Chancellor Rishi Sunak had days to design the furlough scheme. Once lockdown became mandatory in spring 2020, it was a race against the clock to figure out how to protect against mass unemployment while still keeping the incentive for people to return to work when it was legal to do.
Throughout Covid, furlough was envied by countries around the world, with even officials in the United States quietly wishing they could copy what Sunak had come up with. But Sunak wasn’t so sure. The scheme was successful in what it was designed to do: keep unemployment near record lows, making it easy for workers to stay on payroll and get back to work on day one of reopening. But with furlough repeatedly extended – not for weeks, but for eighteen months – the then-Chancellor was acutely aware of a potential risk: a rise in worklessness.
Today – years later – Prime Minister Sunak is trying to address this very real consequence, as he delivers a welfare reform speech today, which includes more measures to get people back to work.
The drive to keep people in work – and make that work pay – has been a theme for Sunak and Chancellor Jeremy Hunt. The last few fiscal statements have honed in incentives: removing the cap on the lifetime allowance for pensions, making full expensing for business investment permanent, and now a total of 4p taken off employee National Insurance (which the government says it would like to abolish completely in the long-term).
But the sticking point has been benefits: while more resources have been directed towards helping people back into work, the fear is that far too little has been done to address the millions of working-age people who are not currently in work. Ministers like to tout Britain’s low headline unemployment rate, which sat at 4.2 per cent between last December and this February, but this number only includes people actively seeking employment. It does not include the millions of Britons who have stopped looking for work. This is how Britain has simultaneously low unemployment figures, yet 2.8 million people registered as ‘long-term sick’ and 5.6 million people on some kind of out-of-work benefit.
What about their future? Are they to be abandoned to a workless life, or can they be engaged? The Prime Minister’s message today is that, with all the innovations (even just in the past few years) to be able to work more flexibly, there should be a type of job that suits more potential workers – a shift, he explains, so ‘the default becomes what work you can do, not what you can’t’. In a bid to tackle the 11 million sick notes issued in the UK last year, Sunak today announces a shift from GPs signing people off work to ‘specialist work and health professionals’ who have ‘dedicated time’ to figure out the needs of sick workers, and whether a full sign-off from work is really the best course of action.
Sunak is touching today on the delicate issue of mental health: something he says he would ‘never dismiss or downplay’ but also must not immediately prohibit sufferers from the workforce when there is a ‘growing body of evidence that good work can actually improve mental and physical health’. Since the pandemic, reports in mental health struggles have surged (unsurprisingly so, after lockdowns). The Office for National Statistics has revealed that 53 per cent of people registered inactive with long-term sickness at the start of last year were reporting their main ailment as depression, bad nerves or anxiety as their main ailment. After speaking to welfare advisors, 80 per cent were deemed as too unwell to work at all.
This is what Sunak wants to rectify: that a mental health diagnosis should not (almost) immediately take someone away from their office or colleagues, especially if this further isolates them.
But will today’s measures be enough? Almost certainly not. As Michael Simmons pointed out on Coffee House earlier this week, the number of people deemed ‘economically inactive’ rose by a staggering 150,000 in the last three months, up to 9.4 million. One minister estimates that at least five to six million of those people are prime candidates to get into some kind of employment, but right now it seems numbers are continuing to go in the wrong direction. Capacity remains an issue, but within the NHS and job centres. With people not being seen for months on end, it makes it increasingly likely that they will fall out of the workforce altogether.
As I wrote for the magazine earlier this year, the problem is not work-shy Britain: the UK had a record-high employment rate before the pandemic hit. A combination of faulty services and disincentives has made it much harder for people to get back to work. The Prime Minister’s decision to talk about the moral imperative of getting Britain working is a necessary first step to fixing the work crisis – but as far as solutions go, very little has been announced so far that is likely to meaningfully change the trajectory of those leaving work.
