The Treasury’s Job Support Scheme is a destructive creation

The Treasury’s plan for jobs lacks the ambition and boldness we need to avoid an unemployment crisis. By relying on the process of ‘creative destruction’ in the midst of a global pandemic, the Job Support Scheme is doomed to fail, and coaching for the unemployed won’t change that outcome. 

As the furlough scheme comes to an end this month, the Treasury recently announced its new plan for jobs. Many commentators and businesses have warned that the new scheme is deeply flawed. It’s skewed incentives and insufficient support will not be enough to prevent the coming wave of redundancies, with 1 in 3 employers reporting they’re likely to lay off workers over the next three months. 

Rishi Sunak appears to believe that ‘creative destruction’ – the process by which innovation and entrepreneurship generates new economic activity and renders the old obsolete – will bring about new employment opportunities. In normal times, this process is a core feature of any capitalist economic system. But the ‘creative’ part – the innovation and entrepreneurship – cannot happen at scale in the midst of a global pandemic and during the deepest recession on record. Without more ambitious action from the Treasury, all that’s left is the ‘destruction’: mass layoffs, without new opportunities arising. Coaching and advice for the unemployed, which Sunak announced today, offers no remedy for this basic problem.

The best way to avoid an unemployment crisis is for the government to roll out a green jobs guarantee, as we outlined in our evidence to Parliament’s Environmental Audit Committee last month. Such a programme would offer large scale public employment – including training where necessary – to anyone willing and able to work. The programme should focus on providing jobs necessary for our low-carbon transition, such as retrofitting the UK’s housing stock, tree planting and nature restoration, and renewable energy projects. Expanding employment in the provision of universal basic services like healthcare, education, and social care should also be central to such a programme, and would result in numerous other social benefits, alongside increasing employment.

By relying on creative destruction, Sunak has come up with a destructive creation. COVID-19 is not going anywhere anytime soon. The government needs a far bolder strategy to deal with the looming unemployment crisis, and public sector job creation must be a cornerstone of that strategy.