The rapid roll-out of the Covid-19 vaccination programme has provided hope that we are entering into the twilight of the pandemic. Indeed, as based on an improving picture, Government recently set out its Roadmap for the easing of lockdown restrictions throughout the Spring and Summer. But the economic impact of the pandemic is still biting, with the most recent GDP figures revealing an annual fall of 10%. This week’s Budget will therefore need to be two-pronged: ensuring businesses and workers remain protected; whilst also looking forward to the longer-term picture as we emerge from lockdown and the action needed to stimulate a recovery.

The most recent statistics show unemployment at 5.1%. With so much of the economy effectively shut down over the past year, unemployment would be far higher were it not for the furlough scheme, due to finish on April 31^st - a schedule that now looks premature. Along with the SEISS, the uplift in weekly Universal Credit payments of £20, and business grants, the Chancellor must extend furlough to avoid a cliff-edge for businesses and workers. Instead, plans for the winding down of the scheme should be targeted. The nature of the economic crisis has been highly sector specific, and while some industries will be better prepared to stand on their own feet once more as demand increases, others will likely need more prolonged support, including hospitality and retail. Recent polling by Ipsos MORI shows that while overall, people are looking forward to resuming normal activities as lockdown restrictions ease, there are variations in the types of activity people are looking forward to doing. For example, 44% of respondents stated that they would be uncomfortable going to bars and restaurants, with 45% stating that they would enjoy this.

Looking forward, any stimulus plan announced by the Chancellor will likely focus on increasing demand, but will need to work in concert with labour market policy levers that can help to stimulate the creation of new jobs.

Strategic investment in the ‘green economy’ would contribute to the creation of new, high-skilled jobs. The Prime Minister is on record as wanting a green recovery but this needs to be matched with investment. Currently, only 4% of planned multi-year spending, by projects, relates to green investment programmes. This budget represents an opportunity to raise investment in green technology across: housing, energy and transport. There is also the opportunity for investment in green infrastructure to be targeted at regions that have suffered industrial decline over recent decades and in which local labour markets have a high proportion of insecure jobs - thereby contributing to the Government’s Levelling Up agenda.

Further investment in skills and training should also feature in the Budget, alongside deeper levels of employment support. Government recently set out a new skills agenda through its FE White Paper: Skills for Jobs - but further support will also be needed for the long-term unemployed, or workers who have been on furlough for over six months. Restart, the Government’s support programme for the long-term unemployed will commence in June, but there are concerns that the number of eligible claimants will outstrip provider capacity. Further investment, in Restart and in training support schemes for younger people, who have been particularly affected by the economic turbulence caused by the pandemic, should be outlined. Additionally, eligibility for training under the Lifetime Skills Guarantee should be broadened to adults who already have A-level and equivalent qualifications but work in lower skilled occupations, or in sectors that have been particularly affected by the pandemic, as we called for in Learning to Level Up.

It will be challenging for the Chancellor to square these imperatives with pressure, and expectation, from Conservative MPs to revert to fiscal conservatism. However in the longer-term, focussing investment through a skills-based recovery will likely reap dividends, especially if strategically targeted on growth areas that will provide for high quality and secure jobs across the country.

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