Halloween jobs horror awaits unless Sunak U-turns on furlough

The House of Lords has some fine minds, and nowhere more so than on its economic affairs committee. Lord Skidelsky wrote the definitive three-volume work on John Maynard Keynes. Lord Burns, a former chief economic adviser at the Treasury, was once tipped as a Bank of England governor. Then there’s Lord Stern, an authority on climate change and a former chief economist at the World Bank.

With intellect like that, today’s committee session with the CBI and the TUC on the question of “will the Covid crisis lead to mass unemployment” should be brief. You don’t need a PhD to come up with the right answer, which is: of course it will, unless the Government reverses course on an avoidable but entirely predictable policy error, and extends its furlough scheme beyond the end of next month. If it does end on Halloween, it will be a horror movie for the jobs market all of its own. 

In a year in which societal and economic norms have been torn asunder, the taxpayer’s continued presence in the pay packets of millions of workers is an admitted aberration. But that doesn’t mean a hard stop is the right move. The intense desire for “normality” feeds through every politician’s call, for example, for us to hop on trains and head back to the old world.

Tearing off the furlough plaster is another manifestation of the trend, even though home working is here for good and the virus is worryingly resistant to political efforts to “move on”. But ending the job retention scheme as the economy heads into a bleak winter solves nothing and will compound the long-term economic scarring left by Covid-19. 

Some numbers for the learned peers to consider: there are 32.9m workers in the UK, and according to the Office for National Statistics’ latest survey, 11pc of them were still furloughed as of the end of August. That’s 3.6m workers currently facing a very uncertain future after October. In hospitality and food, the furlough share is much higher at around 25pc; in a UK cultural and arts scene hammered by social distancing, more than half are still in the job retention scheme.

Hence the outrage of MPs such as Julian Knight, the chairman of the culture, media and sport select committee, who warns the country risks becoming a laughing stock if politicians let it go to the wall. Those suggesting that the continued presence of furlough will simply slow the reallocation of resources needed in an efficient post-Covid recovery seem to assume that nobody will ever want to go to the theatre again. 

Throwing these and other workers into the biggest jobs bonfire since the early 1990s is folly, particularly as employers show no appetite to take them on. The latest jobs figures show just 370,000 vacancies. As the Bank of England’s rate-setter Michael Saunders pointed out in a speech the Chancellor really should read, faster indicators show vacancies are still down by 55pc year on year and there is a “marked weakness” in hiring intentions.