Reaction: Rishi Sunak to unveil £2bn youth jobs scheme to tackle Covid crisis
Chancellor also expected to announce stamp duty ‘holiday’ and VAT cut in bid to boost post-lockdown economy
Rishi Sunak is set to announce plans to pay hundreds of thousands of young people to take part in six-month job placements during the economic downturn triggered by the coronavirus pandemic.
People aged between 16 and 24 who are on Universal Credit and at risk of long-term unemployment will earn a total of £5,500 for working, while businesses will receive £1,000 for taking them on, The Times reports.
The Treasury says the “kickstart scheme”, to be outlined during the Chancellor’s mini budget today, forms part of a “three-point plan for jobs... to help Britain bounce back from coronavirus”.
The scheme “could help 300,000 people” and is central to Boris Johnson’s “‘opportunity guarantee’ for young people, which will also include a huge increase in apprenticeships”, the newspaper adds.
The youth employment programme essentially creates “a pool of ‘free labour’ for companies”, according to the Financial Times. A source close to the chancellor told the paper that companies have a “moral obligation” to take part in order to help stave off an unemployment disaster.
Labour has “welcomed the move”, but says the government has failed to “rise to the scale of the unemployment crisis”, the BBC reports.
The broadcaster’s political editor Laura Kussenberg writes that the announcement shows the “government is looking now to the second phase of the crisis, when the worst stage of the health aspect has passed and they hope the economic recovery can begin”.
With the clock ticking down on the furlough scheme and thousands of Britons already losing their jobs, “the reality is many of those who have been paid by the Treasury will find their job doesn’t return”, Kussenberg continues. “The focus of the chancellor’s statement, therefore, will be ‘jobs, jobs, jobs’, insiders say.”
Kathleen Henehan, an economist at the Resolution Foundation think-tank, told the FT that the work experience funding could potentially create three times as many jobs as a similar scheme that ran after the 2008 financial crisis. But “delivery on this scale will be a huge challenge”, she warned.
Sunak is also expected to “announce a wide-ranging package of tax and spending measures to kickstart Britain’s economic recovery”, The Guardian reports. The measures are expected to include a temporary cut in stamp duty - the tax levied on home purchases - and a cut to the rate rate of value added tax (VAT).
A stamp duty “holiday” would help “reboot the housing market after three months of lockdown”, while the VAT cut would “boost consumer spending in order to kickstart Britain’s economic recovery”, the paper adds.
Conservative MPs argue that cutting VAT would also “bolster demand in the frail hospitality sector”, which is heavily exposed to social distancing restrictions and “where many young people could lose their jobs”, says the FT.
In a further rumoured move, the Treasury may take a leaf out of China’s book by distributing “vouchers for the public to spend in shops, pubs and restaurants that have been hit hardest by the lockdown”, the London Evening Standard reports.
China handed out vouchers to citizens in April in an effort to reboot its hospitality, retail and leisure sectors.
Sunak is due to deliver his statement at 12:30pm today, immediately after Prime Minister's Questions.