'Bleak day for Britain's workers'

Chancellor Rishi Sunak fails to support hardest hit sectors or extend furlough scheme

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In his much anticipated ‘summer economic update’ speech today (July 8) chancellor Rishi Sunak left the millions of people worried about their jobs sorely disappointed after announcing a series of half-measures, and signaling a refusal to extend or modify the furlough scheme beyond October.

The chancellor also failed to answer Unite’s repeated calls to offer robust sector-specific support packages to the industries hardest hit by the coronavirus pandemic, such as aviation, aerospace and hospitality.

He also failed to offer any lifeline to low-paid workers, many of whom only qualify for statutory sick pay (SSP) and so must choose between their livelihoods or their and their family’s health when they fall sick and are asked to self-isolate.

No JRS extension

Sunak categorically said the government would not extend or adapt the jobs retention scheme (JRS), which has helped more than 9m people with wage support, beyond the end of October, noting, “Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before,” while also admitting the end of the scheme would be “a difficult moment”.

This is despite the fact that many countries, including France and Germany, intend to continue their version of their jobs retention schemes through at least 2021 to give companies time to allow demand to pick up again.

Sunak said the JRS would be replaced by what he called a ‘jobs retention bonus’, where employers would be paid £1,000 for every furloughed worker that they retain until at least January. If every employer signs up each of their furloughed workers to the new scheme, this will amount to a £9bn government spending programme.

But critics have pointed out that this is nowhere near enough to stop what will inevitably be a wave of job losses later in the year and next, with employers free to make staff redundant in January and still receive the government bonus.

Job creation schemes

Another big announcement in the chancellor’s speech was the unveiling of a ‘kickstart’ job creation scheme for young people, where for six months, the government will cover the wages of new employees aged 16 to 24 who are at risk of long-term unemployment. Sunak said that there would be an initial pot of £2bn made available for this scheme to support the creation of what he said would be hundreds of thousands of jobs, and that there would be no limit on the number of places available.

He added that the jobs must be at least 25 hours a week and the government would cover wages up to the national minimum wage for six months. While many welcomed the attempt to help young people, who are among the hardest hit economically by the pandemic, critics highlighted that with the minimum wage for under-25s not being a livable wage, and government funding covering wages for these new jobs for only six months, the scheme would be only so much sticking plaster that will not help young people in the long-term.

Noting that he ‘believes in the nobility of work’, Sunak announced several other measures intended to create or support jobs, including more funding for apprenticeships and traineeships, a £3bn fund to create ‘green’ jobs and decarbonise homes, and more investment in Department of Work and Pensions (DWP) work coaches to help people out of work get back into employment.

Support for the already well-off

Other headline measures the chancellor announced included a VAT cut to help the hospitality sector, with VAT being reduced from 20 per cent to 5 per cent on food, accommodation and attractions until January 2021. Restaurants and their patrons will also benefit from a temporary discount scheme – called eat out to help out – where meals eaten at any participating businesses Monday through Wednesday in August will be 50 per cent off up to a maximum discount of £10 per head including children.

Sunak went on to announce a cut on stamp duty to bolster the housing market, with the threshold for stamp duty rising from £125,000 to £500,000  until March 2021, a move that critics have said will only benefit the already well-off and housing developers. Meanwhile, there was no support offered in Sunak’s speech for millions of private renters – in the same week that an analysis from housing charity Shelter found about a quarter of a million renters could lose their homes next month after falling into rent arrears amid the pandemic.

‘Failed test’

Reacting to the chancellor’s statement, Unite general secretary Len McCluskey said, “No gimmicks, no spin – people wanted serious action today to protect their jobs and incomes and on a scale up to the enormous test before our country.  

“Redundancy notices are already flying around like confetti so today was the day we needed the Chancellor to put a stop to this with policies as bold and as necessary as the jobs retention scheme,” he added. “This statement failed that test.  With no modification to the JRS, that dreaded October cliff-edge for businesses and workers has now been set in stone.  Our fear is that the summer jobs loss tsunami we have been pleading with the government to avoid will now surely only gather pace.

“This was a statement by a Chancellor preparing for mass unemployment because he knows that his promised new jobs are a long way off,” McCluskey went on to say.

“The jobs retention bonus barely touches the sides of what needs to be done to support our strategic industries, who are looking enviously across the Channel at governments giving up to two years’ support to help businesses and workers get back on their feet. 

“Where was the long-term and creative approach urgently needed to protect the jobs of Britain’s workers – such as short-time working – while we build back demand?

Turning to stamp duty, McCluskey noted, “A cut in stamp duty may well please the better off with little to fear from this crisis, but it is of no use to the tens of thousands of workers who have lost their jobs in recent weeks and the millions more we fear could follow them.

“The task of rebuilding our way out of this crisis should have begun in earnest today.  Working people should have been able to breathe more easily, knowing that their government was determined to stand beside them, protecting their jobs.  This did not happen.  Today could well prove to be a bleak day for Britain’s workers.” 

By Hajera Blagg

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