What the chancellor’s summer economic statement means for beauty businesses
Chancellor Rishi Sunak delivered his summer economic update yesterday (July 8), which outlined the Government’s ambitions to recovery from the economic harm caused by coronavirus and its aims to support and maintain businesses to get back to work. But how does the statement benefit beauty businesses?
Despite good news in terms of the Government helping beauty businesses to take on new trainees and apprenticeships and paying salon and spa owners a bonus for bringing back furloughed employees, many felt underwhelmed by the statement.
One particular concern was that the beauty sector was not included alongside the hospitality and tourism industries to benefit from the VAT cut from the current rate of 20% to 5% for the next six months (from July 8, 2020, to January 12, 2021). Sunak said this move is a £4 billion catalyst which will benefit more than 150,000 businesses that have been hit hard by Covid-19.
Key highlights from the summer economic update for beauty businesses to be aware of include:
- The Government will not be extending the furlough scheme past October 2020. “Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before,” said Sunak.
- A “Job Retention Bonus” will be paid to any employer who brings back an employee who has been on furlough. This amount is per employee, and subject to them being paid a minimum of £520 per month and being employed until January 2021. This would cost the Treasury more than £9bn if every job furloughed is protected, Sunak says.
- To boost apprenticeships, the chancellor committed to paying businesses who hire apprentices a total of £2,000 per young apprentice and £1,500 per apprentice aged 25 and over. This will be in effect for the next six months
- The Government will also pay employers £1,000 to take on trainees and will provide £100 million to create places on Level 2 and 3 courses
- The “Kickstart Scheme” was also unveiled, which will directly pay employers to create new jobs for any 16-to-24-year-old at risk of long-term unemployment. The job must be a minimum of 25 hours per week paid at least the National Minimum Wage with good quality training and support. If these conditions are met, the Government will commit to paying six months of wages plus overheads. The scheme opens next month with a £2bn fund and there is no cap on the number of places available.
Hillary Hall, chief executive of the National Hair and Beauty Federation (NHBF), said: “The Chancellor’s economic update failed to recognise the significant support needed for hairdressers and barbers, as one of the last sectors to open, and the desperate requirements of beauty businesses who are still not yet open. We had also called for a VAT reduction for our industry.”
She added: “This comes as it was revealed earlier this week that local authorities have underspent their allocated Retail, Hospitality and Leisure Grant funding by £1.7bn, a vital fund for businesses in need across the country. We are calling on the Government to act now and redirect this surplus to the retail and hospitality industries, including the hair and beauty sector.”
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