Commenting on the Chancellor’s Summer Economic Update, Professor
Syed Kamall, Academic and Research Director at the Institute of
Economic Affairs said:
"We are in an unprecedented situation and there remains the issue
that many individuals and families are fearful of leaving their
homes to resume every day activities. The Chancellor can only do
so much in terms of measures introduced to get the economy
moving.
"The cut to Stamp Duty is welcome but why isn’t it permanent? It
is a destructive, regressive tax that clogs up the housing market
and limits labour mobility. Making it permanent would get the
property market moving and encourage those who want to downsize
as well as those looking for family houses, freeing up homes for
first-time buyers.
"It is disappointing more was not announced to encourage private
investment in infrastructure – such as reopening old railways or
rezoning to allow homes to be built in places being vacated by
shops, such as high streets."
Commenting on the government’s plan for jobs, Professor Len
Shackleton, Editorial and Research Fellow at the Institute of
Economic Affairs said:
“The Chancellor has likely found a politically popular policy by
offering subsidies for those employing under 25s but we should
not expect too much real benefit.
“Recruitment subsidies have many drawbacks. Workers are taken on
who would have found work anyway, with the taxpayer subsidy
simply boosting the employers' profits. The target group, in this
case the young unemployed, are taken on at the expense of another
group—say, older workers, women returners, or the only slightly
less young, who become unemployed instead. The schemes also
benefit large companies able to take on more subsidised workers
over small and medium sized enterprises who do not benefit as
much and therefore lose out in a competitive environment and have
to shed labour or close their business.
“The real challenge is to deregulate the labour and product
markets on a sustainable basis to encourage job creation over the
longer term, rather than short-term sticking-plaster schemes of
this kind.”
Commenting on the Stamp Duty holiday and hospitality VAT cut,
Jessop, Economics Fellow at
the Institute of Economic Affairs said:
“Most economists agree that Stamp Duty on housing is one of the
worst taxes and any easing of the burden is welcome. But the
Chancellor should go further and extend this into a fundamental
review of all taxes on property, with the aim of simplifying the
system and allowing local authorities to keep a higher proportion
of revenues raised in their area.”
“The Chancellor was right to resist calls for what would only
have been a small across-the-board cut in VAT and instead target
a larger reduction on the leisure and hospitality sector, where
the additional support is most needed. But the ‘Eat Out to Help
Out’ scheme may be a gimmick too far. It is at least market-led,
in that consumers themselves will decide which businesses should
benefit. However, it seems an overly complicated way to deliver a
boost to demand lasting just a few days in August.”
