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Lords committee calls for new UK job creation plan to prevent unemployment crisis in 2021

·4-min read
CARDIFF,  WALES - AUGUST 12: A close-up of a Job Centre Plus sign on August 12, 2020 in Cardiff, Wales. The Office For National Statistics (ONS) reported the UK's GDP fell By 20.4% between April and June 2020. The UK economy suffered its biggest slump on record due to the coronavirus lockdown measures pushing the country into recession. (Photo by Matthew Horwood/Getty Images)
The House of Lords Economic Affairs Committee has urged the government to focus its spending on creating new jobs instead of wage subsidies. Photo: Matthew Horwood/Getty Images

Britain’s House of Lords Economic Affairs Committee (EAC) has urged the UK government to create a new plan for jobs to prevent a rise in unemployment in the new year.

The committee has called for the government to focus its spending on creating new jobs instead of wage subsidies. The EAC is one of the five permanent investigative committees in the House of Lords and is in charge of considering economic affairs.

It’s calling for the creation of job opportunities for people most at risk of unemployment and to focus those new jobs in sectors which need workers urgently and that are sustainable.

To repair the UK’s “social infrastructure” as highlighted by the COVID-19 pandemic, its asking the government to increase the number of social care workers and invest in the childcare sector.

It means prioritising sustainable infrastructure projects that can be delivered at scale, quickly, and across the whole of the UK.

Speaking about the young, the committee wants the government to introduce a new job, skills and training guarantee, available to every young person not in full-time education or employment for one year.

The guarantee should enhance its existing skills, training and employment support policies, including the Kickstart and the Restart programmes which the committee says “need to be better co-ordinated” if they are to be successful.

The report also highlights other economic issues. It found that the economic impact of COVID-19 — the biggest economic shock in 300 years — has not been shared equally.

Many higher paid workers experienced little or no economic hardship, whereas the youngest and lowest paid employees experienced significant damage to their livelihoods and prospects, the committee said. It wants the government to recognise this disparity in its recovery plans.

READ MORE: UK economy almost ground to a standstill before second lockdowns hit

To support struggling British families it is calling for the temporary increases to Universal Credit to be made permanent, including the £20 ($26.45) per week increase to the Standard Allowance. It also wants the government to ensure that those on legacy benefits receive a comparable uplift, review the level of the benefit cap and increase social security.

The cost of providing adequate sick leave to quarantined employees is small compared to the cost of them not isolating and spreading the virus further, the committee found. As a result it wants the government to raise the level of statutory sick pay and expand eligibility to the lowest paid.

A significant proportion of the debt from the COVID-19 loan schemes will never be repaid, the report said.

Additionally, it wants the government to create a new state body to manage debt and repayments. Loans should be converted into more manageable obligations such as contingent tax liabilities or 'student loan-type' structures, it said.

Lord Forsyth of Drumlean, chair of the EAC, said: “The Government has given the impression that the economic crisis will be short-lived and everything will be fine by the spring. It also assumes that the good news on the vaccine means that the economy and labour market will no longer need support. Both of these assumptions are wrong.

“The sectors with jobs that historically lead labour market recoveries – hospitality, retail and leisure – have been flattened. They are likely to be in a worse state in the spring when wage support ends. Unemployment will spike.

“The Government is sleepwalking into an unemployment crisis. The Chancellor needs to get ahead of the curve to avoid being in the same position as he was in the autumn. He needs a strategy urgently for what comes next and this report sets out a comprehensive plan to save the prospects of a generation of young people.”

Last week, figures from the Office for National Statistics (ONS) the UK economy saw momentum slow significantly in October, even before England went into a second coronavirus lockdown. Britain’s GDP expanded for a sixth month in a row but growth slowed to just 0.4% in October, down from 1.1% in September.

Watch: Why job losses have risen despite the economy reopening

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