Charlotte Pickles: Ten million people are at risk of becoming unemployed. They must be Sunak’s priority this week.

5 Jul

Charlotte Pickles is Deputy Director and Head of Research at the Reform think tank.

The Chancellor’s economic statement next week may be his biggest test yet. During the last few days, UK firms have announced 12,000 job losses. John Lewis, Upper Crust, Topshop, Airbus, WH Smith, TM Lewin, Easy Jet, Accenture are just some of the household names cutting jobs. Small businesses will be doing the same; you just won’t hear about them.

This is the start of the wave of redundancies Reform predicted back in April when we called on the Government to extend the furlough scheme and make it more flexible. The Government stepped up then; they need to do so again. The alternative is the worst unemployment crisis since the Great Depression.

Some readers will be sceptical. Great swathes of the economy reopened this weekend. Across the pond, the American economy added almost five million jobs in June, and the rise in the Eurozone’s unemployment rate in May was lower than expected.

At home, Andy Haldane, Chief Economist at the Bank of England, announced that consumer spending had “risen both sooner and materially faster” than predicted, meaning the GDP hit could be half that predicted in May. Very good news indeed.

However, underneath these headline green shoots is a much starker picture. Haldane also says that the labour market outlook is not as encouraging – that unemployment could be worse than the Bank’s May forecast. As in much of Europe, where more than 40 million people remain supported on furlough schemes, we have no idea if furloughed workers will return to work or join the unemployment rolls.

So while it is promising news that the UK economy appears to be bouncing back, it would be dangerously foolish to assume a jobs recovery at the same pace. Indeed, vacancies last week were down 24 per cent on the previous week.

Next month, businesses are required to start contributing to the cost of their furloughed workers. That’s reasonable, over nine million people have had their wages subsidised and the Government cannot continue this £10 billion-a-month support indefinitely – not least as it risks keeping people in ‘zombie jobs’, delaying their move into new roles and damaging the economy further.

But the phasing out of the furlough scheme will trigger more redundancies. Hundreds of thousands of businesses have gone for three months with little to no revenue. The Government’s loans and grants provided a lifeline for many, but social distancing measures and people’s fear of the virus will mean suppressed revenues for some time.

Expenditure will have to be cut if businesses are to stay afloat – half of companies expect to make redundancies in the next few months.

Which is precisely why the Chancellor must use his statement on Wednesday to announce a comprehensive and ambitious plan for averting mass unemployment.

Because while it might be reasonable to see how consumers respond to the further lifting of lockdown before taking a decision on something like a VAT cut – which would be pointlessly costly if the issue isn’t demand – delaying decisions about investment in employment and skills could be catastrophic.

In a new report this week, produced jointly by Reform and the Learning and Work Institute, we estimate that around ten million people are potentially at risk of unemployment. Those at greatest risk are in areas that already had high unemployment, have low qualification levels and are currently in low paid work. In other words, they will be least resilient to losing their jobs. The result of inaction, even delayed action, will be a levelling down.

The Conservative manifesto pledged to undo the decade-long underinvestment in skills; to help workers “train and retrain for the jobs and industries of the future”.

This recession is unique for its sectoral nature, meaning a large number of workers will not only need to find new jobs, but to switch careers. But it is also unique in that the Government has a direct line to those most vulnerable to unemployment – the furlough scheme.

The Prime Minster should deliver on his manifesto promise with a bold offer to anyone on furlough, or in an at-risk sector like retail or hospitality. This should include universal entitlement to funding for a qualification, or modules of a qualification, up to and including level three, as well as online advice and support.

For those needing to change careers, which we estimate will be up to 200,000 people, the Government should provide a £5,000 learning account for accredited training. They should also receive a time-limited, means-tested maintenance grant to help mitigate wage drops as they start over in a new sector. Eligibility could be linked to an individual’s history of National Insurance contributions.

And to incentivise employers both to hire apprentices and career changers, and to pay living wages, the Government should allow firms to use a proportion of their apprenticeship levy to support wages, with an equivalent grant for SMEs.

On Wednesday, the Chancellor must show the same bold thinking that delivered the furlough scheme. Failure to act now could mean mass unemployment with its sky-high social and economic costs. That’s a legacy the Government should do everything to avoid.

Robert Halfon: Johnson delivers for the workers but Starmer could win back their votes

1 Jul

Robert Halfon is MP for Harlow, a former Conservative Party Deputy Chairman, Chair of the Education Select Committee and President of Conservative Workers and Trade Unionists.

Blue-Collar Boris

I think readers of ConservativeHome will know my columns well enough by now that when I want the Conservative Government to be better, I am not afraid to say it. But it is also important to dance a jig or two, when they get it right.

