Through Wednesday’s summer statement, the Chancellor announced that the Government will introduce a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. However, it’s unclear if this will be sufficient to limit the insecurity many workers will experience over the autumn and winter. With a minimum salary requirement of just £520 per month, this new measure won’t protect workers from reductions in hours or pay above that threshold. There are also doubts that this bonus will be a sufficient incentive for employers who are struggling and unable to retain furloughed employees, and it is likely that a significant proportion of these bonuses are likely to go to jobs that would have been – or have already been - returned from furlough anyway. The Head of HMRC voiced his concerns in a letter to the Chancellor, noting that the overall cost of the scheme and the number of extra jobs it would protect are both currently “highly uncertain.”

In his speech the Chancellor said that he didn’t want to give some furloughed workers “false hope that it will always be possible to return to the jobs they had before” and announced plans to double the number of staff at Job Centres supporting people to find work. While this is a positive step, typically work coaches provide light touch support, and there is evidence that suggests that experiences of work coach support were variable before the crisis. But as the Chancellor highlights, with some sectors clearly facing long term impacts as a result of the crisis, it’s likely many people who are falling out of work will need intensive support to navigate a career change, and Job Centre work coaches haven’t had to offer support in this way before. While further detail on how this form of support will be provided needs to be outlined, one option could be to extend the National Retraining Scheme to cover those made redundant in the worst affected sectors.

Additional support for the leisure and hospitality sectors in the form of VAT cuts was also welcome, as according to the latest ONS data, workers in these sectors were amongst the hardest hit. In May 2020 for example, the accommodation and food service activities sector had the largest proportion of the workforce furloughed, at 80%. While this is expected to improve with the easing of lockdown restrictions and the Chancellor’s new ‘eat out to help out’ discount scheme, due to social distancing requirements it is unlikely that businesses in these sectors will be back to operating at full capacity when the furlough scheme comes to an end in October.

The Chancellor’s commitment to creating up to 100,000 new Green Infrastructure jobs, via a £3bn plan to retrofit public buildings and homes to be more energy efficient was also welcome, but it pales in comparison with the investment seen in Germany.

Last month, German Chancellor Angela Merkel announced a forward-looking €130bn stimulus package that features at least €40bn climate-related spending for 2020/2021, aiming to boost electric vehicle sales, improve building energy efficiency, enhance public transport networks, develop hydrogen infrastructure, and shift the cost of renewables subsidies onto general taxation. The programme also includes a €50bn "future package" to fund R&D, green transport programmes, hydrogen infrastructure, and building energy efficiency upgrades. In contrast, the measures announced for the UK weren’t tied to a longer-term strategy.

Despite the set of measures outlined yesterday, there are still groups of workers who are not being supported, including the self-employed. The second and final Self-employment Income Support Scheme (SEISS) grants will be made in August, and with no further support announced yesterday, many sole traders could be cut adrift as this support comes to a close.

The measures Government announced to mitigate the worst impacts of this crisis are unparalleled and will have served to lessen the financial hardship many would have otherwise experienced. The true benefits of these schemes will only fully be understood when the crisis subsides, and the opportunities available to workers through an economic recovery become clear.

With a focus on stimulating spending and reiterating plans to wind down the furlough and income support schemes, Wednesday’s announcements appear to rest on optimistic assumptions for an economy poised to bounce back.

But the full extent of the crisis and the nature of the recovery are as of yet far from certain. As we progress out of lockdown, there are still uncertainties as to whether consumer demand will pick up sufficiently. Ending the support schemes now shifts risks initially carried by the Government onto businesses and workers, who will face a potential cliff-edge this autumn, despite the Job Retention Bonus.

This week’s announcements are a positive stop-gap that will help to address some of the most pressing concerns among workers and businesses.

The Comprehensive Spending Review set to take place later this year will present an opportunity to take full stock of the economic and social crisis stemming from COVID-19 and re-assess measures announced this week. It will be a chance to revisit strategic goals, for example by developing a green job creation programme to catalyse plans for the UK to become carbon neutral, developing a strategy to protect and improve job quality through the planned Employment Bill.

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