Opinion: We Desperately Need a Bold and Ambitious Economic Recovery Plan
This pandemic has shaken the very core of our Economy, crushing many businesses and leaving others on the verge of financial ruin. With the warning of 1980s level unemployment, public services on their knees, and a substantial budget defect; it is becoming clear the government will need to take drastic action, and quickly. It seems the politics of the early 2010s has returned, and with it, we must learn from its lessons.
The Prime Minister promised ‘not to return to the austerity of 10 years ago’, but his government’s recent interventions don’t seem to match. It was announced that the under 18s ZIP card scheme would be scrapped, affecting over 2 million young people across London, 37% of whom live in poverty. This is part of their £1.6bn plan to bail out TFL, although many councils have complained it will cost over £15 million to administer by September.
This was followed by Chancellor Rishi Sunak’s consideration to introduce a 2% tax on online sales to raise over £2bn, despite the consequences that it will have on business and consumers. This is all being done whilst continuing to push their policy of increasing spending to stimulate the economy.
From this, not only can we conclude the government is not going to keep to its commitment not to lay the financial burden on our youth and vulnerable, but it seems they are flip-flopping on any real concrete plan for economic recovery, contradicting themselves with their clashing policies. Certainly very far from any “new deal”.
The question therefore must be, what should the basis of our economic recovery plan be? Well as Leader of the opposition, Keir Starmer said, “jobs, jobs, jobs”. You might ask how? Let me explain.
Every Former Chancellor has warned of unemployment at 1980s levels. If you want to know how significant that is, at its highest point in 1984, unemployment was at 11.9%, 8% higher than its rate today. With millions of people out of work, the consequences will be detrimental, not just to the unemployed and their communities, but to many businesses as well. It is therefore imperative that the government is not only able to retain and protect existing jobs but actually create job schemes to get people into work.
I must give credit to the government’s £2bn investment plan for those aged 16 to 24 to boost youth employment, however, in current circumstances, this is simply not bold enough. We need to be prepared to enact a radical plan, one that has a genuine effect on the economy.
Creating jobs will not just help the unemployed, it will have a direct effect on thousands of businesses up and down the country. With unemployment low, disposable income will be high allowing people to spend more, thus revenue for those businesses will increase. That way we stimulate the economy, increase government revenue, and cut the deficit. Basic economics! That is why we must emphasize jobs; if we fail, we risk the greatest and most painful recession ever.
However, with that said, we can not be foolish. Making drastic spending cuts on public services will not help get people back into employment. It has to be the government’s priority to ensure workers are facilitated to get employed, by protecting education and public services they rely on. Let’s take, for example, the 16 to 18 ZIP card scheme. For many young people aged 16 and 17, this is the perfect time to start working, either part-time or in an apprenticeship to gain experience and some money. The government’s policy to scrap their ZIP cards does not incentivize them to look for a job, it discourages them, knowing that they are going to have to pay a lot more to travel to and back from their work. Not only is it morally lacking to place the financial burden on the less well off, but it’s also economically incompetent.
This government has to make a decision, do they want to make a strong economic bounce back with a long term vision, or take cheap and short term victories that will have negative outcomes in the future. If they chose the first, another round of austerity is not the way forward. George Osbourne’s austerity (2010–2016) may have cut the deficit, but for many at the bottom, it was a policy of hell. Public services on the collapse, something we have yet to recover from, and incredible levels of inequality.
These vitally important decisions over the next months and years will decide the outcome of our economy for decades to come. They will be the central issues that will decide the next general election; the policy that looks out for the working man and woman will be the one that will inevitably be beneficial for the economy, leading us to prosperity in the future.