Whilst the South West has so far had relatively little incidence of Covid-19, it is forecast to be financially one of the worst affected parts of the UK. In part this is due to the dependence of the economy on the leisure and hospitality sector, and the makeup of the workforce, with a large number of workers who have been furloughed.
Bristol is also impacted by the reduction in demand for aircraft, with both Rolls Royce and Airbus being significant employers in the city.
Expectations of widespread job losses have prompted Rishi Sunak to look to support the hospitality sector through a discount scheme, a VAT cut, a bonus scheme for retaining previously furloughed workers, as well as a new scheme to support those businesses taking on additional younger workers.
This last measure isn’t just aimed at the hospitality sector but rather applies across the board. Details are still thin on the ground but it does sound good news in terms of incentivising employers to offer jobs for younger workers with the Kickstart Scheme. This will cheer many families throughout the South west who are worried about the prospects for their children and grandchildren. It is also important, as there is a strong body of economic evidence that those who struggle to get a foothold in the job market in a recession suffer lower lifelong earnings as a result.
With 286,000 people in the South West employed in accommodation and food service activities – nearly one in 10 jobs – stimulating demand for holidays and meals out could play an important role in preserving jobs, but much will depend on the number of Covid-19 cases remaining low as consumer confidence recovers.
More details of the package of support for the tourism and hospitality sector can be found in this blog.
Aside from tourism and hospitality, the other sector shown some attention is residential property. The generous (or realistic?) temporary cut in stamp duty land tax for properties costing up to £500,000 will give prospective home buyers a strong incentive to move between now and the end of March. This tax cut will also be available to owners of additional properties, who will only be subject to the 3% surcharge for the time being. Details of how the stamp duty changes will work can be found in this blog.
Alongside support for home insulation and other development activity, the Chancellor is taking a traditional approach of trying to inflate the property market in order to stimulate jobs in related sectors. This will be good news for estate agents, conveyancing solicitors and others involved in property transactions, as well as trades and suppliers involved in property renovation and home improvement. These may be among the businesses Mr Sunak hopes will hire young people through the Kickstart Scheme.
The Chancellor’s push to create so-called green jobs through the Green Homes Grant and investment in improving the energy efficiency of social housing and public buildings could also create opportunities for school and college leavers.
The South West already has a reputation as a hotbed for renewable energy. We may well see entrepreneurs launching new businesses, or existing businesses scaling up, to capitalise on the £2 billion Green Homes Grant fund, in turn creating jobs in fitting insulation as well as call centre roles to match homeowners with installers.
This attention for hospitality and property contrasts sharply with other impacted sectors – notably high street retail and the beauty industry, which remains heavily restricted or unable to open. It seems that these sectors will have to wait a little longer for the Government to make further progress on dealing with the virus before they will be able to operate and benefit from the incentives for employing staff.
There is a fairly confusing range of measures to incentivise bringing staff back from furlough, the aforementioned Kickstart Scheme to support work placements for younger people through wage subsidies, and further support for apprenticeships and training. Eligibility looks complex, with access to the Kickstart Scheme limited to Universal Credit claimants, which could exclude many of the intended target workforce. More details can be found in this blog.
Each of these initiatives might be beneficial, but at this stage it’s hard to judge whether the financial incentives are really large enough to change behaviour by potential employers. More importantly there are very few ideas about where the new jobs might come from: there are no obvious growth sectors beyond insulation and infrastructure construction, which aren’t suited to everyone.
After the unexpected level of innovative spending and economic support announced by the Chancellor during the early stages of the pandemic, today’s announcements were a return to relative normality as the Government tries to find ways to stimulate the economy and protect employment.
For now the focus on sector support and employment protection is welcome, but as with the Government’s spring loan schemes, it will be important to see whether the implementation of complex announcements lives up to the social media soundbites.
Altogether, there is plenty of good news for the South West in the Chancellor’s Plan for Jobs, but the concern is that whilst it helps support the economy across the summer and autumn, we will still be faced with the difficult economic realities as we enter 2021.