£3.2bn needed to tackle unemployment, says report

A delay in delivering investment could be "tantamount to levelling down", Learning and Work Institute and Reform report says

Kate Parker

Unemployment

The government must invest £3.2 billion to mitigate the looming unemployment crisis, the Learning and Work Institute and think tank Reform have said. 

The joint blueprint proposed by the two organisations includes career changer maintenance grants, expanding requirements on employers to notify HMRC of redundancies, and permission to use the apprenticeship levy to boost wages.

In the report, entitled When furlough has to stop, the organisation warns that any delay in delivery would be "tantamount to levelling down" with the labour market fallout from Covid-19 already exacerbating pre-existing inequalities.


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Stephen Evans, chief executive of the Learning and Work Institute, said that without urgent action, there will be a second spike in unemployment as the furlough scheme is withdrawn.

He said: “Young people, low-paid workers and areas that had higher unemployment already are being hardest hit. 

“We need rapid and ambitious action to support the 10 million workers furloughed or working in at-risk occupations and sectors like retail and hospitality. That should include early support for those being made redundant and a career changer offer of advice and skills support. Investing now can help prevent an unemployment crisis.”

The blueprint in full 

The blueprint recommends: 

  • A time-limited means-tested maintenance grant of up to £3,000 (a career changer grant) or a career changer premium in universal credit, with eligibility linked to an individual’s National Insurance contributions history. 
  • A £5,000 learning account to invest in accredited training.
  • In order to incentivise employers to hire both career changers and apprentices, and to pay living wages, the government should allow firms to use a proportion of their apprenticeship levy to subsidise wages, with an equivalent grant for SMEs.
  • A universal support offer should be made available to all furloughed workers, those at risk of redundancy and workers in the retail and hospitality sectors. This should include online careers advice and one-to-one support, delivered through different channels to fit with people’s lives.
  • Adult skills funding should be extended to give everyone an entitlement to funding for a qualification, or modules of a qualification, up to and including level 3.
  • Those learning in a priority sector and those with a minimum National Insurance contributions history should be entitled to funding for a qualification, even if they are already qualified to that level.
  • The government should advertise the offer widely, including in HMRC and Department for Work and Pensions communications with low-paid workers. HMRC should direct businesses using the Coronavirus Job Retention Scheme to encourage their workers, who are already permitted to undertake training, to take advantage of the offer.
  • To ensure rapid support for workers at risk of unemployment, companies placing furloughed staff at risk of redundancy should be required to inform HMRC, and the current requirement that firms inform the redundancy payments service if 20 or more staff are at risk should be reduced to five. Workers made redundant should have access to a £1 billion package of support, including at least 10,000 new Jobcentre Plus advisers.

Charlotte Pickles, director of Reform, urged the chancellor to bring forward a package of support next week.

She said: “The prime minister this week underscored the exceptional economic challenge ahead. However, despite his pledge to ‘build back better’, the government is yet to provide a comprehensive plan to alleviate the impending jobs crisis. Today, we have provided a £3.2 billion blueprint for doing just that.

“Ministers acted swiftly to protect jobs as the virus hit, they must be equally swift and ambitious in preventing Great Depression levels of unemployment. The 10 million people facing uncertainty and fearing unemployment cannot wait until the autumn for action – by then it will be too late.”

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Kate Parker

Kate Parker is a FE reporter.

Find me on Twitter @KateeParker

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