King's College London

Professor Jonathan Portes gave Rishi Sunak an ‘A-’ grade for the measures he announced on Wednesday, which included discounts on eating out, support for young people facing unemployment, and a furlough bonus for businesses who retain staff.

Speaking on BBC 5Live’s Wake up to Money program, Prof Portes said: “I’d give [the chancellor] an A-. I think he did most of what needed to be done on jobs, which is by far the most important priority at the moment.

“Some of the stuff, like the voucher scheme to eat out for example, seems to me to be a bit gimmicky, and I’m not a fan of the temporary cut in stamp duty. But the central thrust of the measures, in particular helping unemployed young people, was the right one.”

On the bonus that will see employers paid £1,000 to retain furloughed staff, Prof Portes, a member of the Department of Political Economy, said: “The furlough bonus is going to have a very marginal impact on changing anybody’s decision on whether or not to keep on workers. So, essentially, the furlough bonus isn’t going to save very many jobs.

“It is effectively a subsidy to affected businesses and we should think about it like that. It’s a subsidy for businesses that are keeping on their workers. What we expect to see is that most businesses, and we’ve seen this from evidence already, will, in practice, be keeping on their workers.

“We expect 80 per cent of furloughed workers to come back but that still leaves close to two million workers who are at risk and I think for them, this isn’t going to make a huge amount of difference. Their jobs are still at risk and what really matters is what happens to demand in those sectors and whether those sectors and those businesses are able to re-open economically or not.”

 

Prof Portes said calls to simply keep extending the furlough scheme might not necessarily work and added that, because of changes in demand from consumers, some jobs and businesses might no longer be viable.

He stressed the importance of supporting the incomes of people facing those situations and in investment in creating new jobs and training to ensure people could find a way back into work in future.

On extra money for apprentices and support for young people facing unemployment, Prof Portes said: “What we know from past experience is that it’s not just about the short term with youth unemployment, it’s something that has really long-term, damaging impacts on people and on communities. The after-effects of the Thatcher recession in the early 80s, when youth unemployment soared, and long-term unemployment soared, it wasn’t just about the short-term impact, we are still feeling that in some of our communities.

“We’ve got to avoid that happening and that’s why it’s so important that young people can get jobs in the next few months.”