Rishi Sunak, the chancellor, has warned that he will not be able to protect “every single job” as the UK enters one of the most severe recessions “ever seen”.
The chancellor used his summer statement on Wednesday to outline a new package of job support worth up to £30bn, but business leaders and union bosses have warned that millions of jobs in some of the hardest hit sectors, such as retail, are still at risk.
Mr Sunak admitted there were flaws in some of the measures announced, including a “deadweight” cost to the government’s £9bn bonus scheme designed to reward employers who bring back furloughed workers.
“If you’re asking me ‘can I protect every single job’, of course the answer is no. Is unemployment going to rise, are people going to lose their jobs? Yes, and the scale of this is significant,” he warned in a BBC Breakfast interview on Thursday.
“We are entering one of the most severe recessions this country has ever seen. That is of course going to have a significant impact on unemployment and on job losses,” he said.
The chancellor also hinted the government could raise taxes in order to get public finances back to a “sustainable” level, after ministers gambled on borrowing vast sums to minimise the long-term economic damage wreaked by the coronavirus pandemic.
Britain’s public borrowing will rise to more than £350bn this financial year and the deficit is likely to reach 18 per cent of national income, according to Financial Times calculations.
In a separate interview with BBC Radio 4’s Today programme on Thursday, the chancellor said he was prepared to make the decisions required to cover the cost of the measures, “difficult as they may be”. Pushed on whether this could include tax rises, he said it was “too early to speculate”.
He said: “Longer term, we will and we must return our public finances to a sustainable position. We are able to borrow at record-low interest rates, that allows us to carry a higher rate of debt, but we must remain alert to changes.”
Defending the decision to end the government’s furlough scheme, which has supported 9m jobs since March, Mr Sunak cautioned against people “sitting there on furlough forever” as their skills would fade and they could lose the opportunity to move on to a different job.
“Fundamentally we have to get our economy back to normal: we can’t sustainably have a system where government subsidises jobs and [that is] the only way that those jobs exist,” he said.
The government’s “job retention bonus”, a payment of £1,000 per worker for companies that bring back staff who have been furloughed, could cost up to £9bn if all 9m people currently on the scheme were re-employed before January.
Mr Sunak admitted some companies would claim the £1,000 even though they were already planning to keep workers on, but he said the government’s approach was justified.
“Without question there will be deadweight — and there has been deadweight in all of the interventions we have put in place,” he said.
“Throughout this crisis I’ve had decisions to make and whether to act in a broad way at scale and at speed, or to act in a more targeted and nuanced way.
“In an ideal world you would minimise that deadweight and do everything in incredibly targeted fashion,” he said. “The problem is the severity of what was happening to our economy, the scale of what was happening, and indeed the speed that it was happening at demanded a different response.”
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