The government must do more to protect jobs

The chancellor has got the Covid crisis wrong at every turn

March 25, 2021
From withdrawing support too early to calling for an end to lockdown, the chancellor has made too many mistakes throughout the pandemic © ILYAS TAYFUN SALCI, REX  SHUTTERSTOCK
From withdrawing support too early to calling for an end to lockdown, the chancellor has made too many mistakes throughout the pandemic © ILYAS TAYFUN SALCI, REX SHUTTERSTOCK

The first job of any government is to keep people safe. During the Covid-19 outbreak that should mean firm, clear rules, and no cutting corners when it comes to protecting public health. It should also mean doing everything necessary to protect livelihoods and businesses as we go through the worst economic crisis in 300 years.

For nearly a year, the government has been too slow to give people the support they need—and millions of people have fallen through the gaps. Business closures are up by more than a third, while the self-employed have been left in the dark over what help might be on offer from one month to the next. Parents are struggling with the difficult job of homeschooling, yet the Treasury refuses to heed Labour’s call to give working parents the legal right to request paid flexible furlough. We have the worst Covid death toll of any country in Europe, yet the government has let financial hardship remain a significant obstacle to self-isolation for many on the lowest incomes.

The chancellor has called this crisis wrong time and again, either by trying to withdraw support too soon or waiting until the last minute to extend it. Businesses, workers and the self-employed have faced the looming end of support schemes, only for new grants to be introduced in a last-minute scramble as public pressure to avoid the next cliff edge becomes overwhelming. People might forgive this happening once or twice, but a pattern of behaviour has emerged that offers an insight into the blinkered instincts of the chancellor.

The chancellor has set up a false choice between protecting the economy and protecting public health. His irresponsible decisions to wind down support and lift restrictions too soon have damaged both. And we should continue to question his judgment as our thoughts turn to the question of how to rebuild—after an outbreak that has shone a light on both the mistakes of the last decade and the priorities for the next.

Ten years of the Conservatives left our public services and our economy on shaky foundations going into the pandemic. They didn’t invest what was needed in social care, the NHS and secure affordable housing, and they failed to build a strong, resilient economy. When Covid hit, one in four UK households had less than £100 in the bank, and 3.6m people were trapped in insecure work. While public services were being hollowed out, the Conservatives missed every single debt and deficit target they set themselves—and the national debt went from £1 trillion to £1.8 trillion on their watch.

We must not let our country suffer under the same mistakes again. As the IMF’s head of fiscal policy has said, our government and others should now use fiscal policy to beat the virus and to stimulate our economy by reducing unemployment and restoring economic growth.

That focus on growth, investment and jobs is at the heart of the approach that Labour’s shadow chancellor, Anneliese Dodds, has set out. Labour’s framework for a resilient economy will meet the challenge of our times. It will show how a responsible approach, which aims for a balanced, current budget over the economic cycle, would never prevent us from protecting people and businesses during a crisis or making crucial investments in our future.

People are tired of the government ducking big decisions, from social care and the housing crisis to climate change. Labour’s approach would view public finances over the next 20 years so that we can face up to long-term challenges. Our rules would strengthen the national balance sheet by taking account of a broader set of public sector assets, as organisations including the Institute for Fiscal Studies have recommended. It would put long-term investment in our future above short-term gambling with the public finances.

Labour would build an economy that works for people across the country. We would protect our NHS, not waste billions on failed outsourcing projects. We would call time on tax avoiders, rather than kicking plans for a clampdown into the long grass. And we would train people into jobs, rather than let a generation of our country be scarred by unemployment.

After a decade of the Conservatives, our economy was already weak when Covid hit, and their irresponsible decisions since have weakened it further. That’s why we’ve had the worst economic crisis of any major economy. It doesn’t have to be this way. Labour would harness the national spirit that has seen people pull together throughout this pandemic to build a stronger economy on fairer foundations. We would focus relentlessly on jobs and growth across the entire UK, and on the long-term investment we need to meet the challenges we face. That’s how we would build a better, fairer, more secure future for Britain.

This article is featured in Prospect’s new “The Road to Recovery” report, published in partnership with Lloyds Banking Group, the Government of Jersey and Jersey Finance. Read the full report PDF here.