Yesterday’s speech by the Prime Minister was a blue-collar speech in tooth and claw. When he said that he would focus on the people’s priorities, he really meant it.

For communities like mine in Harlow, and no doubt those in and around the blue wall, there will be a sigh of relief that there is no return to austerity, that the NHS is King, that schools and colleges will be better funded and housing and infrastructure will be built across our land.

Above all, we now have an extraordinary and exciting offering to our young people – an opportunity guarantee, comprising a choice between an apprenticeship or a work placement. This is a real policy that could make a difference to winning back younger voters as well.

The reason why this Boris Johnson speech was so important was not just the significant policy content, but because it set the direction of travel for the Conservative administration. After a few rocky weeks seemingly being bogged down in the Coronavirus mire, the Prime Minister is back on the front foot, setting out a Tory Workers’ agenda, that millions of lower income workers not only relate to, but can also get behind.

They have been reminded of why they voted for us again. Of course, saying that we are going to ‘build, build, build’ is easier than the building itself, but now the course/trajectory/path has been set, it is up to the rest of the Government to start constructing our New Jerusalem.

Starmer unstuffed

Patrick O’Flynn was one of the early media forefathers (and proponents) of blue-collar conservatism, way back in the days when Notting Hill was regarded as the preferred venue of the Tory éminence grise – a little unlike Dudley, where Johnson was yesterday. So, he is someone worth reading up on or listening to.

However, his recent article for The Spectator entitled, ‘Starmer is stuffed, filled me with absolute horror, because his line of argument, if accepted, would instill a large dollop of complacency in every Conservative.

In O’Flynn’s view, Starmer’s history and background, his inability to develop blue-collar policy, the cultural wars and the Tories’ reputation for economic competency, means everything will be alright on the night.

If we, as Conservatives, believe the above to be true, that way disaster lies; not only will we lose our majority at worst, or have a hung parliament at best, but our historic red wall gains in the North will crumble away.

Let me set out a few reasons why:

First, Keir Starmer is radically de-Corbynising the Labour Party – almost by stealth and under the cover of coronavirus. Almost all the way through the Shadow frontbench, from PPS’ to the Shadow Cabinet, moderates are being promoted. If you look at the calibre of Labour MPs – like Shadow Business Minister, Lucy Powell, or Shadow Home Secretary, Nick Thomas Symonds – you know that the Labour leader is being serious when he wants to present an alternative Government. Meanwhile, the NEC and Labour General Secretary are passing into the hands of social democrats, rather than the far left.

Second, whilst Starmer may not have had his Clause IV with the sacking of Rebecca Long-Bailey, it is certainly a Clause 0.4. In one fell swoop, Starmer has shown the British public that he will not tolerate the anti-semitism that has so infected his party over the past few years – and given a pretty sure signal that he wants to enter the doors of 10 Downing Street.

The idea that the public will care about Starmer’s past record as Director of Public Prosecutions is as fanciful as voters being negatively influenced by Johnson going to Eton, or his early and controversial newspaper columns.

Third, never underestimate the power of Labour. Their message of helping the underdog and the poor is enduring, still popular and extremely potent. They are not going to sit back and let the Tories rule for eternity. The psephological evidence shows that public opinion is leaning closer and closer towards Starmer for Prime Minister.

The latest Opinium poll shows that Starmer is preferred to lead the country by 37 per cent of voters, compared with 35 per cent who back Johnson. While the Conservatives remain four points ahead of their opposition on 43 per cent to Labour’s 39 per cent, the gap has closed from over 20 per cent in February and early March, when Jeremy Corbyn was leader. Scaling the Tory wall is far from insurmountable.

Fourth, on policy: Just because Starmer is a ‘metropolitan’ does not mean that his policies will be ‘metropolitan’, too. His Policy Chief is Claire Ainsley, who wrote an important book, The New Working Class: How to Win Hearts, Minds and Votes.

If her views, alongside those of a more communitarian nature as proposed by thoughtful Labour thinkers like John Cruddas, MP for Dagenham (with whom Johnson’s former Political Secretary, my colleague Danny Kruger, is collaborating on big society policy development), or Maurice Glasman, then they could actually have an exciting message to the public, winning minds as well as hearts.

If Tories are busy painting flags on planes, or building Royal Yachts, or shooting ourselves in the foot as we are wont to do on a regular basis – whether it be on free school meals or the NHS surcharge – and Labour are focusing on the cost of living, skills and genuinely affordable housing, I think it is pretty clear voters are going to be looking at the Labour offering, once again.

Having said that, if we come up with more of the blue-collar narrative, I set out in the first part of this article, alongside significant tax cuts for the lower paid, then perhaps O’Flynn could be on to something.

