Here’s where Chancellor went wrong – Ian Murray MP

The UK’s coronavirus outbreak has been one of the worst in world – with Scotland not far behind – and our economies are faring no better, writes Ian Murray MP.

Chancellor of the Exchequer Rishi Sunak delivers a summer economic update in a statement to the House of Commons (Picture: House of Commons/PA Wire)

It was the right thing to do to lock the country down for over a quarter of the year. The entire world did the same, but the economic impact inevitably means significant ramifications for jobs and livelihoods.

Yesterday’s budget statement by the UK Chancellor was sobering when he said the lockdown reduced the size of our economy by 25 per cent, equivalent to all the combined growth of the last 18 years. That translates to people’s jobs.

Research reported this week indicates that UK workers have already been the biggest casualty in the global jobs cut. In Scotland, the Scottish Government has admitted the situation could be even worse with Edinburgh particularly badly affected.

We can’t afford the projected mass unemployment and the impact that would have on our communities. The levels of unemployment this country has seen in the past were not just an economic waste, they ruined lives.

The Labour Party has tried to be a constructive opposition during this time of crisis. We won’t criticise for criticism’s sake. But when the UK or Scottish Government falls short, we must speak up. And the blunt truth is that the UK has one of the highest death rates in the world, with Scotland is just a bit behind. Our economies are faring no better, with a former Scottish Government adviser predicting Scotland will have the worst economic performance of any country in the developed world.

That is why the economic response to this crisis must be focussed solely on the new political mantra of “jobs, jobs, jobs”. However, one of the key elements to that is keeping the hardest hit sectors viable. That is why we are so disappointed that the Chancellor didn’t accept our constructive suggestion to extend the Job Retention Scheme to those sectors that will take longer to recover. The tourism, hospitality and cultural sectors are pivotal to the Scottish economy and the VAT reduction to five per cent will help but they need more targeted support. As one local hotelier told me this week, it costs his business more money to be open than closed.

Until now, the Chancellor has described this kind of targeted, sectoral approach as ‘picking winners’. But the necessary public health measures have created considerable losers.

Supporting businesses which are viable in the long-run, but which are currently starved of cash and customers, is not a matter of ‘picking winners’. It is about protecting our country’s economic capacity for the future. Often when businesses and industries close they are never replaced.

Failure to do so – to make the Job Retention and self-employed schemes more targeted and focused, and to support perfectly viable businesses – will cost jobs. Take the new £1,000 per employee bonus for those businesses that take workers off furlough and keep them employed into the new year. It seems a good scheme but many businesses don’t have the cash to do that. There is no doubt that the best thing the Government can do to boost demand is to give consumers and workers confidence through job security.

That confidence isn’t helped by the Chancellor’s silence on giving support to those small businesses, the self-employed, and workers such as freelancers who have fallen through the cracks of current schemes. These full taxpayers have gone from full income to no income.

In Scotland, the Barnett formula means an additional £800m to Scotland. The Scottish Government will make the decisions on how it is spent. I hope it is targeted on ‘jobs, jobs, jobs’ with an ambition to build back better. The nationalists’ strategy so far has been to demand more powers, but Scotland is benefitting from the best of both worlds at the moment. A parliament making its own decisions and paying for them with the financial clout of the UK.

My plea would be that being ambitious about the future should not just be to build our way out of this and back to the same old, but to do so in a greener, cleaner and fairer way.

Ian Murray is the Labour MP for Edinburgh South

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