Full @resfoundation analysis of the Chancellor's Winter Economy Plan (with thanks to the team for sleep loss overnight). The short version: the policy does not match the rhetoric on protecting "viable jobs". A thread... resolutionfoundation.org/publications/t…
Economic context matters here - we're not living a V-shaped recovery. After swift bounce backs from total economic stagnation in lockdown, the recovery was slowing before the return of rising virus cases & social distancing restrictions confirmed difficult months lie ahead
The Chancellor job was therefore to bring economic policy back in line with both economic reality and social distancing restrictions - which he rightly did by extending support for firms and workers beyond cliff-edges at end October/early November
Centre piece of Chancellor's measures = 'new' Job Support Scheme which really = extended flexible furlough scheme. In considering it's impact it's REALLY important to separate out impact on employees and employers
JSS is generous to employees: by protecting 2/3 of lost wages from reduced hours (so long as they still work 1/3 of previous hours) it is inline with similar schemes elsewhere and the income protection of the full furlough scheme (slightly less than previous partial furlough)
BUT while @The_TUC and others rightly focus on generosity for employees IF they end up on the scheme it is largely the incentives on employers that decide whether any employees will actually be on the scheme...
The JSS is NOT generous to employers. It asks them to cover not only the wages for hours worked but half the costs of the support to workers for hours not worked (e.g to get someone working 33% of previous hours they have to pay 33% of previous wages)
This means the JSS cannot be what all the papers this morning wrongly say it is - a version of the German 'Kurzarbeit' scheme (which asks employers to pay 0 for hours not worked).
Specifically it doesn't give firms an incentive to cut hours instead of jobs because it costs firms more to pay two workers to work half time than one to work full time
Interaction with £1k Job Retention Bonus is... messy. Sometimes it & JSS will encourage short hours. But only until January AND only if you have low enough earnings that £1k > employer costs of JSS BUT not so low that you don't qualify for JRB. Good luck firms working that out...
So what is the JSS? A scheme to support firms with less work today AND strong (non-JSS) incentives to hold on to staff (think skilled manufacturing with high training/recruitment costs). The problem? These are not the bulk of the workers in the firing line of this crisis....
What the JSS is not = encouraging hours rather than jobs cuts where it matters - in hospitality and leisure - to slow the mass shake out of workers that is about to happen. Those sectors rely most on JRS + have least attachment between firms/workers so JSS incentives matter
In designing this scheme, and in the excessive welcome for it from unions/business and even the opposition, is excessive focus on higher paid jobs in the likes of manufacturing rather than on the real problem of this crisis: the disaster it is posing to employment of low earners
This can be fixed and without spending more money- scrapping the £7.5bn Job Retention Bonus (that literally no-one thinks is a good policy) would be enough to reduce the employer costs of the JSS hugely - transforming firms incentives to save jobs. We really should do it.
Understandably lots of debate about child poverty this morning – something we as a country should spend much more time focusing on
The context here is the first Labour Kings Speech in 14yrs – implementing a manifesto just endorsed by the election result. No-one should be surprised that 98+% of Labour MPs voted for it/against amendments from other parties. That’s business as normal just days after an election
More importantly we shouldn’t confuse parliamentary procedure with what actually matters - reducing child poverty, something I’ve spent my life working on – in the last Labour government (which did exactly that) and ever since.
The case for @RachelReevesMP’s sweeping changes to the planning system announced today…
1. For 15yrs, we’ve been attempting to dig a tunnel under the Thames. No digging has taken place, but £800m has been spent & 9k pages of planning applications drafted. This is double what Norway spent actually building Lærdalstunnelen, the world’s longest road tunnel…
2. If we want net zero to happen, and to happen without higher costs, then things are going to have to be built. Things that not everyone loves. And they will also have to be built if we want our firms to be able to invest, grow and pay higher wages
This is yet another example of total tax policy chaos - this proposal is to reintroduce the exact same higher tax allowance for pensioners that George Osborne abolished a decade back. As with the personal allowance & corporation tax it’s going back to square one (ie Gordon Brown)
What is going on? A Tory panic that recent tax rises having been particularly large for richer pensioners (see the blue bars) rather than having confidence in all pensioners having gained from the triple lock (red bars)
Lots of focus on whether the radicalism of Labour's proposed employment law changes are being neutered - but the discussion is weirdly abstracting from the specifics and 'watering down' talk is overdone - this is largely the inevitably turning of slogans into govt action. Quick🧵
Here's @PickardJE list of what he thinks @AngelaRayner programme is. Let's take each in turn
1. creating a single "employee" status. This is about merging current "employee" & "worker" categories + clarifying boundary vs self-employment. It's a fiendishly difficult technical task - if you think it can be done without consultation you've never looked at any employment law
Time to talk Universal Credit. We're 10yrs into its roll-out, so understandably interest has waned. But it's impact on Britain has built - whoever wins the next election will be governing a "Universal Credit Britain" with 7m families - and big winners and losers - on it by 2029🧵
In 2019 the debate was whether to scrap Universal Credit, as Labour proposed. This time is very different. The pandemic showed UC had big advantages (processing millions of claims fast) and the roll-out has gone way too far to be reversed. So we should focus on its impact
What makes this difficult is that UC was introduced at the same time as big cuts to benefits. It's those cuts NOT UC that mean 71% of families are worse off on UC today than the legacy benefits it replaced as they were in 2013/14 (overall the change = average £1,400 worse off)
This is a REALLY good tool, that busts the myth that the biggest problem facing deprived areas is that there talented young people leave. Let's take the case of Hartlepool... 🧵
Overall, young people growing up in Hartlepool are less likely to get a degree than the national average. You already knew that. Let's get to what's interesting
Of those who do get a degree they are far far MORE likely to stay in Hartlepool than graduates generally are to stay where they grew up. The brains are not draining despite what you're always told.