Ajay Kumar at 22:04, 23 July 2023

2023-07-23T22:04:45Z

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{{Short description|Budget statement}}
{{Use British English|date=July 2020}}
{{Use dmy dates|date=July 2020}}
{{Infobox Government Budget
|title=July 2020 United Kingdom summer statement
|parliament=[[List of MPs elected in the 2019 United Kingdom general election|58th]]
|country=United Kingdom
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|image=Royal Coat of Arms of the United Kingdom (HM Government).svg|imagesize=200px
|caption=
|submitter=
|submitted_to=
|date_submitted=
|presented=8 July 2020
|passed=
|year=
|chancellor=[[Rishi Sunak]]
|party=[[Second Johnson ministry|Conservative Party]]
|Total_Revenue=
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The '''July 2020 United Kingdom summer statement''' (also known as the '''coronavirus mini-budget'''<ref>{{Cite web|url=https://www.theguardian.com/world/2020/jul/08/wednesday-briefing-rishi-sunak-to-deliver-coronavirus-mini-budget|title=Wednesday briefing: Rishi Sunak to deliver coronavirus mini-budget|first=Warren|last=Murray|date=July 8, 2020|via=www.theguardian.com|access-date=July 8, 2020|archive-url=https://web.archive.org/web/20200708195957/https://www.theguardian.com/world/2020/jul/08/wednesday-briefing-rishi-sunak-to-deliver-coronavirus-mini-budget|archive-date=July 8, 2020|url-status=live}}</ref>) was a [[Spring Statement|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 [[March 2020 United Kingdom budget|budget]] delivered earlier in the year, and preceded the [[September 2020 United Kingdom Winter Economy Plan|Winter Economy Plan]]. The purpose of the statement was to announce measures aimed at helping to promote economic recovery following the [[Economic impact of the COVID-19 pandemic in the United Kingdom|impact]] of the [[COVID-19 pandemic in the United Kingdom|COVID-19 pandemic]]. The statement was delivered to the [[House of Commons of the United Kingdom|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.

==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 [[British government response to the COVID-19 pandemic|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.{{cn|date=December 2021}}

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.<ref>{{Cite news|url=https://www.bbc.com/news/uk-politics-53268594|title=Sunak unveils £30bn plan to save jobs|work=BBC News |date=July 8, 2020|access-date=July 12, 2020|archive-url=https://web.archive.org/web/20200711091940/https://www.bbc.com/news/uk-politics-53268594|archive-date=July 11, 2020|url-status=live}}</ref><ref>{{cite news|url=https://www.ft.com/content/53f58f76-0d77-479e-a214-e320754c4184|title=Rishi Sunak set for July stimulus package to stave off recession|first=Jim|last=Pickard|newspaper=The Financial Times|publisher=The Financial Times Co. Ltd|date=31 May 2020|access-date=8 July 2020|archive-url=https://web.archive.org/web/20200618094241/https://www.ft.com/content/53f58f76-0d77-479e-a214-e320754c4184|archive-date=18 June 2020|url-status=live}}</ref>

==Key points==
The statement included the following provisions:
* A temporary increase of the [[Stamp duty in the United Kingdom#Stamp Duty Land Tax|stamp duty land tax]] threshold on property purchases from £125,000 to £500,000 with immediate effect until 31 March 2021.{{efn|Initially announced to 31 March 2021 but subsequently extended to 30 June.}}
* A £1,000 jobs retention bonus for employers who bring back furloughed employees from the beginning of November 2020 until at least the end of January 2021; the bonus to be paid for each employee, and applies to those earning over £520 a month
* The creation of a "kickstart" scheme that will pay employers to train 16–24 year-olds "at risk of long-term unemployment"
* An "[[Eat Out to Help Out]]" scheme to encourage customers back into restaurants, bars and cafes: customers to receive a 50% discount, worth up to £10 a head, on meals at participating outlets from Mondays to Wednesdays throughout August 2020
* A reduction in [[Value-added tax in the United Kingdom|value-added tax]] from 20% to 5% for the hospitality sector – food outlets, accommodation and attractions – from 15 July 2020 to 12 January 2021.<ref>{{Cite news|date=2020-09-24|title=What is VAT and how does it work?|language=en-GB|work=BBC News|url=https://www.bbc.co.uk/news/explainers-53334098|access-date=2020-09-24}}</ref>{{efn|Whilst initially announced for a six-month period, the VAT reduction was subsequently extended twice and will now run to 30 June 2021.<ref>{{Cite web|title=Budget 2021 sets path for recovery|url=https://www.gov.uk/government/news/budget-2021-sets-path-for-recovery|access-date=2021-03-03|website=GOV.UK|language=en}}</ref>}}
* A "green homes grant" to help make properties more [[Efficient energy use|energy efficient]]; the scheme to be extended to public sector buildings<ref>{{Cite web|url=https://www.independent.co.uk/news/uk/politics/rishi-sunak-budget-speech-stamp-duty-furlough-scheme-meal-eat-out-vocuhers-a9607971.html|title=Rishi Sunak's emergency mini-budget at a glance|date=July 8, 2020|website=The Independent|access-date=July 8, 2020|archive-url=https://web.archive.org/web/20200709163151/https://www.independent.co.uk/news/uk/politics/rishi-sunak-budget-speech-stamp-duty-furlough-scheme-meal-eat-out-vocuhers-a9607971.html|archive-date=July 9, 2020|url-status=live}}</ref>

