Su­nak dishes up plan to save 2m jobs

Chan­cel­lor un­veils £30bn spend­ing spree, in­clud­ing bonus for firms that do not sack fur­loughed staff and a £10 sub­sidy for eat­ing out ‘Even with these mea­sures, we will al­most cer­tainly see un­em­ploy­ment ris­ing above 3m in the com­ing year’ ‘It sig­ni­fies

The Daily Telegraph - Business - - Front Page - By Tim Wal­lace and Rus­sell Lynch

UP TO two mil­lion jobs could be saved af­ter Rishi Su­nak un­veiled a £30bn spend­ing spree – but Bri­tain is still fac­ing mass un­em­ploy­ment, econ­o­mists have warned.

Swathes of work­ers are likely to be pro­tected by new poli­cies in­clud­ing a bonus for firms that do not sack fur­loughed work­ers, a mas­sive stamp duty cut and a £10 sub­sidy for restau­rant meals.

But although the schemes should help to spark life in Bri­tain’s flatlin­ing econ­omy, ex­perts said there are still mass lay­offs ahead.

The In­sti­tute for Em­ploy­ment Stud­ies (IES) said the pro­pos­als are “a how-to kit for deal­ing with con­se­quences of a big re­ces­sion”, par­tic­u­larly prais­ing a scheme where firms are paid £1,000 for ev­ery worker who they bring back into a se­cure job when the tax­payer-funded fur­lough scheme ends. How­ever, it said: “Even with these an­nounce­ments, we will al­most cer­tainly see un­em­ploy­ment ris­ing above 3m in the com­ing year to lev­els we have not seen since the Eight­ies.

“But with today’s mea­sures there is a good chance that we can avoid it reach­ing the 4m or 5m that many of us had feared.”

Other mea­sures un­veiled in­clude a £2bn sub­sidy scheme called Kick­start, which will cover part of the wages for six months for newly hired work­ers un­der 24. Other sup­port is be­ing of­fered for hir­ing trainees and ap­pren­tices as min­is­ters fight to pre­vent a gen­er­a­tion from dis­as­ter.

Mr Su­nak said: “Our plan has a clear goal: to pro­tect, sup­port and cre­ate jobs. It will give busi­nesses the con­fi­dence to re­tain and hire. To cre­ate jobs in ev­ery part of our coun­try. To give young peo­ple a bet­ter start. To give peo­ple everywhere the op­por­tu­nity of a fresh start.”

Busi­ness groups wel­comed the ac­tion but warned that even more will be needed to pre­vent a melt­down in com­ing months. Adam Mar­shall, di­rec­tor gen­eral of the Bri­tish Cham­bers of Com­merce, said: “Busi­nesses will cel­e­brate many of the Chan­cel­lor’s an­nounce­ments today, although it is likely that the scale of the stim­u­lus needed to help the UK econ­omy restart, re­build and re­new will need to be greater still over the com­ing months.”

The fur­lough scheme sub­sidised up to 9.4m jobs at the height of the cri­sis but will come to an end in Oc­to­ber. It is feared there may be huge job cuts when sup­port is with­drawn. The £1,000 bonus on of­fer ap­plies if firms bring work­ers back off fur­lough and keep them on un­til at least Jan­uary.

Chris Sanger, head of tax at con­sul­tant EY, said that this only amounts to £333 a month per em­ployee, far be­low the £2,500 of sup­port that is cur­rently of­fered by the fur­lough scheme.

He said: “It is a much smaller amount. It sig­ni­fies the Trea­sury mov­ing from look­ing to sup­port busi­nesses to look­ing to stim­u­late the econ­omy. It does not seem to be enough to dampen the hit of the fur­lough ‘cold tur­key’ come the end of Oc­to­ber.” The spend­ing spree takes sup­port mea­sures since March to al­most £190bn, spark­ing fears over longert­erm prob­lems as the na­tional debt ramps up.

Carl Em­mer­son, at the In­sti­tute for

Fis­cal Stud­ies, said that the deficit this year will be eas­ily its high­est level as a share of GDP since the Sec­ond World War.

He added: “This ad­di­tional bor­row­ing is all cur­rently be­ing bor­rowed at very low in­ter­est rates. What mat­ters more for the pub­lic fi­nances will be the ex­tent to which the econ­omy man­ages to bounce back strongly.

“If – as is likely – the econ­omy does not fully re­cover, then fu­ture fis­cal events are likely to in­volve a less pleas­ant set of an­nounce­ments over the ex­tent to which taxes need to rise to restore the health of the pub­lic fi­nances.”

Mr Su­nak also an­nounced that the thresh­old for pay­ing stamp duty will be raised up to £500,000 un­til March, sav­ing home buy­ers up to £15,000.

Emma-Lou Mont­gomery, of fund man­ager Fidelity In­ter­na­tional, said: “The big ques­tion is whether this will be enough to get the mar­ket mov­ing.

“A lack of con­sumer con­fi­dence is likely to be the big­gest chal­lenge for the Gov­ern­ment.”

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