Beyond COvid: The Digest

Winter Economy Plan

September 28, 2020
SUMMARY
  • Winter Economic Plan: It's a meaty In Focus section this week, as we analyse the response to the Government's Winter Economic Plan.
  • Avoiding mass unemployment: Our panel discussion with TUC Gen Sec Frances O'Grady, RSA's Matthew Taylor and PIRC's Alice Martin on job creation after Covid-19 is now online. Watch here.
  • Read our In Brief and Reflections sections for the latest research and analysis around economic recovery and reform Beyond Covid.
  • To get in touch with feedback or suggestions for next week's Digest, contact Michael on michael@beyond-covid.org.

In Focus: Winter Economy Plan

  • The Chancellor’s Winter Economy Plan (WEP), announced last Thursday, won the “qualified support” of both the CBI and the TUC, following warnings from both organisations over the dangers of ending the Government’s furlough scheme without a successor.
  • Nevertheless, many fear that the Government’s measures will not do enough to prevent economic pain. The main criticisms are:
  • ~~Unemployment: That they will not do enough to prevent major job losses.
  • ~~Wellbeing: That living standards will fall significantly in the absence of a robust social safety net.
  • ~~‘Viable’ jobs? There is not enough justification for letting people in ‘unviable’ jobs go unemployed without additional support.
  • UNEMPLOYMENT. Economists predict that, despite the Government’s WEP, over 1 million more workers will lose their jobs by the end of the year - on top of the 700,000 employees who came off payroll between March and August this year.
  • ~~Too little, too late? IPPR Director Carys Roberts has argued that “waiting until the final hour” to respond to repeated warnings over the looming unemployment crisis will have “cost thousands of jobs”. Furthermore, the Chancellor's announcement came after the deadline for redundancy notice had already passed.
  • ~~“Avoidable design flaws”. Resolution Foundation Director Torsten Bell has highlighted that the WEP's Job Support Scheme (JSS) makes it 33% cheaper for companies to keep 1 full-time employee compared to 2 part-timers, undermining the scheme's purpose.
  • ~~Unequal impact. While the costs of hiring and firing and the Job Retention Bonus - itself criticised for creating another 'unemployment cliff edge' in January - somewhat mitigate this effect for higher-paid employees, those in lower paid and insecure work are more likely to be in the firing line.
  • ~~Too costly. The FT's Sarah O'Connor has pointed out that, unlike the German scheme it is supposedly modelled on, the JSS asks employers to make extra contributions - paying 55% wages for 33% hours worked. The Director of the Institute for Employment Studies has said that current Treasury projections of employer takeup are "inconceivable".
  • ~~Alternative approaches. Think tanks IPPR and Autonomy have both outlined alternative unemployment strategies based on reduction of working hours: the Coronavirus Work-Sharing Scheme and the Shorter Working Time Subsidy Scheme.
  • WELLBEING. With unemployment set to spike, many fear a significant fall in living standards.
  • ~~Social security. The Women's Budget Group has argued that urgent welfare reforms are needed to secure people's livelihoods and control the spread of the pandemic, including bolstering Universal Credit and Child Benefit, lifting the "No Recourse to Public Funds" condition and increasing access to and generosity of Statutory Sick Pay. Read their recommendations here.
  • ~~~See also: a New Economics Foundation briefing on the need to make Universal Credit 'fit-for-coronavirus'.
  • ~~Support for self-employed. The Government's support for the self-employed is "much lower" than before and hundreds of thousands of self-employed people are still ineligible for support, and has been called "woefully inadequate" by the Association of Independent Professionals and the Self-Employed.
  • ~~Cuts on the horizon. The Government is still planning to cut Universal Credit and Tax Credits in March, which would reduce incomes in the poorest households by over £700 per year.
  • 'VIABLE' JOBS? The Government has maintained it is necessary to 'wean' the economy off the furlough scheme, and its replacement is intended to protect 'viable' jobs.
  • ~~Whose jobs are 'unviable'? Representatives of industries most affected by lockdown measures - e.g. music venues - have argued that without tailored support, these sectors face irreparable demise despite long-term viability.
  • ~~Where are the viable jobs? Many have pointed out that the Government would need job creation plans to allow people to move to 'viable' jobs - e.g. IPPR's Carsten Jung has argued that "investment into new jobs in future-proof sectors is still only about a tenth of what is needed".
Watch our latest webinar: As a 'second wave' looms, General Secretary of the TUC, Frances O'Grady, the RSA's Matthew Taylor and PIRC's Alice Martin dissect how we can avoid mass unemployment in our recovery from Covid-19.

In brief

  • "Platforming Equality". Think tank Autonomy released a collection of papers on the challenges that the digital economy poses to policymakers, activists and researchers invested in equality.
  • Greening bailouts. Positive Money and ClientEarth gave evidence to the House of Commons’ Environmental Audit Committee on whether sustainability conditions can be attached to COVID bailouts. Watch here.
  • Levelling up? Last week's updated Greater Manchester Independent Prosperity Review warned that the pandemic would widen the North-South economic divide without urgent intervention and impressed the need for investment in social infrastructure.
  • See also: New analysis from NEF shows how the economic fallout from Covid-19 is likely to significantly increase regional inequalities.
  • China’s net zero target. Ector Pollitt, head of modelling at Cambridge Econometrics, writes for Carbon Brief, explaining how China’s pledge to achieve carbon neutrality before 2060 could cut global warming by 0.25C and raise the country's GDP
  • Commission on a Gender-Equal Economy. This Wednesday (10am-11.30am BST), the Women’s Budget Group is organising a webinar to launch its Commission's final report on a "caring economy".

Reflections

  • 2020s neoliberalism. Out-and-proud neoliberal Sam Bowman, Director of Competition Policy at the International Centre for Law & Economics, has written a "neoliberal agenda for the 2020s" including carbon taxation and support for immigration.
  • Childcare as a ‘Universal Basic Service’. Sophie McBain wrote for the New Statesman on the history of childcare in the UK, proposing childcare ‘as a Universal Basic Service’ for a more sustainable and accessible care provision.
  • Reforming the tax system. Autonomy organised a webinar on ‘Labour, Tax and Covid-19: can we create a fairer tax system?
  • Still not ‘the great leveller’. Michael Goodier wrote for the New Statesman on how the same groups are being hit hardest by the second wave of Covid-19: care home outbreaks are increasing again, deprivation is still linked to Covid-19 and ethnic minorities are disproportionately becoming seriously ill.
  • Finnish resilience. Richard Milne wrote for the FT on the importance Finland places on resilience and preparedness, which has allowed it to attain one of the lowest Covid-19 infection rates in Europe while keeping its economy relatively buoyant.

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