July 2020 United Kingdom summer statement

Last updated

 () July 2020 United Kingdom summer statement
Royal Coat of Arms of the United Kingdom (HM Government).svg
Presented8 July 2020
Parliament 58th
Party Conservative Party
Chancellor Rishi Sunak

The July 2020 United Kingdom summer statement (also known as the coronavirus mini-budget [1] ) was a statement from the British Government, or mini-budget statement, delivered on 8 July 2020 by Rishi Sunak, the Chancellor of the Exchequer. It followed the budget delivered earlier in the year, and preceded the Winter Economy Plan. The purpose of the statement was to announce measures aimed at helping to promote economic recovery following the impact of the COVID-19 pandemic. The statement was delivered to the House of Commons, where Sunak unveiled a spending package worth £30bn. Concerns were subsequently raised by organisations including HM Revenue and Customs and the Institute for Fiscal Studies about the statement's impact, as well as its cost-effectiveness, while at least one major retailer declined to take advantage of a financial bonus scheme intended for rehiring employees placed on furlough during the pandemic.

Contents

Background

Sunak delivered his first budget as Chancellor in March 2020, as the COVID-19 pandemic was in its early stages in the UK. Shortly afterwards, the country went into "lockdown", requiring all but essential services to close. The government announced a series of measures to protect companies, and the jobs of employees whose firms were required to close as part of lockdown, including a scheme that would see the government pay 80% of the wages of workers who were furloughed. The scheme was initially to run until the end of June, but later extended to October. By June, 9.3 million people were being financially supported by the scheme.[ citation needed ]

There were concerns about unemployment, which by the end of June was nearing 3 million and threatening to exceed the previous highest unemployment figures last seen in 1986, and fears of a deep recession. In May 2020 it was announced that Sunak would deliver a summer statement in July aimed at helping to reduce the potential impact of a recession. Sunak delivered the statement to the House of Commons on 8 July. [2] [3]

Key points

The statement included the following provisions:

Reaction

Responding to the statement, Anneliese Dodds, the Shadow Chancellor, accused Sunak of putting off the "big decisions" by choosing to present a statement rather than a full budget. [7] Keir Starmer, the leader of the opposition Labour Party, said the bonus scheme "should be targeted in the areas which most need it, not across the piece", while Bridget Phillipson, Labour's Shadow chief secretary to the Treasury, wrote to HM Revenue and Customs to ask them to publish their modelling for the job bonus scheme. [8]

The Institute of Fiscal Studies (IFS) warned that taxes would have to rise to pay for the support measures put in place by the government. [9] The IFS also suggested that raising the stamp duty threshold would adversely affect first-time buyers, who are largely exempt from paying it, while benefiting sellers who could take advantage of the situation with higher property prices. Helen Miller, deputy director of the IFS described first-time buyers as "a group that might actually be made worse off by the policy". [10] The warning of tax rises was echoed by David Gauke, a former Conservative Party minister with HM Treasury, who said that either tax increases or spending cuts would be needed to pay off a £40bn public deficit built up during the pandemic. [11]

In a series of letters sent to the Chancellor before the statement was delivered, Jim Harra, the director of HM Revenue and Customs, questioned whether two of the schemes announced were value for money. He raised concerns about paying companies a £1,000 bonus to retain furloughed workers, a scheme estimated to cost the Treasury £9.4bn, and whether the 50% meal discount, estimated to cost £0.5bn, was cost effective, describing both as "sound policy rationale" but the effectiveness of which would be difficult to measure. In response, the Chancellor said that action was needed to protect jobs, but admitted there would be a "dead weight" cost of the job retention bonus from firms who would have retained their staff anyway. [8] In a BBC interview the day after delivering the statement, Sunak said that he would not be able to protect "every single job" and that the UK was entering a "severe recession". [12]

Aftermath

On 12 July, the High Street clothes retailer Primark became the first major company to say it would not take advantage of the jobs retention bonus, which would allow it to claim up to £30m from the government. Primark had placed 30,000 of its employees on furlough during the pandemic, but had since brought them all back to work. The company's announcement put pressure on other large employers to make similar announcements. [13] On 19 July, property website Rightmove and catering firm Compass announced they would also not claim money from the scheme. [14]

The temporary cut in value-added tax for the hospitality industry, worth £4bn, came into force on 15 July and was to last until 12 January 2021. Nando's, Pret a Manger, KFC and McDonald's were among the firms to announce price reductions as a result. [15]

Notes

  1. ↑ Initially announced to 31 March 2021 but subsequently extended to 30 June.
  2. ↑ Whilst initially announced for a six-month period, the VAT reduction was subsequently extended twice and will now run to 30 June 2021. [5]

Related Research Articles

A spending review, or occasionally a comprehensive spending review, is a governmental process in the United Kingdom carried out by HM Treasury to set firm expenditure limits and, through public service agreements, define the key improvements that the public can expect from these resources.

