Chancellor Rishi Sunak’s summer budget is welcome light-touch, modish nudge economics. Sociologists and futurologists predict the pandemic will be an event where culture will be identified as pre-, post- and perhaps pendant-Covid 19, whilst the Chancellor appears to have embraced the threat of Covid 19 or its antonym “opportunity”.
The real Covid 19 losers appear to be the young and not-so-young unemployed. Alleviating unemployment is an economic as well as moral imperative for any government, so the Chancellor’s investment (emotively) in “apprenticeship” is lauded. The £2,000 is well-judged. No one committing to an apprenticeship programme should (or is likely to) be tempted to take someone on, with all the attendant responsibilities, for that much, but it’s enough to grab an employer’s attention and encourage the thought. There is additional benefit in investing in apprentices who will become experts in the emerging ways of doing business highlighted by Zoom.
Rishi Sunak has been a surprise political PR winner in a weak field, the image supported by closer analysis. The furlough scheme benefited from being reactive on the hoof and hasn’t proved controversial. HMRC will be looking closely at claims, but businesses have been responsible. I may be absurdly optimistic (dangerous in a chartered accountant) but the economy is strong enough to fund this. The Chancellor has to take credit for strong sterling which implies the markets don’t see the measures as inflationary.
Much vaunted property crashes for the last 75 years have turned out to be blips, particularly residential property to which the stamp duty relief is aimed. Stamp duty is a stealth tax on people’s homes and is horrible in concept and worse in application. Sunak would have been far better doing something about business rates and gets few marks for fiddling around with stamp duty. Brits worry about property prices and this unnecessary relief smacks of being seen to do something.
The measures to help the hospitality industry may help a little. VAT is another dreadful tax dreamt up presumably to deflate headline income and corporation tax rates. One could argue that since VAT is a tax that has blighted the hospitality sector, the reliefs merely loosen the ligature. I haven’t done the maths but the 15% cut on food and non-alcoholic drinks might be better than it first looks, because it is VAT that has been charged on costs with no input tax (on wages for preparing the food, and there is no VAT on most ingredients).
The August dining vouchers are a brilliant idea; who could criticise a “dine out to save our economy” campaign? The tone of the summer statement bodes well for the “fundamental review” of business rates promised this autumn.
The job retention bonus strikes a chord anecdotally, with employers finding that furloughed staff have been found to be redundant. A thousand pounds isn’t going to help, but is indicative that a competent Chancellor recognises the problem.
Forget negative headlines, there is an underlying confidence that Covid 19 will heal the divisions of the last decade, and references to a spirit of 1940 might yet be justified.