Wednesday Update

DB Live: Chancellor cuts VAT; FM opens air bridges

REFRESH THE PAGE MANUALLY FOR UPDATES

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. 

Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.