The Chair of the House of Lords Economic Affairs Committee has
written to the Chancellor of the Exchequer to express his
disappointment at the Treasury’s failure to engage seriously with
the committee’s recent report, Employment and COVID-19: time
for a new deal.
In his letter to The , has
asked him to reconsider the report’s main conclusions and
recommendations.
,
Chair of the Economic Affairs Committee,
said:
“After a lengthy inquiry, our cross-party,
evidence-based report set out a blueprint for a new economic plan
for an investment-led recovery.
“We set out a substantial body of evidence on
the urgent need for the Government to devise a strategy to shift
public spending away from job protection and towards job
creation.
“The Treasury’s response to our report, which
largely contains last year’s recycled policy announcements, does
nothing to allay our fear that the Government is sleepwalking
into an unemployment crisis.”
The letter to the Chancellor is
below.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
The
Chancellor of the
Exchequer
HM Treasury
1 Horse Guards Road
London
SW1A 2HQ
25 February 2021
Dear Rishi,
I am writing in regard to your Department’s response
to our report, Employment and COVID-19: time for a new
deal. I was disappointed that it failed to engage seriously
with many of our main conclusions and
recommendations.
We were concerned that the Government is sleepwalking
into an unemployment crisis. After a lengthy inquiry, our
cross-party, evidence-based report set out a blueprint for a new
economic plan for an investment-led recovery. We set out a
substantial body of evidence on the urgent need for the
Government to devise a strategy to shift public spending away
from job protection and towards job creation. As you know,
unemployment is forecast to rise this year and economic scarring
is expected to persist. It is obvious that wage subsidies will
not be enough to save the prospects of a generation of young
people. They serve only to freeze the labour market and cannot be
relied upon to protect jobs in the long-term.
First, we made proposals on how to revitalise and
join up our muddled training and skills system (a system which
the Financial Secretary to the Treasury described as falling
“some way short of international best practice"). While we made a
range of recommendations on how to improve the Government’s
existing policies, it was clear from evidence that these
programmes would still not be sufficient to meet the scale of the
unemployment challenge. We therefore called for the Government to
combine its improved skills and training policies under the
auspices of a new jobs and skills guarantee, available to every
young person not in full-time education or employment for one
year.
Second, we set out measures to deal with the
substantial debt burden on many businesses. We backed TheCityUK’s
proposal to create a new state entity to manage debt and
repayments. We were concerned that Government-backed loans will
be recovered in the same way as standard commercial loans, so we
called for innovative solutions that would restructure debt to
make it more manageable.
Third, we concluded that the Government needs to
invest strategically to generate demand and to create more job
opportunities. We set out how the Government can harness
investment in a way that creates jobs, while helping to achieve
many of the Government’s most ambitious objectives, including
levelling up left behind regions, repairing Britain’s broken
social care system, and renewing our neglected infrastructure. We
identified two main areas for investment: social infrastructure
(including the critically important social care and childcare
sectors) and sustainable physical infrastructure. We said the
Government should prioritise investment in green projects to
align economic recovery with the Government’s longer-term
objectives on levelling-up and climate change. Investment to
create job opportunities in these sectors is crucial. Such jobs
are suitable for those most at risk of unemployment, can be
rolled out across the country, and are most likely to have
long-term benefits to the UK.
Delivering these three priorities will ensure that
the nation can repair its labour market quickly and sustainably.
However, your Department’s response largely contained recycled
policy announcements made last year, which we scrutinised during
the Committee’s inquiry and analysed in our report.
I look forward to hearing you set out measures in the
Budget on Wednesday. While vaccines will help solve the health
crisis, the economic crisis will continue, and different
solutions are needed. Our recommendations were in line with those
made by the IMF and the OECD, which called for substantial public
investment to repair the damage caused by COVID-19 and to steer
the economic recovery. I urge you to consider our recommendations
again, and to set out how the Treasury is using our report in its
plans for supporting the labour market through the next stage of
the pandemic.
The Committee Clerk will be in touch with your office
to invite you to give evidence on these matters soon. I intend to
place a copy of this letter and your response in the public
domain.
Chairman of the Economic Affairs
Committee
CC , Financial Secretary to the
Treasury
