UK markets closed
  • FTSE 100

    6,695.07
    -20.35 (-0.30%)
     
  • FTSE 250

    20,596.91
    -196.81 (-0.95%)
     
  • AIM

    1,195.31
    -2.78 (-0.23%)
     
  • GBP/EUR

    1.1237
    -0.0044 (-0.39%)
     
  • GBP/USD

    1.3684
    -0.0046 (-0.34%)
     
  • BTC-GBP

    24,434.64
    +2,230.10 (+10.04%)
     
  • CMC Crypto 200

    661.07
    +51.07 (+8.37%)
     
  • S&P 500

    3,841.47
    -11.60 (-0.30%)
     
  • DOW

    30,996.98
    -179.03 (-0.57%)
     
  • CRUDE OIL

    51.98
    -1.15 (-2.16%)
     
  • GOLD FUTURES

    1,855.50
    -10.40 (-0.56%)
     
  • NIKKEI 225

    28,631.45
    -125.41 (-0.44%)
     
  • HANG SENG

    29,447.85
    -479.91 (-1.60%)
     
  • DAX

    13,873.97
    -32.70 (-0.24%)
     
  • CAC 40

    5,559.57
    -31.22 (-0.56%)
     

Job creation plans 'missing' from UK spending review despite rising unemployment

Tom Belger
·Finance and policy reporter
·3-min read
Britain could tackle rising unemployment through more direct job creation, according to a think tank. Photo: Scott Heppell/AP
Britain could tackle rising unemployment through more direct job creation, according to a think tank. Photo: Scott Heppell/AP

Plans to create new jobs and stave off mounting unemployment were “missing” from the UK government’s spending review, according to a think tank.

The UK chancellor Rishi Sunak set out a string of policy announcements on Wednesday, calling jobs his “number one priority.”

His spending plans included a £2.9bn ‘Restart’ plan to help a million unemployed people find work, £1.4bn funding for Jobcentres, £1.2bn for government-funded youth work placements, an extended bonus for hiring apprentices, and £138m for adult education.

But the Resolution Foundation warned on Thursday his plans did not go far enough, calling for more direct measures to create new opportunities for work.

It comes as new Office for Budget Responsibility (OBR) predict a “significant rise” in already-mounting unemployment. The government budget watchdog expects joblessness to hit 2.6 million in the second quarter of next year, with an unemployment rate of 7.5% as the furlough scheme is wound down.

READ MORE: Tax rises look 'inevitable' after dire UK economic forecasts

“The chancellor’s strategy for dealing with looming high unemployment appears to be focusing on providing job-finding support for the unemployed,” said researchers in a new report. They noted he was also focusing on stemming flows out of work, after caving into pressure to extend the furlough scheme to next March.

But they added: “What is missing from this strategy are significant efforts to stimulate new job creation. Ultimately, the effectiveness of the Restart scheme, or any other back-to-work measures, will depend on the strength of the labour market and the number of new jobs created.”

The think tank is calling for the government to use its public spending power to boost the labour market. It argues hiring should be ramped up significantly in social care, fixing staff shortages and severe unmet need for care.

WATCH: Chancellor freezes public sector pay and cuts foreign aid

The report notes such employment can be ramped up quickly, compared to infrastructure projects which take time to get off the ground. There are often no requirements for formal qualifications, “so it is a plausible option for those losing work in the current ‘lockdown’ sectors, or others who are currently unemployed.”

READ MORE: What does the spending review mean for your finances

Merely returning the ratio of carers to the elderly population to its level in 2014 would see a 15% hike in employment numbers. If the government set aside an estimated £3.9bn a year, it would increase the workforce by around 180,000 staff, according to the foundation’s analysis earlier this year. Low pay should also be tackled in the sector, it adds.

The Joseph Rowntree Foundation has also proposed such investment in care, alongside a ‘real’ living wage.

Another Resolution proposal would see significant government investment in making Britain’s housing stock energy efficient, curbing emissions while creating jobs across the country. While the government has launched a Green Homes Grant of vouchers for home insulation, the think tank supports a more ambitious plan to bring all homes up to adequate energy performance standards.

It highlighted a Cambridge Econometrics study which suggested directly funding measures for low-income households and providing zero-interest loans for other households. This was estimated to create 108,000 jobs a year.

READ MORE: COVID-19 could cut average UK pay by £1,200 a year by 2025

Slashing employer national insurance contributions (NICs) could also boost hiring in new sectors, according to the think tank.

The chancellor’s spending review also included plans for £100bn of capital investment next year, with infrastructure plans including new or expanded roads, prisons, hospitals and schools.

“This spending review will ensure hundreds of thousands of jobs are supported and protected in the acute phase of this crisis and beyond with a multi-billion package of investment to ensure that no one is left without hope or opportunity,” Sunak said.

The Treasury has been approached for comment.

WATCH: Economic damage from pandemic likely to last long – Sunak