How the government’s £500 high street voucher would work

A high street voucher scheme to kick start the economy could be in the pipeline as the government seeks ways to shore up towns and cites post Covid-19 lockdown.

The widely reported proposal suggests adults and children could both be given vouchers designed to be used on the high street to help support traders who a beginning to re-open.

Adults could see as much as £500 heading their way, while youngsters could receive £250 worth of vouchers.

Suggested by the Resolution Foundation, the scheme could cost around £30billion but could protect hundreds of thousands of jobs across the country Mirror Money reports.

But whether chancellor Rishi Sunak takes up the scheme is unknown ahead of tomorrow’s (July 8) budget which will be announced in parliament.

If taken up, how could a high street voucher scheme work?

The vouchers would be universal, delivered as coupons or smartcards and activated over 12 months. It would be a one-off, non-refundable £500 – as opposed to several monthly payments. The report said: « The voucher scheme can target the parts of the economy where the problems are – bricks and mortar consumption in shops and restaurants, rather than online sales – and recognises the different impact of the crisis on poor and rich families.

It said the money would be delivered as vouchers, instead of cash, to encourage people to ‘spend not save’.

The report added: « The Foundation notes that cash transfers risk being simply being saved by higher income households, who are already boosting their balance sheets through ’enforced savings.' »

Has it been done before?

Yes, similar versions of the scheme have already been introduced in China, Taiwan and Malta to help rebuild their economies.

In Taiwan, the vouchers can be used to purchase goods and services at retail shops, restaurants, markets, cultural venues, hotels, and rail transport. They cannot be used online or to purchase goods such as cigarettes, stocks, or coupons.

In Malta, residents are being given €100 (£90) in five €20 vouchers to spend at bars, hotels, and restaurants which have suffered from the collapse in global tourism.

The vouchers – which are valid for six months – are being mailed to all residents over the age of 16 and 80% of them have to be spent in the hospitality sector.

How could it work in the UK?

If introduced in the UK, the Resolution Foundations says the vouchers would equate to £500 an adult and £250 a child.

Households would then be given a time limit to spend them – such as 12 months.

They would also have to be spent on the high street – as opposed to online.

In the event of a second outbreak, the vouchers would be deactivated electronically, and reactivated when businesses reopen.

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James Smith, 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.

« Social distancing has huge implications for firms in sectors like retail, hospitality, tourism and leisure that will last into the forthcoming reopening phase. That is why the jobs of so many workers in these sectors are in the firing line. The Chancellor’s recovery package on Wednesday should reflect this unique economic challenge.

« As well as setting out the biggest ever peacetime job support programme, the Chancellor should get Britain spending in places 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. »

The Chancellor will lay out his new measures to try and protect and stimulate the economy tomorrow.