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Wednesday Update

DB Live: Chancellor cuts VAT; FM opens air bridges

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KEY POINTS IN CHANCELLOR’S STATEMENT

– Temporary cut to VAT on food, accommodation and attractions from 20% to 5%

– “Eat out to help out” vouchers that will give diners 50% off their meals out, with conditions, for August

– Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021

– a £2bn Kickstart scheme to create thousands of job placements for young people

– a cut in the Stamp Duty Land Tax (SDLT) for England and Northern Ireland, raising the threshold from £125,000 to £500,000.

– A £2bn green energy plan to help make homes more energy efficient

3.30pm: Tax-free home sales

Replicating the chancellor’s plans to cut stamp duty could result in more than 90% of Scottish home sales being tax-free but would drastically cut Land and Buildings Transaction Tax (LBTT) receipts, the Chartered Institute of Taxation (CIOT) has suggested.

2.50pm: Barnett consequentials ‘must target jobs’

Scottish Chambers of Commerce chief executive Liz Cameron said the Scottish Government needed to use the £800 million additional funding received through the Barnett formula to target support where it is most needed – “protecting jobs and ensuring young people can access training and support.”

British Chambers of Commerce director general Dr Adam Marshall added: “It is likely that the scale of the stimulus needed to help the UK economy restart, rebuild and renew will need to be greater still over the coming months.

“BCC’s research shows investment intentions have been hit hard during the pandemic, and so the Government should be preparing new incentives for business investment in the UK.

“Many businesses are concerned about how they will survive in the event of a local lockdown, and we ask the Government to urgently set out what support will be available if that happens.”

2.45pm: Labour attacks ‘hit and miss’ approach

Scottish Labour leader Richard Leonard said his party has been calling for a quality Jobs Guarantee Scheme, “but we need good jobs and jobs for good – not low-paid, part-time employment for just six months, delivered through a scheme which cuts off everyone over the age of 24.

“Neither the Tories nor the SNP have shown they appreciate the scale of the economic catastrophe we are facing. The Scottish Government cannot create the jobs and industry we need if it clings onto its failed hit and miss approach to intervention.”

2.35pm: Tories ‘threatening’ Scotland’s recovery

Ian Blackford

The SNP said the Tory government is “threatening Scotland’s recovery” – after the Chancellor refused to extend the furlough scheme and failed to give a commitment to devolving further financial powers to the Scottish Parliament.

Responding to the fiscal statement, Westminster leader Ian Blackford, pictured, warned that the Tories were putting people’s “jobs and livelihoods on the line” by cutting off the Job Retention Scheme and Self-Employment Income Support Scheme too soon.

2.30pm: Public sector borrowing to hit £320bn

The measures announced by the Chancellor will add to the deterioration in the public finances that has been caused by COVID-19, says Howard Archer, chief economist to the EY ITEM Club. He expects Public Sector Net Borrowing excluding banks to come in around £320 billion (15.6% of GDP).

“The EY ITEM Club suspects the economy contracted around 17% year-on-year in the second quarter, and expects the economy to return to clear growth in the third quarter with GDP expanding close to 10% quarter-on-quarter.

“The further easing of lockdown restrictions, including the relaxation of social distancing rules on 4 July and the partial re-opening of the hospitality sector should help matters. The EY ITEM Club expects GDP to contract around 8% over 2020.”

2.25pm: Small firms directors ‘overlooked’

Andrew McRae, the policy chairman for the Federation of Small Businesses, said there are many small businesses that were not supported by the Chancellor’s package – with company directors once again overlooked.

“Given these businesses have had little to no support in over 100 days, FSB is hoping that support can be provided in the near future,” he said.

2.20pm: Self-employed still left out

The Association of Independent Professionals and the Self-Employed has pointed to the lack of any mention of the self-employed in the Chancellor’s statement.

Although IPSE has welcomed the measures to boost the economy, including the employer bonus at the end of the furlough scheme, it has urged the government to introduce a “tapered end” to the Self-Employment Income Support Scheme to ensure freelancers do not face a “cliff-edge” in August.

2.15pm: Retail sector challenges Holyrood

Princes Street, Edinburgh

Ewan MacDonald-Russell, Scottish Retail Consortium head of policy, said: “The [Chancellor’s] decision to cut VAT… may have been a missed opportunity not to go for a broader reduction. Such a move could have encouraged shoppers to return to the High Street; boosting, cafes, restaurants, and attractions, as well as shops. The Chancellor should consider the evidence over the next few months and consider revising this in his Autumn Budget.

“Scottish retailers will look for swift clarity from Scottish Ministers on how they intend to use the Barnett consequential revenues from today’s statement.”

1.55pm: FSB welcomes ‘jobs first’ strategy

Federation of Small Businesses national chairman Mike Cherry, said: “We’ve always said that the Chancellor should take a jobs first approach to today’s intervention and that’s exactly what he’s done. 

“The Chancellor is absolutely right to stress that the job of getting the economy back on its feet has only just begun.”

1.50pm: Scots Tories call for stamp duty match

The SNP must match the Chancellor’s boost on stamp duty for the sake of householders, first-time buyers and the economy, the Scottish Conservatives have said.

Yesterday, the SNP said it had no intention of amending its equivalent scheme, the Land and Buildings Transaction Tax.

Jackson Carlaw

Scottish Conservative leader Jackson Carlaw, pictured, said: This announcement by Rishi Sunak will get the housing market moving again immediately, and that’s vital on a number of levels.

