Treasury considers £500 vouchers for all adults to help Covid-hit high streets

Chancellor Rishi Sunak could hand every adult £500 in vouchers, while children would receive £250, under proposals to help sectors of the economy such as retail and hospitality that have been worst hit by the pandemic. 

The plan has been drawn up by the think tank Resolution Foundation, which has already held talks with the Treasury about its ideas. 

The move would be designed to kick-start a financial recovery by sparking a targeted surge in consumer spending. As a result, the vouchers could not be spent online, but in physical retail stores and hospitality operators such as cafes, restaurants and bars. 

Similar schemes have already been used in countries like China as economies across the globe bounce back from the coronavirus crisis. 

Back in April, the Chinese city of Wuhan, where the coronavirus outbreak is thought to have originated, handed out vouchers worth 500m yuan (£57m) for residents to use in shopping malls, convenience stores, restaurants and sports, cultural and tourist venues such as museums.   

Sunak is poised to deliver a “summer update” on the state of the UK economy on Wednesday and the Treasury has refused to rule out the introduction of a voucher scheme ahead of that address.  

Resolution Foundation said its vouchering idea would cost the government around £30bn, but insisted it would prove more effective than a VAT cut or cash gift to households, both of which are also understood to be under consideration. 

The vouchers would expire after one year and the scheme could also be closed down if there was a second wave of Covid-19. 

Resolution Foundation research director James Smith told The Guardian: “Social distancing has huge implications for firms in sectors like retail, hospitality, tourism and leisure that will last into the 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 to be spent only in these sectors would kick-start demand in the right parts of our economy, boost living standards and deliver targeted support to the businesses that need help the most.”