Beneath the upbeat headline announcements from his Budget, Rishi Sunak’s short-termist decisions and inaction spell bad news for unemployed workers trying to re-enter the job market, even as the economy recovers.
The OBR has revised its forecast for unemployment downward, which is welcome news. But 2.2 million workers are still predicted to be out of a job this autumn – and the Chancellor has no real plan for them. While additional billions were rightly poured into job protection in the form of the furlough extension, we heard precious little in the way of new funding for job creation and support to move people into work.
The unemployment peak is due to hit after the furlough scheme wraps up. The Chancellor offered nothing extra to help those at risk of becoming unemployed, and nothing to help those who have already lost their jobs.
Instead, Sunak merely referenced the previously announced Kickstart and Restart schemes. As argued by Yvette Cooper, Kickstart is currently on course to fall a long way short of providing the number of placements needed to prevent a youth unemployment crisis. And the Restart scheme is too narrow in scope to deal with the immediate unemployment challenge, as it targets only the long-term unemployed.
The Budget could have gone much further, by doing three things differently. First, as we recommend in the final report of the Fabian Society’s commission on workers and technology, the government has already promised large capital investment increases – so why not bring them forward, to quickly create good jobs in sectors like energy efficiency retrofitting, social housebuilding and digital infrastructure?
The Treasury’s plans are ‘backloaded’, with the government spending £22.5bn more in the two years up to 2026 than in the next two years. This approach is the wrong way around. More should be spent sooner to stimulate job growth.
Second, we saw a cut in day-to-day public spending. The government should be using public service spending to create new, well-paid jobs in high-demand sectors like education, health and care.
Finally, skills and training. Workers at the sharp end of the Covid-19 crisis need to be equipped to navigate the significant labour market changes created by the pandemic, which has accelerated uptake in new technology that will transform or replace jobs. The Budget showed that either the government does not grasp this, or is disregarding it.
The Chancellor’s skills centrepiece was a paltry increase in the cash incentive for employers to take on new apprentices, and some additional money for traineeships. The government needs to be much more ambitious at a time when entry (or re-entry) to the labour market will be a fragile prospect for so many. The commission on workers and technology recommended that the government funds an unlimited number of apprenticeships during the crisis, covering the costs of training while employers pay wages.
There was also no new money for adult skills provision outside of apprenticeships and traineeships. Funding for retraining and adult education is not an optional extra in the context of the changing labour market – it is an essential. People need support to adapt to the world of work that emerges at the end of the pandemic: a world that will be continually reshaped by new technology.
Our commission recommended that workers have access to free technical qualifications above the current level 3 offer in areas of local employer demand; that they have access to financial support while they learn; and that the government should reverse the short-sighted decision to abolish the Union Learning Fund, which has a track record of engaging workers in education and adding value to the economy.
Most urgently of all, workers on furlough should be provided with free training – via their employers, colleges, and other providers – to ensure that they build their skills and resilience if they have no viable job to return to come October.
The Chancellor had an opportunity with this Budget, to secure a brighter future for workers as the threat of the pandemic recedes. But for those facing unemployment, it was an opportunity missed. Sunak has prioritised short-term posturing over real policy action. Without a course correction, sadly it is workers who will pay the price.