AoC Alert - Unpacking the Fiscal Statement (08.07.20)

Published: 14 Jul 2020

Chancellor’s Summer Economic Statement

Today, the Chancellor Rishi Sunak set out the plans for the country's economic response to the coronavirus pandemic in a fiscal statement in Parliament. It included a substantial package of measures listing a number of tax and spending initiatives to boost employment, along with a range of employment incentives. He described this as a ‘Jobs Plan’.

The plan for young people and adults aged 16 to 24

There are several big measures as part of a plan for those in the 16 to 24-year-old age group. The Treasury has estimated these as costing a total of £3 billion but spending will depend on take-up:

  • The Kickstart scheme which will involve the government paying the wages (at minimum wage levels) of 16 to 24-year-olds who are on Universal Credit Not many under 21 are eligible and Treasury say the scheme will be targeted on those “deemed” (by their Jobcentre) to be at high risk of long-term unemployment. Employers will be able to register in August 2020 for money to be paid in autumn 2020 and beyond. Funding will be conditional on firms showing the job is new. The employer will also be expected to provide training (but there are no details yet on this). The Treasury budget assumption is £2.1 billion based on 300,000 people being supported at an average cost of £6,500 but the Chancellor said there will be no cap on the number of places.
  • Employers will be paid £1,000 per trainee taken on as part of a plan to treble the number of traineeships from 10,000 to 30,000 as an estimated cost of £100 million. Funding for traineeship places is split between 16-18 and adult education budgets.
  • There is a new plan (not previously announced) to spend £101 million to support 18 and 19-year-olds in further education to take “high value” courses at Level 2 or 3 in a number of sectors. AoC has been arguing for action to help this age group for months but this plan has nothing for living costs and does not extend above Level 3.
  • Employers will be paid £2,000 for each new apprentice aged under 25 and £1,500 for those aged over 25. This scheme builds on the existing employer payment for 16-18 year old apprentices, so comes to £3,000 for them. We understand that this might be from August to the end of January next year.

The Treasury are also allocating £1 billion to the Department for Work and Pensions to double the number of work coaches, to double the Work and Health programme budget (from £100 million to £200 million) and to increase the “intensive support” offered to jobseekers.

The total estimated cost of these new measures in the 2020-1 financial year is £3.7 million (more than half of which goes on the Kickstart scheme). Treasury estimate that more than twice that could be spent on a new £1,000 Job Retention Bonus but that depends on how many of the 9.4 million currently on furlough are re-employed for 3 months in the winter.  The Chancellor has also earmarked more than £10 billion in 2020-1 towards four eye-catching announcements (a 5% VAT rate in hospitality, a stamp duty cut, a green homes grant and an “eat out to help out” scheme). The total estimated bill of the 8 July measures is “up to £30 billion”, taking the combined cost of all the Covid-related fiscal measures (extra spending plus tax cuts) to £270 billion. No wonder Rishi Sunak scores well in the opinion polls. The Office of Budget Responsibility didn’t update its economic forecast today but will be publishing its annual fiscal sustainability report next week.

Even though the measures for 16 to 24-year-olds are small in the grand scheme of things, there are some significant extra sums coming into our system in the next eight months. The government intention is to:

  1. Create a package which builds on existing arrangements to speed implementation
  2. Provide a range of offers so that nobody falls through the cracks
  3. Layer the incentives so that those in most need get the most.

The government is acting in several of the areas suggested in AoC's Rebuild plan but not all of them. There was very little in the statement on adult education or training for those over the age of 25 and there is still no action to assist colleges to support 16 year olds to catch up on lost learning.

It’s important to note that this wasn't a budget or mini-budget. The Chancellor said there will be an Autumn budget and spending review in the autumn, which will be the point where 2021-2 budgets are confirmed. For further analysis on today’s measures click here and David Hughes’ media response is here.

Unpacking the Fiscal Statement: AoC Webinar

We will use the weekly Q&A on Friday this week to give everyone a chance to unpack the Chancellor’s statement and what it means for colleges. Join us at the usual time of 2pm to talk through potential opportunities, concerns and thoughts after a range of announcements for young people and training in today’s economic update. To register please email Sam Ayerst.

Supporting a #SkillsLedRecovery

A jobs plan only succeeds with a skills plan. We’d urge colleges to write to their local MPs to express that and why it matters in your region.  You can find your local MP here.

Tweet your MP, sharing some of our graphics, and use the hashtag #skillsledrecovery. AoC has drafted some tweets below and you can access our latest gif here or a collection of still images here.

  • The average college works with hundreds of local employers. They are the key to delivering @rishisunak’s #PlanForJobs. Properly supported, they can help skill and upskill, train and retrain the nation. #SkillsLedRecovery
  • Any #PlanForJobs needs a plan for skills. That includes putting colleges at the heart of the work, so that they can support individuals and employers to rebuild the economy and our communities. #SkillsLedRecovery @AoC_info
  • Colleges skill and upskill, train and retrain millions of people every day. They are at the heart of every community, working with individuals and businesses. They can deliver @rishisunak’s #PlanForJobs. @AoC_info
  • There were lots of bold announcements by @rishisunak to support people into work. The key is going to be skills, education and training. A #PlanForJobs needs to go hand in hand with a #SkillsLedRecovery. @AoC_info
  • Many adults face redundancy this autumn. They need strong support to be successful in a very different post-pandemic labour market including intensive training, higher level skills, and support to move sector.  #SkillsLedRecovery @AoC_info  

Updated guidance expected - attendance July to September for adult learners

The guidance around reopening to adults between July and September will be published later today. We aim to provide more details on this tomorrow for you.

T Level Update

We have an update from Sue Lovelock, Director of Professional & Technical Education at DfE outlining the latest T Level updates for T Level providers. The letter sets out the T Levels which will be available for delivery from 2022 and 2023. You can read it here.