July 8, 2020 / 9:05 AM / a month ago

Factbox: UK's Sunak takes aim at jobs crisis with employment bonus, tax cuts

LONDON (Reuters) - British finance minister Rishi Sunak promised 30 billion pounds ($37.7 billion) to head off an unemployment crisis by paying companies to bring back furloughed workers and cutting taxes for hospitality firms and homebuyers.

Chancellor of the Exchequer Rishi Sunak leaves Downing Street, following the outbreak of the coronavirus disease (COVID-19), London, Britain, May 4, 2020. REUTERS/John Sibley/Files

Here are the key details announced by Sunak.

JOB RETENTION BONUS

Sunak stuck to his plan to close the furlough scheme that has supported 9 million jobs at the end of October - but he offered to pay employers a 1,000-pound bonus for every worker brought back from furlough and kept on until the end of January.

The cost of the bonuses could be as much as 9.4 billion pounds.

TAX CUT FOR HOSPITALITY AND TOURISM SECTORS

Britain will cut value-added tax (VAT) on spending on hotels, restaurants and tourist attractions to boost demand for services hardest hit by the COVID-19 lockdown.

The standard 20% rate of VAT will be lowered to 5% from next Wednesday until Jan. 12, 2021 for the hospitality and domestic tourism sector at a cost of 4.1 billion pounds.

However, the cut excludes alcoholic drinks.

“EAT OUT TO HELP OUT”

The government will introduce a 500 million pound discount scheme to boost spending at restaurants, cafes and pubs.

For the month of August every diner will be entitled to a “Eat Out to Help Out” discount of 50% at participating restaurants, cafes and pubs up to a maximum of 10 pounds per head on Monday to Wednesday, Sunak said.

PROPERTY TAX CUT

The threshold of the stamp duty tax on property purchases will go up from 125,000 pounds to 500,000 pounds until the end of March, to boost activity in the housing market after the coronavirus lockdown.

Sunak said the average stamp duty bill will fall by 4,500 pounds, and nearly nine out of 10 people buying a main home this year will pay no stamp duty at all.

The changes apply in England and Northern Ireland and are likely to cost 3.8 billion pounds.

WORK PLACEMENT SCHEME

A 2.1 billion-pound Kickstart Scheme will enable employers to offer six-month work placements to unemployed young people aged 16-24, using government funds to pay them the national minimum wage for 25 hours a week.

The Resolution Foundation think-tank estimated the programme could help up to 300,000 young people into work.

GREEN ECONOMY FUNDING

Sunak has earmarked 3.1 billion pounds to improve the energy efficiency of homes and public buildings, and support more than 100,000 jobs.

The funds comprise 2.0 billion pounds in grants - worth up to 5,000 pounds each - to cover two-thirds of the costs of insulation and double-glazing of windows. The poorest families will receive up to 10,000 pounds without having to pay anything.

The remaining 1.1 billion pounds will be spent on reducing greenhouse gas emissions from public-sector buildings.

WORK COACHES

The government will double the number of its job coaches to 27,000 and triple the number of traineeships lasting from six weeks to six months. Businesses will receive 1,000 pounds for every trainee offered a work experience placement.

Overall, the measures to boost skills and improve the process of finding jobs will cost 1.6 billion pounds.

Reporting by Andy Bruce; Editing by William Schomberg and Paul Sandle

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