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It makes no sense in ordinary times for the Government to pay people to do nothing – unless they are sick, disabled, incapacitated or unable for some other reason to work at all.

But these are extraordinary times, and Ministers have been right to set up schemes which aim to support people and business when it makes sense for them not to work – or where they simply can’t.

Those that are delivered through third parties, such as the Business Interruption Loan Scheme, seem to be working less well than those that government is handling directly itself.

(Which is why we believe that the simplest way of dealing with the Gordian knot of government regulation, the banks’ slowness to lend and the plight of small business is for government to stand 100 per cent behind the loans.)

The online portal for the Job Retention Scheme has held up well, given that some eight million people have applied for it – far more than Government originally anticipated.

And Iain Duncan Smith writes on ConservativeHome this morning about the durability of Universal Credit – which is becoming the backbone of state support for inactivity, but was designed to ease the journey from it to work.

This raises the question of what further measures, if any, Ministers should take to help pay people to work as, God and Boris Johnson willing, the lockdown is eased in mid-May.

For although it indeed usually makes no sense for the taxpayer to pay people not work, with the exceptions we’ve already described, for the taxpayer to pay people to work doesn’t come without problems either.

The classic example was Gordon Brown’s tax credits plans, which built on the Major Government’s own Family Credit scheme, but “took it all too far”, like Ziggy Stardust in the song.

These schemes can reach the point where government funding workers becomes a substitute for their employers paying them properly – and also raises problems of equity between the beneficiaries and the taxpayer.

(The Coalition Government addressed the issue by compelling some employers to pay more – hence the rise of the rebadged Minimum Wage as the National Living Wage.)

But it doesn’t follow that because such plans can get out of hand, none should be implemented at all.  Over at the Education Department, Gavin Williamson is pondering the matter, this site is told.

The story of Britain’s “jobs miracle” since the late Major period is too well told to need telling again, together with some of the issues that it throws up about the quality and durability of that work.

What’s more to the point now is the return of unemployment on a huge scale.  The Office for Budget Responsibility’s recent assessment was bleak – and, remember, it is based on a “hopefully temporary” shock.

“Unemployment rises by more than 2 million to 10 per cent in the second quarter, but then declines more slowly than GDP recovers,” the OBR declares.

There are two groups of people who are particularly exposed: those who have recently lost their jobs, and younger people – who already find themselves unable to build up capital to the same extent as older ones.

For the former, JobCentre Plus will need a shift in thinking.  Until the Coronavirus, those coming through its doors were those without work in an age of full employment, in effect.

One source pondered whether the service is capable of actively engaging the newly unemployed with potential careers in say, teaching, the police or nursing (at a time when post-Brexit policy seeks to reduce migration).

And there may be a role for an expanded careers service, which takes one to the younger group specifically, who will be entering a restricted labour market.

There’s a case for, say, abolishing some of the lower qualification rules, which make it harder for people from retraining, and for raising the limit in apprenticeship funding for SMEs.

The Government could pay wider time-limited subsidies to businesses fearful of taking new workers on as the lockdown is relaxed.

That raises the potential problem of nothing being so permanent as the temporary – but schemes along those lines wouldn’t be out of place amidst a broader programme of deregulation, tax cuts and letting the deficit take the strain.

That’s if the money markets will wear it, a matter that Neil O’Brien probed in his column earlier this week, but it makes sense, as it did not in 2010, to try to grow our way out of trouble, given the stronger public finances.

At any rate, the Government will need new policy responses to what at the very least will be a spike of mass unemployment for the first time in recent history.

96 comments for: Responding to the challenge of two million unemployed people – and maybe more

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