Bridget Phillipson MP: We must plan now to avoid a furlough cliff edge
Bridget Phillipson MP: We must plan now to avoid a furlough cliff edge

In just over a month, 6.3 million workers have been placed on furlough. With the TUC, CBI, FSB and many others, Labour supported the creation of the Job Retention Scheme. It has staved off the immediate threat of mass unemployment, and protected families’ incomes at this time of national crisis. It was the right thing to do. But the action that ministers take in the weeks ahead will be central to shaping the recovery and limiting the length and depth of the current downturn.

As the government starts to plan for what comes next, they must consider the need for greater flexibility in the furlough scheme, and the reality that any significant reduction in the level of support it provides risks plunging hundreds of thousands of families into poverty.

We know that life will not swiftly return to normal. Some businesses will start to re-open, whereas others will be hit harder and for longer. Any exit strategy must consider a change in the furlough scheme to allow for short-time working, an approach followed by other European countries such as Germany. And as we approach the next cliff edge and the end of the scheme in its current form, ministers must avoid the temptation of thinking their work is done.

The need for the scheme to be reformed so it can be effectively extended is also a chance to improve it, in ways that make it both better value for the government and more flexible for workers and their employers. For one thing, it would be totally unacceptable for executives and shareholders to profit from public support — so we must move towards a moratorium on dividend payouts and share buybacks, as required by the Danish government, for those companies that benefit from government support.

As well as making sure we ride out the crisis now, we also need to see more clarity from the government on their plans for the future. The government needs to work with trade unions and with businesses to enable the economy to recover safely, smoothly, and fully. Forecasts on the dire levels of unemployment we might expect without a rapid recovery show what is at stake. We should never forget the evil and misery of mass unemployment.

Joblessness devastates lives and has its own impact on people’s health, on our wider society, and of course on our economy itself. After ten years of Tory cuts, our social security system is inadequate and the social and economic consequences of mass unemployment would scar Britain for a generation.

To avoid the mistakes of the past decade, the government will need an ambitious plan to get our economy going once more, to ensure support not just for job retention but for job creation, and to address the significant underlying weaknesses that existed in our economy even before the current crisis. It is not too late, but they need to make changes now, plan for a better tomorrow, and act swiftly to ensure this crisis does not do permanent damage to our country.


Bridget’s article was first published in The Times Red Box

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