ACCA comments on Chancellor's economic statement 8 July 2020

From the economy, to tax, to skills - ACCA experts share initial thoughts on today's announcements from the UK government.

Economics: Michael Taylor, ACCA’s chief economist, said:

‘Rishi Sunak’s economic statement is the second phase of the government’s economic response and represents a broad and indeed welcome package that offers vital support.

‘Winding down the furlough scheme by October was to be expected, and the move from furlough to jobs through the new Jobs Retention Bonus is to be welcomed. The £1,000 bonus per employee is a necessary measure and incentivises employers to keep people in jobs.

‘Even these support measures do not mitigate the risk of the virus itself, it remains to be seen if they will be sufficient or effective in stimulating demand and limiting the inevitable rise in unemployment in coming months. Revival needs resilience, we await with interest how this will relate to the Autumn budget.’

Tax: Jason Piper, ACCA’s tax policy lead, said:

‘Cutting VAT from 20% to 5% is an admirable attempt to stimulate demand. When combined with the eat out vouchers, we hope it will be effective in the short-term in achieving this aim.

‘The Chancellor’s restraint in not adjusting other areas such as payroll taxation will be welcomed by businesses already faced with adapting to the CJRS regime, although in the longer-term change may be needed and of course further furlough support would be welcomed. But even the current incentives will have an administrative impact, especially where not all elements of a given supply qualify for the reduced rate.

‘ACCA urges businesses, particularly those involved in accommodation and attractions, to familiarise themselves with the new guidance around VAT. We call on HMRC to be understanding around business capacity and forgiving of innocent errors on VAT as businesses acclimatise to the administrative complexity created by today’s announcement.’

Skills: Claire Bennison, head of ACCA UK, said:

‘ACCA welcomes the government’s attempt to address the job and skills challenges. The chancellor’s £2bn scheme to create thousands of job placements for young people, along with temporarily placing apprenticeships back on the table, is a welcome ambition.

‘Having learnt lessons from apprenticeships, the government must ensure the new kickstart scheme avoids unnecessary administrative barriers particularly for small businesses.

‘The government must ensure there is an agile approach, notably on businesses onboarding young people with limited work experience to ensure a system that is fit and fair for all.’

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"Even these support measures do not mitigate the risk of the virus itself, it remains to be seen if they will be sufficient or effective in stimulating demand and limiting the inevitable rise in unemployment in coming months. Revival needs resilience, we await with interest how this will relate to the Autumn budget."

Michael Taylor, chief economist - ACCA