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Chancellor Rishi Sunak is to cut VAT on hospitality as part of a £30bn plan to prevent mass unemployment as the economy is hit by coronavirus.

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

And Mr Sunak announced a scheme to give 50% off to people dining out in August.

The chancellor warned “hardship lies ahead”, but vowed no-one will be left “without hope,” in a statement to MPs.

He 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.

But he said he would “never accept unemployment as an inevitable outcome” of the pandemic.

Details of how the package will be paid for – through borrowing and possible tax rises – are likely to be unveiled in the chancellor’s Autumn Budget.

‘Decent work’

The “job retention bonus” could cost as much as £9.4bn if every furloughed worker is brought back.

Explaining how it will work, the chancellor said: “If you’re an employer and you bring back someone who was furloughed – and continuously employ them through to January – we’ll pay you a £1,000 bonus per employee.

“It’s vital people aren’t just returning for the sake of it – they need to be doing decent work.

“So for businesses to get the bonus, the employee must be paid at least £520 on average, in each month from November to the end of January – the equivalent of the lower earnings limit in National Insurance.”

He told MPs he will cut VAT on food, accommodation and attractions from 20% to 5% from next Wednesday.

This 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.

Rishi Sunak said this “£4bn catalyst” would help protect “over 2.4 million jobs”.

Mr Sunak also announced an “Eat Out to Help Out” discount, which he said would help protect 1.8 million jobs, at cost of £0.5bn.

Meals eaten at any participating business, Monday to Wednesday, will be 50% off in August, up to a maximum discount of £10 per head for everyone, including children.

Businesses will need to register, and can do so through a website, which will open next Monday.

Stamp duty holiday

The chancellor also announced a £2.1bn “kickstart scheme” to create more jobs for young people.

The fund will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment.

Mr Sunak also announced a temporary stamp duty holiday, costing £3.8bn, to stimulate the property market.

This would exempt the first £500,000 of all property sales from the tax.

The chancellor outlined a number of other measures in the build-up to his statement, including:

Labour’s Shadow Chancellor Annaliese Dodds said the chancellor should keep the furlough scheme going in certain sectors.

Record unemployment

She told MPs: “We need a strategy for the scheme to become more flexible so it can support those businesses forced to close again because of additional localised lockdowns.

“There is still time to avoid additional floods of redundancy notices. It is the government’s duty to help Britain through this.”

She said the unemployed “claimant count” was on course to top three million people in June, “the highest number since the previous record in 1986”.

Some 9.3 million workers are having 80% of their salaries paid for by the government – up to £2,500 a month – under the furlough scheme, which was originally due to end in July, before being extended to October, with employer contributions.

From August, employers must pay National Insurance and pension contributions, then 10% of pay from September, rising to 20% in October.

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