Reactions to the Chancellor’s statement

Labour Hub surveys reactions from around the movement to Rishi Sunak’s latest measures

Far more needed to protect the UK against mass unemployment

Geoff Tily, Senior Economist, TUC

There was no mention anywhere in this statement of the crisis in retail, an industry on its knees with hundreds of thousands of jobs already gone and many more losses to come in the period ahead. ..

Research for the TUC shows that an £85bn investment in green infrastructure could help create 1.24 million jobs in the next two years. There are over 100,000 vacancies in social care, and 100,000 more in the NHS. There have been 100,000 redundancies in the past decade in local government. But public services got nothing from today’s statement.

The TUC have calculated that to match Roosevelt’s New Deal would mean a total of £450 billion spending over the next five years. In spite of all the fanfare, the chancellor announced just £3 billion for greening homes and public buildings on top of the prime minister’s so called ‘new deal’ package of only £5 bn.

And the gaping holes in too many families’ budgets will remain unfilled. There was no action on the UK’s incredibly low level of sick pay, which leaves those who have to self-isolate facing huge falls in income. Nothing about the inadequate amounts of universal credit – or the five week wait to receive it. No pay rise for key workers. ”Up to £10 off” in restaurants won’t mean much to those who have been driven to food banks or only have a few pounds to feed their family a day.

Today, Britain should have had a back-to-work Budget” 

Anneliese Dodds, Shadow Chancellor

Research reported this week in the Telegraph indicates that British workers have already been the biggest casualty in the global jobs cut. It showed that while jobs markets in many other countries have already fully recovered, in Britain it could take comparatively much, much longer for vacancy levels to return to normal. The levels of unemployment this country has seen in the past were not just an economic waste, they ruined lives. We’re seeing the same impacts again- the same devastated high streets and communities robbed of their pride and purpose…

Supporting businesses that are viable in the long run, but which are currently starved of cashflow, is not a matter of ‘picking winners’. It’s about protecting our country’s economic capacity for the future.

Failure to do so – to make the job retention and self-employed schemes more targeted and focused, and to support viable businesses – is driving up unemployment in this country. The claimant count is on course to top three million in June – the highest number since the previous record in 1986. This is the Chancellor’s record, and one which cannot, and must not, be worsened.

Budget spending is insufficient and inconsistent

Prem Sikka, Professor of Accounting at University of Sheffield and Emeritus Professor of Accounting at University of Essex

It’s just too small. At the end of 2019, the UK gross domestic output (GDP) was estimated to be about £2,210bn. So the government’s job creation package of £30bn is just 1.3% of GDP.

Many sectors which need it are not helped. There’s nothing extra for local authorities who are trying to restructure town centres, modify schools, provide local services and retain jobs.

And there are no wage rises for public sector workers to bring them up to the level of their wages in 2010 and stimulate the economy.

And the Chancellor did not help the nearly three million freelance and self-employed workers who have been unable to claim on the Government’s previously announced support schemes due to various restrictions.

The higher education sector was also left out. It is teetering and 13 universities could go bankrupt leading to loss of jobs, exports and contributions to the local economies…

Employers will receive a bonus of £1,000 per employee for bringing back staff who were furloughed and remain employed through to January 2021.

This measure could cost £9bn and is manna from heaven for employers who were going to bring back staff anyway. In the absence of long-term stringent conditions, some employers may bring back staff and then fire them in January.

Chancellor could have put this country on a new economic course

Faiza Shaheen, Director of CLASS

Given the scale of the economic downturn, Rishi Sunak was extremely timid in his use of fiscal stabilisers and job investment programmes. While a recent TUC paper spoke about an £85bn government green investment programme to create 1.24 million long-term and well-paying jobs, the Chancellor spoke about six-month minimum waged placements for young people and £3bn on greening homes and buildings. Young people will not look back kindly on a government that had a clear mandate and opportunity to transform Britain for the better but didn’t.

The cancelling of the stamp duty for homes up to £500k was another signal that this government intends a return to the same old normal. Interventions like this will continue to stoke an already unaffordable housing market. Instead of cutting stamp duty that disproportionately benefits the top end of the housing market, we need to be building green and affordable homes implementing rent controls.

The hospitality sector is indeed in need of support, but the £10 voucher scheme for use Monday to Wednesday was both weak in monetary terms and dangerous from a public health perspective.

Permanently Perpetuating Polarisation

Phil Burton-Cartledge, Lecturer in sociology at the University of Derby

On furlough, employers are in line to receive £1,000 for every member of staff who comes off furlough and remains on the payroll come February. At £9bn budgeted for the scheme, even the dogs in the street can see the problems with this. As a job protection measure, it’s useless. If an employer thinks laying off staff is going to make “efficiencies” then a thousand quid sweetener will not compensate for the salary saving. What it will do is provide a bung, albeit a fairly paltry one, to bigger business and large organisations planning on bringing back furloughed workers anyway. ..

