This was the week that reality bit for all of us in terms of the depth, breadth and likely length of the COVID-19 crisis. Encouraged by the initial success of national lockdown in reducing infection rates, and driven by an understandable desire to get ‘back to normal’ and re-start those parts of the our economy that were frozen, policy focus over the summer very rapidly turned to winding down support schemes and building a recovery that supported the people and places that have been worst affected. But an economic crisis driven by a global pandemic was unlikely to ever follow the usual pattern of downturn followed by recovery. With infection rates now rising rapidly again, strict public health measures being reintroduced and a widely available vaccine still a year away at best, we remain closer to the beginning of this crisis than the end.

Yet until today, families, businesses and workers had been given little sense of the longer term support they would be able to access to help them get through the next 18 months. The Chancellor’s Winter Economy Plan seeks to remedy this, with a focus on additional measures to be introduced for the coming winter as the initial furlough scheme comes to an end.

So, what was announced? The headline initiative was the launch of a new Jobs Support Scheme – the first wage subsidy initiative of its kind to be introduced in the UK. The Scheme, to be introduced in November, is aimed at avoiding some of the job losses resulting from suppressed demand caused by the introduction of stricter public health measures to control the spread of COVID-19 during the winter. The scheme will see Government directly subsidise the wages of workers in businesses across the UK, with all SMEs eligible to apply for the scheme, as well as those larger businesses who have seen their turnover reduce as a result of the COVID-19 crisis. To access the scheme workers must work at least a third of their normal hours, paid for by the employer, with Government and employers then each paying a third of the remaining amount to top up their pay packet to 77% of their usual salary. The implication of this is that if you are not able to work a third of your usual hours, the Scheme will ultimately not help retain your job. And of course even if you do work a third of your normal hours, your employer then faces the prospect of paying an additional portion of your wages for hours not worked, which may yet mean they decide against accessing the Scheme altogether.

Given these factors, it is likely that unemployment will still rise significantly during the winter, particularly in those parts of the economy such as retail, hospitality and tourism, where demand will continue to be most acutely impacted. Job insecurity was already high in these sectors even before the pandemic - full time retail workers earn on average £135 per week less than those in other industries, and since the onset of the crisis the sector has seen more workers furloughed than any other (1.9 million workers, 42% of all workers as of August 2020). Meanwhile the UK Hospitality’s Quarterly Tracker showed that the sector had seen sales decline by 21.3% in the first quarter of 2020 – a trend that is likely to continue due to ongoing public health measures. This is doubly serious because we know that workers in insecure and low-paid work who lose their jobs face serious challenges in transitioning into new jobs, and can end up facing long term unemployment. This will be even more challenging given the economic contraction we will see over the coming months, where already there are 4 unemployed workers for each vacancy in the economy.

It is worth noting that in addition to the Job Support Scheme, a range of other initiatives were also announced, including extending repayment periods for Government loans and continuing reduced VAT rates for hospitality and tourism. And earlier this week, Government announced a series of measures to encourage and enforce self-isolation, including a £500 payment through local authorities for workers who are unable to work from home and are ineligible for sick pay.

Yet over and above these specific announcements, it’s perhaps most important that this week represents a reset moment in how we think about the pandemic and the impact it will have on our economy, businesses and workers.

While targeted emergency support is vital, it is striking that there was no mention of additional support for those who will lose their jobs over the coming months. When he takes to his feet again for the Autumn Statement, the Chancellor must also introduce longer term changes required to support all families across the country into 2021 and beyond. For starters, temporary increases to Universal Credit and Working Tax Credits should be made permanent and extended to those on legacy benefits, and substantial investment should be channelled into supporting workers to re-train and get back into the labour market as the crisis plays out.

With the full effects of the UK’s departure from the EU on our jobs market still yet to be felt, the reality is that supporting businesses and workers to navigate the pandemic will be the work of years, not weeks or months. Building on the announcements today, the Chancellor’s next priority must be to strengthen the safety nets upon which we will all rely in the coming period, and bolster the skills and training infrastructure that can support workers into jobs in the future.

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