VAT, NICs … what will Rishi Sunak’s summer statement target?

VAT, NICs … what will Rishi Sunak’s summer statement target?

On Wednesday, the chancellor will attempt to shore up Britain’s economic recovery from coronavirus as lockdown controls are lifted across most of England. But Rishi Sunak is facing a delicate balancing act while severe risks to public health remain. Although expectations that this will be a blockbuster summer statement are being downplayed, here are some of the policy changes the chancellor is thought to be considering for this week’s economic update. The government is preparing to scale down the furlough scheme from the end of this month. Currently, the programme funds 80% of employees’ wages but it will end entirely in October after being trimmed from August onwards. As many as 9.3 million jobs have been furloughed at 1.1 million companies, at a cost to the exchequer so far of £25.5bn. Hospitality industry leaders have called for the government to extend support to the sector for longer, while Anneliese Dodds, Labour’s shadow chancellor, has demanded that Sunak ditch a “one-size-fits-all” wind-down of the scheme and provide targeted sectoral support. The Resolution Foundation thinktank has suggested the chancellor use Wednesday’s address to turn the furlough scheme into a job creation programme, which would subsidise the wages of workers in the most heavily affected sectors – such as aviation – until at least the end of next year. However, the Treasury is understood to dislike a sector-specific plan, as it would be difficult to administer and could be seen to favour some industries over others. Sunak has come under pressure to announce ...
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