The Spring Statement of the British Government, also known as the "mini-budget", is one of the two statements HM Treasury makes each year to Parliament upon publication of economic forecasts, the second being the Autumn Statement presented later in the year. At 2016's autumn statement, it was announced the budget would move to the autumn, with a spring statement taking place the following year. Both usually involve speeches in the House of Commons by the Chancellor of the Exchequer. The Spring Statement for 2019 took place in March 2019. In 2020 the spring statement was upgraded to a full budget following cancellation of autumn 2019's budget. and additional statements were made in summer and autumn 2020. In 2021 the spring statement was also replaced by a full budget.

<span class="mw-page-title-main">Nadhim Zahawi</span> British politician (born 1967)

Nadhim Zahawi is a British politician who served in various ministerial positions under prime ministers Theresa May, Boris Johnson, Liz Truss, and Rishi Sunak from 2018 to 2023. He most recently served as Chairman of the Conservative Party and Minister without Portfolio from 25 October 2022 until he was dismissed by Sunak on 29 January 2023. A member of the Conservative Party, he became Member of Parliament (MP) for Stratford-on-Avon in 2010.

<span class="mw-page-title-main">2013 United Kingdom budget</span>

The 2013 United Kingdom budget was delivered by George Osborne, the Chancellor of the Exchequer, to the House of Commons on Wednesday 20 March 2013.

<span class="mw-page-title-main">Rishi Sunak</span> Prime Minister of the United Kingdom since 2022

Rishi Sunak is a British politician who has served as Prime Minister of the United Kingdom and Leader of the Conservative Party since 2022. The first British Asian prime minister, he previously held two cabinet positions under Boris Johnson, latterly as Chancellor of the Exchequer from 2020 to 2022. Sunak has been Member of Parliament (MP) for Richmond (Yorks) since 2015.

<span class="mw-page-title-main">2018 United Kingdom budget</span>

The 2018 United Kingdom budget was delivered by Philip Hammond, the Chancellor of the Exchequer, to the House of Commons on Monday, 29 October 2018. It was Hammond's third as Chancellor of the Exchequer since being appointed to the role in July 2016, and his last before being replaced by Sajid Javid by means of Boris Johnson's cabinet reshuffle upon becoming prime minister in July 2019. Following the budget in March 2017 the government moved the annual budget to the Autumn, with the following budget held on 22 November of the same year. On 26 September 2018, Hammond announced that the 2018 budget would be held earlier, in October, so as to avoid clashing with the final stage of Brexit negotiations. On 28 October he suggested that a second budget would be needed in the event of a failure to negotiate a Brexit deal, since the scenario would require a "different response", with a need for "fiscal buffers" to provide support for the economy.

<span class="mw-page-title-main">2020 United Kingdom budget</span>

The 2020 United Kingdom budget, officially known as Budget 2020: Delivering on Our Promises to the British People, was a budget delivered by Rishi Sunak, Chancellor of the Exchequer, to the House of Commons on Wednesday 11 March 2020. It was Sunak's first budget, the first since the withdrawal of the United Kingdom from the European Union, the first since Boris Johnson becoming Prime Minister and the first to be held in the spring since March 2017.

<span class="mw-page-title-main">March 2021 United Kingdom budget</span>

The March 2021 United Kingdom budget, officially known as Protecting the Jobs and Livelihoods of the British People was a budget delivered by Rishi Sunak, the Chancellor of the Exchequer in March 2021. It was expected to be delivered in autumn 2020, but was postponed because of the COVID-19 pandemic. It succeeds the budget held in March 2020, and the summer statement and Winter Economy Plan held in summer and autumn 2020, respectively. The budget is the second under Boris Johnson's government, also the second to be delivered by Sunak and the second since Britain's withdrawal from the European Union. The budget was the first for government expenditure in the United Kingdom to exceed £1 trillion.

