Following the Chancellor’s Summer Statement yesterday I posted a blog simply summarising what he had announced. Now, nearly 24 hours later, I’ve had a chance to reflect on what was said, and I can’t for the life of me believe that he’s got it right.
I don’t normally comment on political issues but confine myself to analysing the tax and business implications of fiscal and economic announcements. But I’ve decided to exempt myself from my self-imposed moratorium on political comment and get a few things off my chest!
I should say at the outset that I’ve been broadly supportive up until now. The furlough scheme and self-employed income support scheme were needed, and more or less hit the button. I’m less convinced as to how effective the various loan schemes were, but that’s more to do with the banks not playing ball rather than the sentiment behind the schemes. But some of yesterday’s announcements baffle me.
Of course, furlough and the SEISS have to end. We simply can’t afford to keep them going. And yes, there will be both business and individual financial hardship to come. That is sad but inevitable. But yesterday’s announcements are set to cost another £30 billion. Money well spent? I don’t think so.
The gimmick: “eat out on us”… £10 off meals eaten out on certain days in August. What about those who can’t even afford to eat in and are relying on food banks. Wouldn’t the money have been better spent helping them? If you have the luxury of being able to afford to eat out, is £10 off your meal really going to change your decision about going out or not? And does it fit with the social distancing and “be alert” messaging? I think not.
Similarly, a reduction in VAT from 20% to 5% on eating out, hotels, leisure parks, B&Bs, camping sites etc. Surely holidays have now been planned. If you can afford to go away, will a VAT reduction really change behaviours? And will the VAT reductions even be passed on to the consumer?
As for the SDLT holiday, surely a distortion in the housing market is inevitable. Will people really bring forward house moves to take advantage of this? Maybe first-time buyers will, but who else? And if you’re in the fortunate position to be able to spend £500k on a house, does the saving of a few £thousand really make a difference?
Kickstarters (our lexicon of new words increases by the day!). Surely there needs to be a commitment from the employer to continue to employ these young people (so-called trainees) once the initial period ends, otherwise it’s no more than encouraging cheap labour. Far better would have been a proper incentive for companies to invest in full, proper apprenticeships, which give young people the opportunity to learn skills that will hopefully set them off on a lifetime career.
Muddled thinking, gimmicks, loss of credibility. We needed something more imaginative and sustainable.