“Change course” on Covid economic support, Labour tells government

Anneliese Dodds has warned that the government “needs to change course” on its approach to economic support in the pandemic, or risk seeing an “extra wave of unemployment”.

In an interview with BBC Breakfast this morning, the Shadow Chancellor urged the government to “shift away from that one-size-fits-all approach to removing the scheme and requiring an employer contribution”.

She said that job losses reported recently were linked to the “initial change to the employer contribution”, requiring employers to pay for National Insurance and pension contributions in August.

Commenting on reports from the Office for Budget Responsibility, Dodds said: “They suggested that we could see a reduction of about 1.4 million jobs that are recovered by the job retention scheme.”

She added: “It does seem to be likely that unless we see a shift away from that one-size-fits-all approach to removing the scheme and requiring an employer contribution, that we will see extra waves of unemployment coming through.

“We’ve already seen some over recent days, which appear to be related to the initial change to the employer contribution – covering National Insurance etc… We do think that’s a warning signal that government needs to change course.”

Earlier this week, the Shadow Chancellor warned that the unemployment crisis in the UK caused by the coronavirus pandemic will “get much worse” unless the government takes urgent action now.

Her comments follow the release of a report by the OBR, which outlined three scenarios for the UK. All three show the country experiencing the worst recession in 300 years and a huge increase in borrowing.

Data published on Monday by the Office for National Statistics showed that the country has returned to growth for the first time since the start of the lockdown – but that the growth is much smaller than the ‘v-shaped’ recovery hoped for.

GDP in the UK rose by 1.8% in May, according to the independent statistics authority. While a welcome increase, it follows the record slump of 20.3% in April, and a 6.9% decline in the preceding month.

Data published by the ONS today showed that early indicators for June suggest the number of employees in the UK on payrolls is down around 650,000 compared with the figure in March.

Commenting on this statistical release, Shadow Chief Secretary to the Treasury Bridget Phillipson said: “Every lost job is a personal tragedy now and a hammer blow to public finances in the long run.

“Last week the Chancellor should have targeted support to the sectors worst affected by this terrible crisis. Instead his blanket approach won’t deliver for those who need it most.

“The government still has time to grasp the scale of the challenge and change course. It must act now before it’s too late.”

Labour has repeatedly argued for the government to abandon what the party describes as a “one-size-fits-all” approach to economic support, calling instead for “sector-specific” and targeted intervention.