I just wish he wouldn’t say it, nor any other right-thinking individual. Conservatives have to take the next few years as if we have a majority of one, and remember that the political left want the Tories gone, and will stop at nothing to kick them out of Downing Street.

Andy Street: Our blueprint setting out the economic ambitions of the West Midlands

30 Jun

Andy Street is Mayor of the West Midlands, and is a former Managing Director of John Lewis.

Last week saw the launch of a blueprint setting out the post-Coronavirus economic ambitions of the West Midlands. As a manufacturing heartland, where draftsmen drew up plans for everything from steam engines to Spitfires, blueprints are in our blood. They illuminate our history. This intentionally ambitious £3.2 billion business case draws a clear trajectory to our region’s future.

As Mayor of the West Midlands, it’s my job to attract as much investment as possible. Rishi Sunak’s bold and decisive actions – notably through the furlough scheme – have provided unprecedented economic support for jobs during lockdown. Now, demands on the public purse are high. All investment must be fully justified, diligently used and – crucially – deliver real results. Every penny counts.

Our region was the UK’s fastest growing outside the capital until Covid-19 struck, and as a hotbed of export, manufacturing, construction and professional services, we play a key role in the UK’s economic success. This new blueprint lays out a powerful business case for how continued investment can spark rapid and sustained recovery, not only for us here but for UK PLC.

Our ambition is deliberate because the stakes are high. Research suggests we could be hit harder than most by the lockdown. When coronavirus struck, the West Midlands was in a strong economic position, with record employment figures and productivity growth well ahead of the national rate. However, our economic mix – dependence on manufacturing and business tourism, as well as a significant contribution from universities – leaves us vulnerable.

By following the blueprint we have drawn up, the Government can demonstrate its commitment to ‘levelling-up’ by backing the people of the West Midlands to deliver.

We need to do everything we can to get back on our feet quickly and return to the levels of success we were enjoying before the outbreak hit. That means driving a rapid economic recovery, safeguarding more than 135,000 jobs while building thousands of new homes. It also means learning the lessons of the financial crash of 2008/09, and listening to business.

Investment is crucial. However, while we need significant investment from the Government – £3.2 billion over the next three years – this is broadly in line with the £2.7 billion investment we have secured since 2017, which supported strong economic success here.

Our business plan is to build on our success and on the investment we have already attracted from Government, while leveraging much more private and public sector investment locally, including from our universities.

The blueprint sets out a business case for investments, while outlining the economic benefits they would deliver. For example, it directly supports our automotive sector by harnessing clean technology and electrification. A major investment package, including £250 million towards a Gigafactory producing state-of-the-art batteries, will unlock 51,700 green jobs.

The building of HS2, next year’s Coventry City of Culture festivities and the Birmingham 2022 Commonwealth Games present opportunities to create jobs for local people. By accelerating major infrastructure investment and supporting the recovery of the tourism and cultural sector we can unlock 33,000 jobs.

Then there is the West Midlands’ growing reputation as a hotbed for health research. By investing in healthcare innovation we can protect 3,200 jobs, while improving the health of our population.

Improving transport, housing and digital infrastructure will play a key part in a rapid recovery, while laying the foundations for future economic strength. We can build better transport and digital links to drive productivity and create thousands of jobs in construction. Schemes include extending rail, metro and bus routes, with cash for enhanced digital connectivity and to accelerate fibre connectivity in deprived areas. Reopening long-closed railway stations will better connect people to employment opportunities, attract investment into once-isolated areas and improve productivity.

The West Midlands has pioneered the regeneration of brownfield sites to tackle the housing crisis, while protecting the environment. We even have our own regional definition of ‘affordable housing’ applied at planning level by the West Midlands Combined Authority. We want to build 35,000 new homes – 15,000 of which will be affordable – with a focus on housing key workers. Plans include using a £200m investment package to regenerate derelict eyesores and £24 million for a new National Brownfield Institute in Wolverhampton, which will be a centre of excellence for land reclamation.

Investment to equip people with the skills needed for the future aims to help get them back into work. This includes helping 38,400 young people obtain apprenticeships and work experience, retraining 20,000 workers for in-demand sectors such as health and social care, logistics and business services, and upskilling 24,000 for jobs for the future.

Finally, we want to back the region’s businesses with support schemes – including helping them navigate their way through the post-lockdown world – creating or safeguarding 43,900 jobs.

This ambitious business case is based on our region’s experiences not only of recovering from the last downturn, but on the successes of the last three years. The blueprint has been developed as a team effort between the region’s local enterprise partnerships, universities, business groups and local authorities.  Crucially, some of our biggest employers have also shared their insights about how the region can play its part in securing a strong national recovery, putting central investment to good use.

For the UK to fully recover, all of its regions must recover too – creating a stronger country with a more robust, balanced economy.