By Ellie McCarthy
Last Wednesday, Rishi Sunak set out his summer economic statement detailing his next steps to counteract the economic impacts of COVID 19.
Sunak was clear during his speech in the House of Commons that this was not a time for party politics or ideologies, and he would not simply settle for unemployment being ‘the inevitable’. He went further to outline his new job retention bonus, the kickstart scheme, a new program for traineeships, food vouchers and stamp duty break – sounds pretty positive, doesn’t it?
But inevitably, his policies were hit with criticism, suggesting he had failed to acknowledge larger decisions and to provide a back-to-work budget. Anneliese Dodds stated that what had been put forward simply wasn’t enough to take the load off the public’s shoulders.
So, what did Sunak propose, and how could they support young people?
Furlough and the Job Retention Bonus
Sunak has been persistent throughout that the furlough scheme will come to an end in October this year. The worry, then, is that many employers are ‘hanging on’ to their employees until October, with a surge of unemployment to follow.
To counteract this, Sunak introduced the ‘Job Retention Bonus’, with the purpose of paying the employer £1000 per employee that they take off furlough and continue to employ until January 2021. Approximately 9 million people have been furloughed, so this is potentially an enormous additional cost for the government. However, there is hope employers will be persuaded to take on as many staff members as possible, to avoid mass unemployment. Of course, for young people that have bills or debt to pay, it is vital that they return to work, so in theory, an initiative such as this could be invaluable. However, it is questionable the extent to which this policy will be taken advantage of. How likely is it that employers are going to take on an employee, pay their wages, National Insurance, etc, for the sake of £1000? And is this simply a delay tactic until January 2021?
Traineeship Programme
In a bid to keep young people in the workforce, the Chancellor announced a Traineeship Programme worth £111m for 18-24-year olds, which has been developed to encourage employers to hire young trainees and create new apprenticeships over the next six months. Employers that decide to provide this opportunity will receive a £1000 bonus. Theoretically, this is a fantastic initiative that could not only keep young people employed but facilitate them with necessary skills to progress to higher stages of their career development. Nevertheless, it does not change the fact that many will be reliant on a wage as low as £4.15 per hour. Such a little amount has come under scrutiny before as an amount that is simply not enough alone to financially support a young person. This begs the question – whilst businesses are receiving £1000 per apprentice, what support is the apprentice receiving? It is one thing to incentivise businesses, yet without additional support, many young people will simply not be able to take advantage of an apprenticeship programme, especially during a time of such economic uncertainty.
Kick Start Scheme
Another policy aiming to support young people is the Kick Start Scheme – a £2 billion policy to provide work placements for people aged 16-24 years old. To be eligible, you must be receiving universal credit, and be deemed to be at risk from further unemployment. Currently, it is important to acknowledge the vulnerable – and in theory, this policy is seeking to do so, allowing young people to continue to be employed through economic instability. Some, however, may be getting déjà vu right about now, since this is not the first time, we have seen a policy like this. Back in 2009, the Labour Party announced the Future Jobs Fund, which created 130,000 jobs for young people. It was criticised thoroughly, with minimum waged jobs often simply being subsidised with minimum training. It was eventually cancelled by David Cameron, who spoke publicly about the scheme’s inefficiency.
Stamp Duty Land Tax
Amidst this uncertainty, property transactions and house prices have fallen. To drive growth and improve confidence into one of the UK’s key industries, the government has unveiled a 6-month stamp duty land tax holiday for properties below £500,000. Before the Chancellor’s announcement, first-time buyers were not required to pay any tax on properties up to £300,000 and were required to pay 5% on properties between £300,000 and £500,000. Arguably, the new stamp duty holiday will have limited benefit to many young buyers.
Eat Out to Help Out
The ‘Eat Out to Help Out’ scheme has been introduced to build consumer confidence and encourage businesses alike to reopen. Many young people are employed in lower-paid hospitality jobs and are probably the most vulnerable to a surge in unemployment. Hence, an initiative such as this will hopefully encourage consumers and generate income for these employers. It is obviously not known the extent to which a policy such as this will take off. Not only has nothing of its kind been implemented before, but the fact remains that COVID 19 remains a serious health threat to many, which could ultimately deter people from eating out.
Overall, Sunak has delivered a range of innovative policies with the general consensus that the government will continue to their best endeavour to support young people during this difficult period. Only time will evidence the true impact of the varied policies. Nonetheless, CYW are supportive of the endeavours to steer the Country’s youth through these uncertain times.