The Chancellor’s speech today may join The Godfather Part II, The Empire Strikes Back and Frozen II as sequels that prove even more popular than their predecessors. Picking up from the Prime Minister’s launch of Project Speed last week, Rishi Sunak set out to prove why he has polling figures higher than any other Cabinet member as he announced Gordon Brown’s 2009 ‘Future Jobs Fund’ – sorry – the new ‘Kickstarter Scheme’, alongside other measures to protect jobs, hospitality and the housing market.
The Old Wykhamist and former Goldman star cum neo-Keynesian man of the people brought forward a raft of new measures in this mini-budget. The Chancellor aims to combat the imminent unemployment crisis feared as the furlough scheme draws gradually to a close and the public remain fearful of returning to normal, and the spending that comes with it.
To boldly go where no one has gone before
Boldest were the measures to give bonuses to firms that bring employees back from furlough and the commitment to pay the wages of 16-24 year-olds for six months if employers hire them for more than 25 hours per week. These are undeniably radical measures, as is the clunkily titled ‘eat out to help out’ scheme, promising to pay for half of people’s restaurant bills in August. Yet, of possibly greater interest were the policy moves on the green recovery: £2 billion to help people make their homes more energy efficient, £1 billion to retrofit public sector buildings, and £50 million to pilot a scheme to retrofit social housing.
The investment in retrofit – long overdue for a country with Europe’s least energy-efficient building stock – is still much lower than hoped, perhaps not surprising for a policy Dominic Cummings called “boring old housing insulation”. The Shadow Chancellor, Anneliese Dodds, pointed out that the money announced actually represents only one seventh of what had previously been promised for retrofit schemes, with no alternative policy presented.
More may follow of course, but this raises the question of whether the Government is taking a sufficiently long term view, and arguably gives credence to those who believe the pandemic response is distracting from the ongoing climate crisis.
Stamp Duty stamped out
Not much more was set out for the construction sector, apart from paying some lip service to the Prime Minister’s previous announcements, but in housing the immediate cut to Stamp Duty up to £500,000 was welcome. Both this and the VAT reduction to five percent for hospitality and tourism are only temporary measures, and they will return to their previous rates in March and January next year respectively, but if a second wave is prevented or swiftly dealt with then this will hopefully aid these vulnerable sectors through the worst of the crisis. Treasury documentation referred to a policy paper being published later this month on comprehensive reform of the English planning system to release more land for housing, with no further details on whether this will be the long-awaited Planning White Paper.
Now that the Government’s plan has been fully laid out, with implementation of certain measures beginning immediately, we will soon be able to assess the actual effectiveness of both Project Speed and the Plan for Jobs. The stakes have never been higher, with the global recession predicted to be greater than any in recorded history and Britain set to bear more than its share of the brunt. That the Government is clearly not afraid to use public spending to prop up the economy is a positive first step, but as the Chancellor himself admitted, the job has only just begun - and it is an extraordinarily tough one.