Boris Johnson's virus recovery plan won't solve looming mass unemployment

Tuesday 30th June 2020 21:45 BST

The prime minister drew his inspiration from none other than Franklin D Roosevelt, the Democrat president who rebuilt the US after the Great Depression through vast state intervention worth hundreds of billions of pounds that provided millions of Americans with jobs.

"If it sounds like a new deal that is what it's meant to sound like and what it is meant to be," he told his audience at Dudley's technical college.

In one way the allusion to FDR is justified. As my colleague Ed Conway points out, the UK government is set to borrow more this year than President Roosevelt did in any year in the 1930s as the government pours hundreds of millions into the furlough scheme, welfare support, business grants and the NHS.

But for what comes next, this was a speech rich on rhetoric while the actual detail was thin gruel.

There was no new money for this 'new deal' as the prime minister dusted down his 2019 manifesto and promised instead to accelerate infrastructure schemes worth £5bn.

The biggest new announcement was a pledge to deliver the "most radical reforms of our planning system" since the Second World War as part of his promise to "build build build" our way out of this economic crisis. His third pledge was to guarantee young people an apprenticeship or work placement.

It felt, in the words of one senior business figure who watched the speech, "quite ad hoc and underwhelming".

"There is huge business concern about the lack of road map and the forward plan," they said.

As Mr Johnson himself acknowledged in this speech, people are worried about their jobs and their businesses.

"We're waiting between the flash of lightning and the thunderclap with our hearts in our mouths for the full economic reverberations to appear," he said.

So as the prime minister talks about a long-term plan to "build, build, build", millions of people are struggling to look beyond the coming weeks and months as they worry about their livelihoods.

Nearly nine million workers - over a quarter of the working population - have been furloughed. Three million of them work in the hospitality sector. For these people the focus is on jobs, jobs, jobs.

Mr Johnson refused to commit to extending the furlough scheme beyond October - Labour had suggested targeted extension for particularly hard-hit sectors such as hospitality, the arts and travel.

And he could not give any indication on how many jobs he believed his pre-coronavirus infrastructure plan would create.

The prime minister refused too to be drawn on whether his plans would, like Roosevelt's, also require new taxes on the wealthier in society.

Elected on a manifesto that promised not to raise the rates of income tax, VAT or national insurance, he refused to repeat that pledge on Tuesday, saying only he was "absolutely determined to ensure that the tax burden, insofar as we possibly can, is reasonable."

Sir Keir Starmer, the Labour leader, said the scale of the response by the prime minister does not nearly match the predicament we are in.

"The prime minister promised a new deal, but there's not much that's new and it's not much of a deal," he said.

"We're facing an economic crisis, the biggest we've seen in a generation, and the recovery needs to match that.

"What has been announced amounts to less than £100 per person and it's the announcement of many manifesto pledges and commitments, so it's not enough."

In the coming weeks and months, millions of people could lose their jobs.

Bringing forward infrastructure projects and investment is of course welcome, but the direct effect on jobs is, by the prime minister's own admission, uncertain and likely to be relatively small.

It gives Sir Keir Starmer some space to outflank a prime minister who has so firmly placed his tanks along Labour's old red wall.

The prime minister hopes his long-term economic rebuild will put him in pole position when the next general election comes around.

But the imminent thunderclap of mass unemployment in the coming weeks will not be resolved by repairing schools and building new hospitals.

The country needs a new deal to be delivered now.

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