All eyes were on the Chancellor Rishi Sunak as he delivered the Summer Economic Update in the Commons yesterday afternoon, with MPs gathered anxiously to see whether he would live up to Boris Johnson’s Rooseveltian rhetoric.
Yesterday’s announcements include a £2bn job creation “Kickstart Scheme” for the under 25s, a temporary cut in stamp duty with no charge on property transactions below £500,000 and an “Eat Out to Help Out” discount of up to £10 per head in Britain’s restaurants, cafés and pubs in August.
Young people across the country are set to benefit from £111m to triple the scale of traineeships, £32m to expand the careers service, £17m to support vocational training, and cash incentives for businesses to recruit more apprentices. But Sunak was adamant that the Coronavirus Job Retention Scheme, which is so far covering the pay of 9.4m workers, would finish at the end of October.
One-third of 18-24-year-old employees (excluding students) have lost their jobs or been furloughed during the pandemic, according to the Resolution Foundation, compared to one-in-six prime-age adults. Worryingly, the same research finds that the proportion of 18-24-year-olds who have lost their job since the outbreak began is three times as large as the figure across all employees.
It is not hard to imagine what is going to happen in October, when businesses will no longer have the government paying 80% of their workers’ salaries. A replacement £1,000-a-head “job retention bonus” is unlikely to cut the mustard and be enough to prevent the wave of mass redundancies that will disproportionately inundate young people. According to the Institute for Public Policy Research, an extra 620,000 young people will be unemployed by the end of the year, bringing the total to over a million.
With the dreaded October cliff-edge confirmed, these incentives risk being too small to be effective. Instead, businesses that had no intention of laying off furloughed staff will now benefit from a payment that is just too little to convince those making redundancies to change their mind.
It is clear that the furlough scheme needs to wind down at some point. But Sunak should have proposed fading it out sector by sector, ensuring that industries most likely to have furloughed staff receive support over longer periods of time.
And how does this fit into the government’s wider levelling up agenda? Other announcements made yesterday are focussed on higher income homeowners, with a cut in stamp duty, or middle-class families, with meal deal discounts. Little has been promised for people who have already lost their jobs as a result of the crisis and little has been promised for private renters. Young people overwhelmingly comprise both of these groups.
This is not a new deal for young people: the cut in stamp duty alone (amounting to £3.8bn) will account for more than the support announced for young people combined.
Sunak is clearly eager to cement his popularity – which, according to this poll, puts him first place amongst Cabinet members, including the Prime Minister – ahead of an Autumn of more difficult economic decisions. Admittedly, his update was more coherent than Johnson’s “build back better” speech last week. But Sunak’s going to have to promise more than meal deals and “endurance” to keep youth unemployment levels down.
Now, with the Education Secretary’s announcement this afternoon that the government will “tear up the target to send 50% of young people to university” – despite universities reporting record numbers of applications from young people during the lockdown – it is even less clear what the future holds for young jobseekers in a market where jobs are becoming increasingly scarce.
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