The Tories’ youth employment initiative is even more of a joke. Talking about “good quality jobs” without cracking a smirk, Sunak announced a £2bn fund from which employers receive £1,000 to £2,000 bungs for “trainees”, who in turn will have their minimum wage salary paid by the government. The higher payment comes into play if they are taken on for six months. If it sounds like a temporary fix to fiddle the jobless figures it probably is… Even now, in the midst of the greatest implosion of the global economy since the 1930s, the Tories still believe it’s the wrong approach to job-seeking, not lack of vacancies that causes unemployment…

There was nothing for renters, nothing for those stuck on social security for the foreseeable, nothing for equipping workers for the future, nothing for underemployment, nothing for social care, and nothing for the mental health epidemic… It perpetuates political polarisation – something the Tories have, of course, done well out of.

Misjudging the Scale of the Crisis

Grace Blakeley, economics and politics commentator and staff writer at Tribune

The promises on home insulation are equally uninspiring. £3 billion is not nearly enough cash to combat the climate emergency – it is barely enough to cover the costs of retrofitting existing homes. Environmental think tank E3G suggests that at least £18 billion is needed to retrofit all existing buildings in line with the government’s 2050 net zero target. Just contrast the UK’s £3 billion pledge with Germany’s £36 billion green recovery package.

Wishing for a V-shape

Michael Roberts, Marxist economist

The measures are designed to get people back to work and for businesses to resume as before.  So all this funding is just temporary.  It all runs out at the end of January, by which time the government hopes the COVID virus and the lockdowns will just be a bad nightmare and everybody can wake up to a new bright 2021.

But none of the measures can have any lasting impact on achieving sustained recovery. They are mainly directed to persuade employers in leisure industries with nothing for other sectors.  And they rely on private businesses to make decisions about re-employing their laid off workers.  There is no state jobs project and a limited investment programme. The Job Retention Bonus hardly meets the average wage costs of employers.

Tony Wilson, director of the Institute for Employment Studies, said the value of the kickstart subsidy was a third lower than that offered under the Future Jobs Fund introduced by Gordon Brown’s Labour government after the 2008 financial crisis, but was intended to create four times as many jobs….

Then there is the grotesque decision to raise the stamp duty threshold on house purchases.  The Chancellor, who apparently owns seven luxury homes, will be a beneficiary, along with buy to let landlords.  But the average first-time buyer already pays no stamp duty in all regions and nations except London and therefore won’t benefit.  And anyway, why is the government trying to boost house prices in this crisis?  Indeed, the huge loss of tax on this could have been better used to build new affordable homes, given the dire shortage of good housing in Britain.

Economic gloom will have increased

Richard Murphy , Tax justice campaigner. Professor of International Political Economy, City, University of London

First, never before has so little been held back for the announcement to the Commons…  Second, what is staggering is how small the sums involved are. It appears that we have £9 billion extra for what looks like a furlough extension to January; just £1 billion for the unemployed; a subsidy for house prices via stamp duty, £3 billion for green schemes (but that already had been announced in March and if anything seems to have shrunk since then), £4 billion of VAT subsidy for tourism and some small sum for a cheap outing out in August.

Third, it seems that once again Sunak has massively underestimated the scale of the issue he is facing. The scale of this is just so small – and even naive.

Pace of action would decarbonise UK homes by 2100

Mika Minio-Paluello, Energy Economist with Transition Economics

The green components fail to scratch the surface of the necessary climate action, exacerbate inequality, and don’t deliver the scale of job creation needed to achieve recovery. At this rate of change, it would take 80 years to retrofit all UK homes – and the majority would still be leaky. The programme will give homes a couple of new windows, rather than the whole-house retrofits needed to hit net zero.

The Chancellor’s primary green announcement focused on decarbonising buildings – where the UK has been struggling to reduce carbon emissions. He committed £1 billion for public buildings, and £2 billion to retrofit and insulate domestic homes. The latter will come as vouchers for home-owners to insulate lofts, install double glazing, and replace old boilers.

The government claim this will lead to 600,000 homes receiving energy efficiency upgrades. At that rate, it will be 2060 before all UK homes receive an upgrade.

To make matters worse – our analysis shows the government is planning for an average grant of £3,300 per home. As some homes will be contributing part of the cost, that means an actual investment of £4,200 per home. But upgrading UK homes to EPC level C will cost more like £10,000 per home (and that’s not enough to hit net zero.). So these homes receiving the ‘Green Homes Grant’ will still need an additional retrofit in the next decade.

Government policy is responsible for the decimation of jobs

Tom O’Leary, socialist economist

The enormous loss of jobs in recent weeks will not be halted by the miserable ‘summer statement’ announced by the government.  In fact, the flow of job losses is a direct result of government policy itself, in particular how it is ending the furlough scheme…

The jobs furlough scheme is being phased out with employers having to meet 20% of pay for retained workers from August.  The scheme will end entirely in October…The reason for the wave off announced job losses now is because of statutory requirements to consult with the workforce about job losses…

The package is best characterised as a series of small subsidies to businesses.  Yet many of these consumer businesses will continue to fail because the government has failed to get the virus under control.  School attendance, footfall in shops and even pub going remain massively below where they would normally be because the majority of the population is right to remain extremely wary of a return to normal.  Paradoxically, in putting profits first at every stage rather than public health, the government has deepened and prolonged the economic crisis.