==Reaction==
Responding to the statement, [[Anneliese Dodds]], the [[Shadow Chancellor of the Exchequer|Shadow Chancellor]], accused Sunak of putting off the "big decisions" by choosing to present a statement rather than a full budget.<ref>{{Cite web|url=https://www.politicshome.com/news/article/shadow-chancellor-anneliese-dodds-accuses-rishi-sunak-of-dodging-big-decisions-by-failing-to-deliver-full-budget|title=Shadow Chancellor Anneliese Dodds accuses Rishi Sunak of dodging 'big decisions' by failing to deliver full Budget|date=July 8, 2020|website=Politics Home|access-date=July 9, 2020|archive-url=https://web.archive.org/web/20200709200501/https://www.politicshome.com/news/article/shadow-chancellor-anneliese-dodds-accuses-rishi-sunak-of-dodging-big-decisions-by-failing-to-deliver-full-budget|archive-date=July 9, 2020|url-status=live}}</ref> [[Keir Starmer]], the [[leader of the Labour Party (UK)|leader]] of the opposition [[Labour Party (UK)|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.<ref name=BBC-politics-53348246/>

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.<ref>{{Cite news|url=https://www.bbc.com/news/business-53347853|title=Taxes will rise to pay for virus, says think tank|work=BBC News |date=July 9, 2020|access-date=July 12, 2020|archive-url=https://web.archive.org/web/20200711044400/https://www.bbc.com/news/business-53347853|archive-date=July 11, 2020|url-status=live}}</ref> 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".<ref>{{Cite web|url=https://www.independent.co.uk/news/uk/politics/stamp-duty-first-time-buyers-rishi-sunak-ifs-a9609726.html|title=First time buyers will be left 'worse off' by Rishi Sunak's stamp duty axe, think-tank warns|date=July 9, 2020|website=The Independent|access-date=July 10, 2020|archive-url=https://web.archive.org/web/20200710103931/https://www.independent.co.uk/news/uk/politics/stamp-duty-first-time-buyers-rishi-sunak-ifs-a9609726.html|archive-date=July 10, 2020|url-status=live}}</ref> The warning of tax rises was echoed by [[David Gauke]], a former [[Conservative Party (UK)|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.<ref>{{Cite web|url=http://www.theguardian.com/uk-news/2020/jul/11/david-gauke-tax-rise-must-pay-for-covid-19|title=David Gauke: tax rises and cuts only way to pay for Covid-19|date=July 11, 2020|website=the Guardian|access-date=July 12, 2020|archive-url=https://web.archive.org/web/20200711183111/https://www.theguardian.com/uk-news/2020/jul/11/david-gauke-tax-rise-must-pay-for-covid-19|archive-date=July 11, 2020|url-status=live}}</ref>

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.<ref name=BBC-politics-53348246>{{Cite news|url=https://www.bbc.com/news/uk-politics-53348246|title=Tax boss questions value of Sunak job schemes|work=BBC News |date=July 9, 2020|access-date=July 12, 2020|archive-url=https://web.archive.org/web/20200711081616/https://www.bbc.com/news/uk-politics-53348246|archive-date=July 11, 2020|url-status=live}}</ref> 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".<ref>{{Cite news|url=https://www.bbc.com/news/uk-politics-53346419|title=Sunak 'sorry' for not being able to save every job|work=BBC News |date=July 9, 2020|access-date=July 12, 2020|archive-url=https://web.archive.org/web/20200711050623/https://www.bbc.com/news/uk-politics-53346419|archive-date=July 11, 2020|url-status=live}}</ref>

==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.<ref>{{Cite news|url=https://www.bbc.com/news/business-53380719|title=Primark says no to £30m job retention bonus|work=BBC News |date=July 12, 2020|access-date=12 July 2020|archive-url=https://web.archive.org/web/20200712130531/https://www.bbc.com/news/business-53380719|archive-date=12 July 2020|url-status=live}}</ref> On 19 July, property website [[Rightmove]] and catering firm [[Compass (company)|Compass]] announced they would also not claim money from the scheme.<ref>{{Cite news|url=https://www.bbc.com/news/business-53465971|title=Rightmove and Compass say no to job retention bonus|work=BBC News |date=19 July 2020|access-date=19 July 2020|archive-url=https://web.archive.org/web/20200719203618/https://www.bbc.com/news/business-53465971|archive-date=19 July 2020|url-status=live}}</ref>

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.<ref>{{Cite news|url=https://www.bbc.com/news/business-53411649|title=KFC, Nandos and Pret lower prices after VAT cut|work=BBC News |date=15 July 2020|access-date=19 July 2020|archive-url=https://web.archive.org/web/20200716112907/https://www.bbc.com/news/business-53411649|archive-date=16 July 2020|url-status=live}}</ref>

==Notes==
{{notelist}}

==References==
{{reflist}}

{{United Kingdom budget}}
{{COVID-19 pandemic in the United Kingdom, Crown Dependencies and British Overseas Territories}}{{Rishi Sunak}}
[[Category:July 2020 events in the United Kingdom]]
[[Category:United Kingdom budgets|2020 07]]
[[Category:2020 in British politics]]
[[Category:2020 government budgets]]
[[Category:COVID-19 pandemic in the United Kingdom]]
[[Category:Economic responses to the COVID-19 pandemic]]
[[Category:Rishi Sunak]]

July 2020 United Kingdom summer statement - Revision history

Ajay Kumar at 22:04, 23 July 2023