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
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.”