The Sunak effect: new data reveals impact of Chancellor’s economic mis-management on number of planned redundancies
New analysis by Labour reveals a connection between Chancellor Rishi Sunak’s mishandling of the furlough scheme and spikes in the number of businesses planning job losses.
The Chancellor’s last-minute approach to the coronavirus crisis has created huge uncertainty for businesses, with spikes in planned lay-offs coming ahead of his wind-down of the Coronavirus Job Support Scheme last autumn and the last-minute extension of the scheme with just five hours to go.
The Chancellor’s failure to plan ahead and determination to pit public health against the economy by winding down support too soon has left Britain with the worst recession of any major economy and created a jobs crisis.
By analysing data on the number of firms filing notices proposing large-scale staff redundancies, Labour has revealed:
- In June and July 2020 planned redundancies were twice as high as they were in May, with struggling businesses preparing to start contributing to furlough costs from 1 August. More than 300,000 redundancies were proposed in these months – 573 per cent more than the same time the year before.
- In July alone, the same month the Chancellor announced his “Plan for Jobs”, there were 150,000 redundancies being planned.
- In September, the month the Chancellor announced that a ‘Job Support Scheme’ would replace the furlough scheme in November, planned redundancies jumped up again to 81,670 – 41 per cent higher than the month before.
- In total almost 140,000 redundancies were planned in September and October, before Sunak changed his mind and decided to scrap the Job Support Scheme and continue the furlough scheme after all.
- And data published by the ONS this week shows that across the crucial months of September to November, a total of 395,000 reported they had been made redundant, an all-time record.
Labour is calling on the Chancellor to learn from his mistakes and give businesses some long-term certainty ahead of the Budget by extending the business rates holiday by at least six months and the reduced rate of VAT for six months or three months after public health restrictions are lifted – whichever is later –before they are hit by a £50 billion bombshell in April.
Labour has also called for a ‘smart’ extension to the furlough scheme, with new training to help furloughed workers improve their skills and tough conditions on employers to stop abuse.
Lucy Powell MP, Labour’s Shadow Minister for Business and Consumers, said:
“These numbers aren’t just statistics – each one represents an employee being told they are about to lose their job and a firm losing a valued worker.
“Rather than constantly changing his mind, the Chancellor should have stood by his promise to do whatever it takes. As we’ve said throughout this crisis, the public health restrictions have got to be backed by the right economic support to help businesses and workers.
“Businesses cannot wait for the Budget – they are a step ahead of the Chancellor and making their decisions about their employees’ futures right now. Unless the Chancellor gives businesses some certainty now he may as well send out P45s himself.”
The data on the number of proposed redundancies brings into sharper focus the terrible impact of the pandemic on UK employment, with the total number of redundancies planned in 2020 around 104 per cent higher than the year before.