The 'summer economic statement'

So…

At 12:39 yesterday, with a hearty cheer from the Conservative benches, Chancellor Rishi Sunak took to his feet in the House of Commons, for what was described as a “summer economic statement”.

Early last month, rumours circulated that he would be delivering yet another emergency budget - but those were soon quashed, although we may indeed see one in September or maybe October. Only time will tell.

No. This was not a budget; it was a statement.

So what did the Chancellor state?

Well, as expected, he focussed significantly on jobs and he announced a number of schemes designed to try to prevent unemployment from spiralling in the coming months.

Clearly, it won’t be possible to save every job - but the Chancellor did say that he would not accept that high levels of unemployment were inevitable.

I admire his optimism but, with the benefits claimant count on course to top 3 million people in June - the highest level since 1986 - is he being realistic?

Anyway…

He started by emphasising that he wants to create green jobs. His precise words: "this is going to be a green recovery".

He announced a ￡2bn ‘Green Homes Grant’ under which "homeowners and landlords will be able to apply for vouchers to make their homes more energy efficient and create local jobs". He also said he would release ￡1bn of funding to improve the energy efficiency of public sector buildings. So that’s ￡3bn in total on that front.

He went on to announce an immediate holiday on stamp duty on the first half a million of all property sales in England and Northern Ireland, to run until March 31st next year. This is obviously good news for estate agents, although some have pointed out that what they could really do with are more first-time-buyer-friendly mortgages.

The Chancellor went on to say he would cut VAT from 20% all the way down to 5% for the particularly badly hit hospitality and tourism sectors (from July 15th until January 12th, to be precise). He said he wanted to see pubs, restaurants, cafes and B&Bs bustling again.

He also announced a plan meaning the government will cover 50% of people’s restaurant bills - up to a tenner a head - on Mondays, Tuesdays and Wednesdays in August at, as the saying goes, “participating restaurants”. That one raised a few eyebrows, including mine, especially when he labelled the scheme ‘Eat Out to Help Out’ - although, yes, I can see the rationale behind it.

Then came even bigger news - if you can call it news, given that it had been leaked well in advance…:

"We can do more for young people", he said, announcing that the government "will pay employers ￡1,000 to take on new trainees" and offer companies ￡2,000 each to encourage them to hire apprentices.

He then concluded with the biggest news - the rabbit out of the hat - the ‘Jobs Retention Bonus’... under which the government will pay a ￡1,000 bonus to businesses for each furloughed person brought back and employed through to January - a policy which could cost the country over ￡9bn.

“If you stand by your workers, we will stand by you”, said the Chancellor.

Great.

But how can the government ensure that money from the retention bonus will not go to employers who were already planning to bring workers back to work - and what about those companies who are unable to operate despite the bonus.

Labour later suggested making the furlough scheme more flexible with the adoption of a sector-by-sector focus. Not a bad idea. But, likewise, not without its complications.

The precise words of the Shadow Chancellor were, "The Chancellor still needs to abandon his one-size-fits-all approach to withdrawing the job retention and self-employed schemes" and she went on to say that the money spent on furlough "must not serve merely to postpone unemployment".

Anyway… This ‘Jobs Retention Bonus’ does now at least give employers a well-defined choice. Are you prepared to pay, in respect of your furloughed staff, 5% in August, 15% in September and 24% in October plus ￡1,560 pounds in each of November and December in order to get a ￡1,000 bonus in January?

And how long is a piece of string?

Yes.

Sorry.

I’m being facetious.

Because it all depends on demand, doesn’t it - and that remains highly unpredictable. So the choice might be clear but, for most employers, it’s probably far from clear which choice to make!

Yes, this new ‘Jobs Retention Bonus’ might help encourage some employers to hold back on making significant redundancies whilst they wait to see what happens next. But there are plenty of employers who do not have the luxury of time and who are already fighting for their very survival.

Trade Union leader Frances O'Grady - I’ve quoted her many times before - I do like her style, even if I don’t fully agree with her politics - she described the scheme as a "little tinkering around the edges". Perhaps a little harsh. But…

And Dame Carolyn Fairbairn, director general of the CBI, the Confederation of British Industry - I’ve quoted her before too - said, "Prevention is better than cure. Many viable firms are facing maximum jeopardy right now. With nearly 70% of firms running low on cash, and three in four reporting lack of demand, more immediate direct support for firms, from grants to further business rates relief, is still urgently needed."

Labour’s immediate reaction to the Chancellor’s whole announcement was, of course, to accuse the Chancellor of putting off many big decisions until later in the year. They are of the opinion that he should have announced a full back-to-work budget yesterday, as indeed was initially rumoured. Predictable criticism. Understandable criticism.

And then there’s news in this morning that Burger King may permanently shut up to 10% of its restaurants, with 1,600 jobs at risk, despite yesterday’s statement.

Are Labour right? Who knows? Personally, yes, I think I would have liked a so-called full back-to-work budget right now - but I see the pros and cons of both approaches.

Will what was announced yesterday be enough?

Probably not.

And there have been immediate claims that, for example, aviation and gyms have been ignored by the government. Not to mention the self-employed.

But I do think yesterday’s statement represents a damn good start - and there should be more to come in the autumn.

Watch this space.