Rishi Sunak, the Chancellor of the Exchequer, today used his so-called mini budget to outline financial support measures for the UK economy. A speculated move many believed the Chancellor would take was gifting Britons £500 each to give businesses a financial helping hand. The plans were originally drawn up by the Resolution Foundation and would see British adults given £500 in vouchers to spend in areas of the economy hardest hit by the crisis.
The thinktank also suggested children could be given £250 worth of vouchers for similar means.
However, it appears the Chancellor ditched these plans for an alternative voucher scheme directed at restaurant business.
He instead focused in on an ‘Eat Out to Help Out’ scheme, a government-backed discount initiative.
Mr Sunak tweeted: “To support restaurants and the people who work in them we’re saying ‘Eat Out to Help Out’.
“So for the month of August we will give you a 50 percent reduction, up to £10 per head, on sit-down meals and non-alcoholic drinks Monday-Wednesday. #PlanForJobs.”
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The original plans involved the vouchers being ring fenced for use in certain sectors, with only “face to face” retail permitted.
It was hoped this would level the playing field between physical retailers, and the online companies which have somewhat benefitted from a lack of high street competition.
The scheme would last for a year, and enable customers to use the vouchers within the sector for a purpose of their choice.
The Resolution Foundation stated the plans were more effective to the economy than a temporary VAT cut, which was, in fact, announced in today’s economic update.
Similar proposals have been implemented elsewhere in the world, to alleviate concerns of a widespread economic downturn.
Taiwan implemented a stimulus voucher scheme which commenced on July 1, enabling citizens to use the scheme until December 2020.
In Wuhan, where the virus is first reported to have originated, Chinese authorities handed out half a billion yuan of vouchers in April to encourage consumer spending.
And the Maltese government handed out vouchers of 100 euros to spend in a variety of locations including bars, hotels and restaurants.
Commenting on the original plans, James Smith, Research Director at the Resolution Foundation, said: “While every part of the economy has been affected by the current crisis, the stand out feature of this recession is that some areas are far more affected than others.
“As well as setting out the biggest ever peacetime job support programs, the Chancellor should get Britain spending in place where it’s needed most.
“A universal ‘High Street Voucher’ scheme – worth £500 per adult and £250 per child – to be spent only in these sectors would kickstart demand in the right parts of our economy, boost living standards, and deliver targeted support to the businesses that need help the most.
“The Chancellor has already shown that big, bold measures like the Job Retention Scheme are welcome and necessary in the current economic climate. He should take this same approach as we enter the crucial recovery phase of the crisis.”
Mr Sunak plans to make further announcements about the UK’s economic recovery in coming months.