Sunak Slashes VAT; Adds £30 Bn To Fuel Economy


UK’s Chancellor of Exchequer Rishi Sunak on Wednesday announced a £30bn plan to save jobs and fuel country’s corona-battered economy.  Delivering a mini-budget at the parliament, he also announced VAT cuts on hospitality such as food, accommodation and attractions.

The government also unveiled a new bonus programme in which the government will pay firms a £1,000 bonus for every staff member kept on for three months when the furlough scheme ends in October, the BBC reported.

Besides, Sunak also announced a scheme to give 50% off to people dining out in August.

As per reports, the tax cut will apply to eat-in or hot takeaway food and non-alcoholic drinks from restaurants, cafes and pubs, accommodation in hotels, B&Bs, campsites and caravan sites, attractions like cinemas, theme parks and zoos.

According to BBC report, the chancellor rejected calls to extend the furlough scheme beyond October, saying it would give people “false hope” that they will have a job to return to.

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Chancellor of the Exchequer Rishi Sunak

Britain’s economy shrunk by a record 20.4 per cent in April as a result of lockdown measures.

Green Recovery

UK’s 30 billion pound Covid-19 response plan includes an additional three billion pound investments in energy efficiency schemes in 2020-21, taking the overall low carbon investments to about 20 billion pounds.

The new funding means the UK is now planning one of the largest climate-friendly stimulus packages by a single country, with Germany leading on $42 billion.

“Our plan for jobs will not be the last action; it is merely the next in our fight to recover and rebuild after coronavirus. We want to create green jobs. This is going to be a green recovery, with environment at its heart,” Sunak said.

The UK’s flagship green investment is directed towards energy efficiency measures, with 2 billion pounds for private properties, including a 500 million pound grant focused on fuel for homes, and 1 billion pounds for public buildings.

UK properties are among the least-well insulated in Europe, accounting for almost a fifth (19 per cent) of total emissions.

The new measures are intended to support the shift away from coal towards a cleaner energy system, making 650,000 homes more energy efficient and creating 140,000 new green jobs.

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According to a new report from the International Energy Agency (IEA), an uptick in global energy efficiency investments could contribute to nine million jobs every year by 2023.

The UK has already set a coal phase-out target for 2025 and this year, its power grid was coal-free for 67 days, 22 hours and 55 minutes.

Mateo Salazar, Senior Economist, Vivid Economics said: “The announced measures are a positive step by the government, but much more is required to deliver a green recovery.

“Funding for green initiatives makes up only a small proportion of the UK government’s stimulus in response to Covid-19, falling well short of the green stimulus measures announced in Germany and the large package proposed by the EU.”

Martha McPherson, Head of Green Economy and Sustainable Growth, IIPP, Mariana Mazzucato’s institution, which has been advising the UK government, said: “A well-targeted green investment plan can offer a greater multiplier effect than conventional stimulus.

“There are good things in this package – housing insulation and retrofit are badly needed. But Covid-reactive spending promises need to be embedded in a longer-term mission-oriented green transition plan – and this should be a ‘just transition’ that invests in green skills in the workforce, and in new green jobs which are high-quality, additional, and geographically well-distributed across the UK.”

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Added Luke Murphy, Head of the Environmental Justice Commission, IPPR: “We know that buildings make up a significant contribution to our carbon emissions and this investment to upgrade public buildings, provide vouchers to homeowners to retrofit their homes and the small pot for social housing is really welcome.

“However, if this is the sum total of the government’s ambition then it is short of what is needed to reduce emissions from buildings as well as more broadly for job creation and to get the UK on track for net zero.

“The government should build on this announcement and commit to a multi-year programme of energy efficiency and low-carbon heat that covers all tenures, extending the current scheme to cover rented housing as well.”

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