Taking new steps towards a Net Zero economy

Taking new steps towards a Net Zero economy

BLOG · BY TTF CEO DAVID HOPKINS · 09 July

The Chancellor yesterday announced £30bn in additional spending measures to boost demand, retain jobs, and get young people into employment. This was the second major fiscal response to the COVID-19 crisis and represents a new phase of response from the Government.

It was reaffirmed yesterday that the Coronavirus Job Retention Scheme will come to an end in October. A clear incentive was given to employers to bring furloughed workers back and retain them, with £1,000 bonus for each furloughed worker still in employment come January.

There were some sector specific interventions. While headlines focused on the £300m being spent on 50% discounts, up to the value of £10, for consumers in restaurants and pub meals from Monday to Wednesday in August, the housing and construction markets have been given significant boosts.

A temporary holiday on stamp duty for all property transactions up to a threshold of £500,000 is not to be sniffed at. The last time such a holiday was introduced was 2009, following the Global Financial Crisis, and it did turn out to be an effective measure for boosting transactions in the housing market.

We saw just recently from the HMRC that there were 48,450 UK residential property transactions in May 2020, which, while 16.0% higher than April 2020, is still 49.6% lower than May 2019, and still 6.2% lower than at the lowest point in the financial crisis, which was January 2009.

The benefit of transactions in this market is that they tend to be paired with other forms of activity, with the Institute for Fiscal Studies referencing a study which showed that this cut change to stamp duty has achieved one pound of additional spending for every pound of tax cut.

Reports over the last couple of months since have shown many firms focusing on completing old sites, rather than beginning anew. While not a direct impact, firms will be keeping an eye on how these cuts affect the housing market and may be incentivised to begin new work.

Also, included in the announcement was the funding of £2bn of Green Home Grants, with £5-10k grants for households towards retrofitting properties to be energy efficient. This will also help unlock work for plumbers, builders and tradespeople and their supply chains, including our own members.

It was positive to see such a focus from the Government on helping young people into work through additional funding of apprenticeships for those most at risk during a downturn. However, with the CJRS to come to an end, many other groups will likely find themselves out of a job.

There is still a lot of detail to be seen in how these schemes will be rolled out, and it was positive that the Chancellor made clear that this was not the end of the Government’s response to recovery. However, I expect we are to enter a period of transformation.

The Chancellor was right to say not every job will be saved. But by boosting the economy in the right places, particularly in green industries like retrofit, we will be able to make new meaningful work for many people, and take strong steps to a Net Zero economy.

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