“The SNP must do the same, otherwise the consequences for families and the wider economy will be dire.”

1.25pm: VAT cut welcome

The series of support measures announced by The Chancellor this afternoon are “hugely welcomed”: by Scotland’s tourism industry and go beyond what we had anticipated in terms of the lowering of VAT to 5%,” said Marc Crothall, chief executive of the Scottish Tourism Alliance.

1.20pm: Disappointment over quarantine change

Responding to the FM’s relaxation of quarantine Marc Crothall, chief executive of the Scottish Tourism Alliance, said: “We welcome clarity around the opening up of routes into Scotland and support the Scottish Government’s risk-based approach in balancing the economic challenges with the health risks.

“However, the news that Spain is not on the list of air bridges announced today will come as a blow to the aviation sector and our tourism industry with Spain representing a huge proportion of restart plans. 

“The Spanish market accounted for 205,000 visits to Scotland in 2018 and with many Scots now expected to shelve plans to travel to the destination, it may be likely that airlines will abandon plans to capture the summer market which would have been required to avoid mass redundancies across the sector. 

“We are however hopeful that these both Spain and Serbia may be included at the next review point on 20 July.”

1.10pm: Eat out to help out

Mr Sunak says he will give everyone 50% off meals in selected restaurants during August.

The discount will rise to £10 per head for adults and children, and apply Monday to Wednesday.

He says the scheme will help people “Eat Out to Help Out” the hospitality sector.

1.08pm: No avoiding the quarantine rules

Nicola Sturgeon says travellers cannot get around the need to quarantine in Scotland by flying to or from an airport in England.

The first minister says Public Health Scotland will have contact details of those in Scotland and will carry out sample checks.

1.05pm: Stamp duty cut ‘must be matched in Scotland’

The cut to stamp duty must be matched in Scotland to avoid a housing market collapse according to property management firm, apropos.

housing for sale

Joint MD David Alexander says cutting the the tax in England and Northern Ireland without a comparable reduction in land and buildings transaction tax will lead to a two-tier market.

1pm: Cut in VAT

VAT on food, accommodation and attractions will be reduced from 20% to 5% from next Wednesday until 12 January.

12.57pm: Green jobs plan

Mr Sunak has announced a £3bn green jobs plan includes a £2bn Green Homes Grant under which “homeowners and landlords will be able to apply for vouchers to make their homes more energy efficient and create local jobs”.

He says the grants will cover at least two thirds of the cost, up to £5,000 per household.

He also says he will release £1bn to improve the energy efficiency of public sector buildings.

He confirms the new £2bn Kickstart scheme to create thousands of job placements for young people.

12.55pm: Stamp duty cut

Mr Sunak confirms a temporary holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland, to run until 31 March next year.

12.50pm: Sturgeon relaxes quarantine rules

Nicola Sturgeon says that from 10 July if you are travelling to Scotland from any of the 39 places the UK government has rated as Green you will not have to self-isolate on arrival in Scotland. Travellers from some on the Amber list, including Spain and Serbia, will still have to quarantine.

She says in her daily briefing that many of the strands of Covid came to Scotland from overseas travel, in particular from mainland Europe.

12.46pm: Sunak says no furlough extension

The chancellor says there will be no extension to the government’s wage subsidy scheme. “The truth is that calling for endless extensions to the furlough scheme is just as irresponsible,” he says.

He announces a “jobs retention bonus”. An employer who brings some back an employee who was furloughed and continues to employ them until January will receive a £1000 government bonus.

“The employee must be paid £520 each month through to January,” he says.

“If you stand by your workers we will stand by you,” he says.

12.45pm: Chancellor opens statement

Chancellor Rishi Sunak begins his Summer Statement in the Commons by saying “No one will be left without hope.”

11am: Senior executive leaves Record group

The Daily Record owner’s chief operating officer has confirmed he is leaving as part of a cull of 550 jobs announced yesterday.

Full story here

8.50am: Van der Kuyl backs aquaculture firm

Tech entrepreneurs Chris van der Kuyl and Paddy Burns have invested in a Dundee-headquartered aquaculture technology specialist.

Full story here

8.15am: London open

The FTSE 100 opened lower for a second day as rising coronavirus cases in some parts of the world erodes confidence in the reopening of economies.

London’s blue-chip index dipped 22 points or 0.35% to trade at 6,167.98.

7am: Boohoo review

Boohoo

Fast fashion retailer Boohoo said it was “shocked and appalled” by the recent allegations over cheap labour at one of its suppliers and has launched a review led by Alison Levitt QC.

It say some of the allegations against it are inaccurate.

Full story here

Springfield Properties – record reservations

Springfield Properties said the reopening of construction sites in Scotland on 15 June was met with a record number of reservations in a one-week period.

Full story here

Craneware well-positioned

Keith Neilson

Healthcare billing company Craneware said it expects to deliver standstill results with revenue for the year.

Full story here

FirstGroup

The transport company reported a statutory operating loss of £152.7m (2019: profit of £9.8m) which includes the Greyhound impairment charge of £186.9m (of which £124.4m was in the first half).

Chief executive Matthew Gregory said: “Despite the near-term uncertainty, the long-term fundamentals of our businesses remain sound.

“We are resolutely committed to delivering our strategy to unlock material value for all shareholders through the sale of our North American divisions at the earliest appropriate opportunity. 

Today’s agenda

Chancellor Rishi Sunak will deliver his summer statement (12.30pm)



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