<span class="mw-page-title-main">British government response to the COVID-19 pandemic</span> UK government response to COVID-19

In response to the COVID-19 pandemic in the United Kingdom, the UK Government introduced various public health and economic measures to mitigate its impact. Devolution meant that the four nations' administrative responses to the pandemic differed; the Scottish Government, the Welsh Government, and the Northern Ireland Executive produced different policies to those that apply in England. Numerous laws were enacted or introduced throughout the crisis.

<span class="mw-page-title-main">Coronavirus Job Retention Scheme</span> Furlough scheme announced during the COVID-19 pandemic in the UK

The Coronavirus Job Retention Scheme (CJRS) was a furlough scheme announced by Rishi Sunak, the Chancellor of the Exchequer, on 20 March 2020, during the COVID-19 pandemic in the United Kingdom. The scheme was announced on 20 March 2020 as providing grants to employers to pay 80% of a staff wage and employment costs each month, up to a total of £2,500 per person per month. The scheme initially ran for three months and was backdated to 1 March.

Project Birch is the British government's bailout plan for companies during the COVID-19 pandemic. As of September 2020, only one company has qualified for help.

<span class="mw-page-title-main">September 2020 United Kingdom Winter Economy Plan</span>

The Winter Economy Plan was a statement from the British Government, or mini-budget statement, delivered on 24 September 2020 by Rishi Sunak, the Chancellor of the Exchequer. It succeeded the summer statement held earlier in the year, and was a partial replacement to the cancelled budget scheduled for the Autumn. The purpose of the statement was to announce measures aimed at further helping to promote economic recovery following the impact of the COVID-19 pandemic. The statement was delivered to the House of Commons. The plan aimed to further promote economic recovery while preserving jobs and businesses which were considered viable.

<span class="mw-page-title-main">Chancellorship of Rishi Sunak</span> Rishi Sunaks tenure at HM Treasury (2020–2022)

Rishi Sunak served as Chancellor of the Exchequer of the United Kingdom from his appointment on 13 February 2020 to his resignation on 5 July 2022. His tenure was dominated by the COVID-19 pandemic in the United Kingdom, with Sunak becoming a prominent figure in the government's response to the pandemic, giving economic support to struggling businesses through various schemes. He was also involved in the government's response to the cost of living crisis, UK energy supply crisis, and global energy crisis.

<span class="mw-page-title-main">October 2021 United Kingdom budget</span>

The October 2021 United Kingdom budget, officially known as the Autumn Budget and Spending Review 2021. A Stronger Economy for the British People, was a budget statement made by Chancellor of the Exchequer Rishi Sunak on 27 October 2021. It was the third and final consecutive budget delivered by Sunak before his resignation in July 2022.

<span class="mw-page-title-main">Akshata Murty</span> Indian businesswoman (born 1980)

Akshata Narayana Murty is an Indian heiress, businesswoman, fashion designer, and venture capitalist. She is married to Rishi Sunak, the Prime Minister of the United Kingdom and leader of the Conservative Party. According to the Sunday Times Rich List, Murty and Sunak are the 222nd richest people in Britain as of 2022, with a combined wealth of £730 million.

<span class="mw-page-title-main">Premiership of Liz Truss</span> Period of the Government of the United Kingdom in 2022

Liz Truss's tenure as Prime Minister of the United Kingdom began on 6 September 2022 when she accepted an invitation from Queen Elizabeth II to form a government, succeeding Boris Johnson, and ended 49 days later on 25 October upon her resignation. While prime minister, Truss also served as First Lord of the Treasury, Minister for the Civil Service, and Minister for the Union.

<span class="mw-page-title-main">September 2022 United Kingdom mini-budget</span>

On 23 September 2022, the Chancellor of the Exchequer, Kwasi Kwarteng, delivered a Ministerial Statement entitled "The Growth Plan" to the House of Commons. Widely referred to in the media as a mini-budget, it contained a set of economic policies and tax cuts such as bringing forward the planned cut in the basic rate of income tax from 20% to 19%; abolishing the highest (45%) rate of income tax in England, Wales and Northern Ireland; reversing a plan announced in March 2021 to increase corporation tax from 19% to 25% from April 2023; reversing the April 2022 increase in National Insurance; and cancelling the proposed Health and Social Care Levy. Following widespread negative response to the mini-budget, the planned abolition of the 45% tax rate was reversed 10 days later, while plans to cancel the increase in corporation tax were reversed 21 days later.

