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Today is the day that many businesses on our high streets have dreaded – the due date for the next quarterly rent. This is felt most acutely by those businesses that make up the backbone and character of many local communities but remain closed, such as pubs, hairdressers and restaurants.
Even much-loved businesses whose customers are eagerly anticipating their return cannot escape economic reality. Without money coming in, they fear debt could rapidly become unsustainable. It is critical they are given confidence this will not be the case, otherwise much greater unemployment will ensue. It makes no sense that, from July, the chancellor has decided that these businesses must pay increased contributions to furloughed staff, with no alternative support in place. This will simply lead to more people losing their jobs – and much of the good work done by furlough will have been undone.
A different approach is needed. That is why Labour is calling for a back-to-work budget in early July, one which focuses on jobs above all else.
First, the government needs to acknowledge the risk of additional unemployment, and act to prevent the situation worsening. We already know that people who go through spells of unemployment when young can earn between 13-21% less, 20 years later. The cost of widespread unemployment to the public purse is considerable. Mass unemployment is like an invasive perennial – once it has taken hold, it can take years to fix. Better to prevent it ever taking root.
The government’s one-size-fits-all approach to support schemes makes no sense – it treats industries that can open today and industries that can’t exactly the same. The chancellor refuses to publish any modelling on the impact of this approach on unemployment. Yet failing to change course will inevitably lead to more people out of work.
A self-employed hairdresser, for example, or worker in hospitality, will be very unlikely to see the business they work in return to full capacity in the near or even medium term. We have repeatedly urged the chancellor to adopt a sectoral approach to economic support. This should include introducing the employer contribution at a slower rate for those sectors that have been hardest hit – not least because the promised sector deals are still yet to materialise.
We have also seen next to no action to encourage young people to stay in education and training, even though the evidence shows this is an effective way to keep them out of the pool of unemployed people.
Secondly, given the already disturbing level of unemployment, the government must act now to put in place the support needed for people to be able to get back into work. We need tailored support for groups with specific challenges such as young people, older people and disabled workers – and an early-warning system for major employers planning redundancies.
The government should also be using the localised data and knowledge it has from the furlough and self-employed schemes so that the response isn’t just dreamt up in an office in Westminster, but works right across the UK. Labour-run local authorities and metro mayors are already working on plans to provide this kind of support, especially for young people. So far, the government has lagged far behind.
Finally, the government needs to provide confidence and support to employers to create new jobs. A well-designed apprenticeship guarantee policy, while welcome, would not be enough – it would miss out almost half a million young people, who would not currently be in line to participate.
Instead, we need a detailed stimulus, focused on measures leading to sustainable employment, and targeted schemes like the Future Jobs Fund put in place by the last Labour government, to support the unemployed back into work. Moving back the stimulus means that even if individuals get the help they need, not enough will have been done to stimulate demand and create new jobs.
The UK lags behind other nations here, with the German package focused on promoting the environmentally friendly, work-rich industries of the future. Just announcing a handful of prestige projects, especially if they are not tied to the promotion of employment and skills, would be a lost opportunity.
The UK government was too slow to get PPE to hospitals and care homes and too slow to put in place its test, track and trace system – which was once billed as “world-beating” but currently looks barely fit for purpose.
We cannot afford for the government to be asleep at the wheel when red lights are flashing on the economy’s dashboard. Labour supported the creation of the furlough and self-employed support schemes – indeed, we called for them. Nobody thinks they should last longer than necessary. But a poorly designed winding down would be a disaster for business and a disaster for jobs. The government can no longer ignore the warning signs. It must act to save jobs.