The Chancellor of the Exchequer, Rishi Sunak, last week announced his Spending Review. He was careful to spell out the extent of the economic damage caused by COVID-19 – though he did not mention that other countries, with different COVID strategies, had done far better.
And he used phrases like “economic emergency” to describe the state of government finances.
He then went on to set out various spending measures.
As he probably hoped, much of the media picked up on the economically illiterate scare stories about the state of government finances, and there was little scrutiny of his spending package. Hardly any indeed questioned whether he had spent enough.
But this is the question the media should have been asking.
He announced a pay freeze for around 2 million public servants. A pay freeze, of course, means a real-terms pay cut: their money will buy less after inflation next year than it bought this year. A real-terms pay cut for 2 million people is a substantial contribution to prolonging the mass impoverishment which has plagued the UK since 2010.
And he claimed to be protecting jobs and livelihoods. As the Metro reported,
“Mr Sunak announced the launch of a three-year ‘Restart’ programme, worth £2.9 billion. It aims to help more than a million unemployed people get back into work over the coming months and years.”
And on the face of it, this sounds like a lot of money. But let’s consider the facts. On the Chancellor’s own estimates, we are heading for unemployment around 2.6 million people. The number of vacancies in the UK is only around 434,000.
If his Restart package – which amounts to just under £1 billion per annum – is intended as a way of matching people to the vacancies, it is a reasonable amount of money: over £2,000 per vacancy.
But even if every vacancy were filled by this matching process, almost five in every six of the unemployed would still be unemployed.
If his restart package is intended to create jobs for 2.6 million unemployed, it is woefully inadequate: less than £400 per person.
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