<span class="mw-page-title-main">Premiership of Rishi Sunak</span> Period of the Government of the United Kingdom from 2022

Rishi Sunak's tenure as Prime Minister of the United Kingdom began on 25 October 2022 when he accepted an invitation from King Charles III to form a government, succeeding Liz Truss. He is the first British Indian to hold the office of prime minister. As prime minister, Sunak is also serving as First Lord of the Treasury, Minister for the Civil Service, and Minister for the Union.

<span class="mw-page-title-main">November 2022 United Kingdom autumn statement</span>

The November 2022 United Kingdom autumn statement was delivered to the House of Commons on 17 November 2022 by Chancellor of the Exchequer Jeremy Hunt, after being delayed by three weeks from its original scheduled date of 31 October. The budget addressed the ongoing cost of living crisis, and saw the announcement of a five-year package of tax increases and spending cuts designed to steer the UK through recession. An economic forecast published on the same day by the Office for Budget Responsibility (OBR) stated the UK had entered a recession after experiencing two quarters of a shrinking economy, and predicted the UK's economy would shrink during 2023. A reduction in households' disposable income was also forecast.

<span class="mw-page-title-main">2023 United Kingdom budget</span>

The 2023 United Kingdom budget was delivered to the House of Commons on 15 March 2023 by Chancellor of the Exchequer Jeremy Hunt. It was the first full budget statement to be presented by Hunt since his appointment as chancellor. The date of the budget was confirmed by Hunt on 19 December 2022. At the same time he confirmed the budget would be accompanied by a full budget report from the Office for Budget Responsibility. The statement was presented as a budget for growth, with the objective of bringing about the conditions for long-term sustainable economic growth within the UK.

References

  1. ↑ Murray, Warren (8 July 2020). "Wednesday briefing: Rishi Sunak to deliver coronavirus mini-budget". The Guardian. Archived from the original on 8 July 2020. Retrieved 8 July 2020– via www.theguardian.com.
  2. ↑ "Sunak unveils £30bn plan to save jobs". BBC News. 8 July 2020. Archived from the original on 11 July 2020. Retrieved 12 July 2020.
  3. ↑ Pickard, Jim (31 May 2020). "Rishi Sunak set for July stimulus package to stave off recession". The Financial Times. The Financial Times Co. Ltd. Archived from the original on 18 June 2020. Retrieved 8 July 2020.
  4. ↑ "What is VAT and how does it work?". BBC News. 24 September 2020. Retrieved 24 September 2020.
  5. ↑ "Budget 2021 sets path for recovery". GOV.UK. Retrieved 3 March 2021.
  6. ↑ "Rishi Sunak's emergency mini-budget at a glance". The Independent. 8 July 2020. Archived from the original on 9 July 2020. Retrieved 8 July 2020.
  7. ↑ "Shadow Chancellor Anneliese Dodds accuses Rishi Sunak of dodging 'big decisions' by failing to deliver full Budget". Politics Home. 8 July 2020. Archived from the original on 9 July 2020. Retrieved 9 July 2020.
  8. 1 2 "Tax boss questions value of Sunak job schemes". BBC News. 9 July 2020. Archived from the original on 11 July 2020. Retrieved 12 July 2020.
  9. ↑ "Taxes will rise to pay for virus, says think tank". BBC News. 9 July 2020. Archived from the original on 11 July 2020. Retrieved 12 July 2020.
  10. ↑ "First time buyers will be left 'worse off' by Rishi Sunak's stamp duty axe, think-tank warns". The Independent. 9 July 2020. Archived from the original on 10 July 2020. Retrieved 10 July 2020.
  11. ↑ "David Gauke: tax rises and cuts only way to pay for Covid-19". the Guardian. 11 July 2020. Archived from the original on 11 July 2020. Retrieved 12 July 2020.
  12. ↑ "Sunak 'sorry' for not being able to save every job". BBC News. 9 July 2020. Archived from the original on 11 July 2020. Retrieved 12 July 2020.
  13. ↑ "Primark says no to £30m job retention bonus". BBC News. 12 July 2020. Archived from the original on 12 July 2020. Retrieved 12 July 2020.
  14. ↑ "Rightmove and Compass say no to job retention bonus". BBC News. 19 July 2020. Archived from the original on 19 July 2020. Retrieved 19 July 2020.
  15. ↑ "KFC, Nandos and Pret lower prices after VAT cut". BBC News. 15 July 2020. Archived from the original on 16 July 2020. Retrieved 19 July 2020.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.