The Government needs to shift spending away from wage subsidies
and towards creating new jobs, if it is to prevent a spike in
unemployment next year. It must focus spending on creating job
opportunities for people who are most at risk of unemployment in
sectors which need workers urgently and that are sustainable.
This means creating jobs to repair the UK’s ‘social
infrastructure’, the urgency of which has been exposed during the
COVID-19 pandemic, by increasing the number of social care
workers and investing in the childcare sector. It means
prioritising sustainable infrastructure projects that can be
delivered at scale, quickly, and across the whole of the UK.
The Government should also introduce a new job, skills and
training guarantee, available to every young person not in
full-time education or employment for one year. It should enhance
its existing skills, training and employment support policies,
including the Kickstart and the Restart programmes which need to
be better co-ordinated if they are to be successful.
These are the main conclusions of a new report, ‘Employment and
COVID-19: time for a new deal’, unanimously agreed and published
today by the cross-party House of Lords Economic Affairs
Committee.
,
Chair of the Economic Affairs Committee, said:
“The Government has given the impression that the economic crisis
will be short-lived and everything will be fine by the spring. It
also assumes that the good news on the vaccine means that the
economy and labour market will no longer need support. Both of
these assumptions are wrong.
“The sectors with jobs that historically lead labour market
recoveries – hospitality, retail and leisure – have been
flattened. They are likely to be in a worse state in the spring
when wage support ends. Unemployment will spike.
“The Government is sleepwalking into an unemployment crisis. The
Chancellor needs to get ahead of the curve to avoid being in the
same position as he was in the autumn. He needs a strategy
urgently for what comes next and this report sets out a
comprehensive plan to save the prospects of a generation of young
people.”
The Committee’s other key findings and conclusions include:
- The economic impact of the COVID-19 pandemic, which is the
largest economic shock in 300 years, has not been shared equally.
Many higher paid workers experienced little or no economic
hardship, whereas the youngest and lowest paid workers have
experienced significant damage to their livelihoods and
prospects. The Government needs to recognise this in plans for
the recovery.
- A significant proportion of the debt from the COVID-19 loan
schemes will never be repaid. The Government should create a new
state entity to manage debt and repayments, along the lines of
the UK Recovery Corporation proposed by TheCityUK, and loans
should be converted into more manageable obligations such as
contingent tax liabilities or 'student loan-type' structures.
- The temporary increases to Universal Credit should be made
permanent, including the £20 per week increase to the Standard
Allowance. The Government should also ensure that those on legacy
benefits receive a comparable uplift, review the level of the
benefit cap and increase the generosity of social security for
struggling families.
- The cost of providing adequate sick leave to quarantined
workers is small in comparison to the cost of them not isolating
and spreading the virus further. The Government should raise the
level of statutory sick pay and expand eligibility to the lowest
paid.
