MP’s have urged the Chancellor to consider a targeted continuation of the Furlough scheme and warn of mass long-term unemployment and viable firms could go under without support
The Treasury Committee’s report the Challenges of Recovery finds that Effectively targeted assistance to those who need it is important
However, they say it is not clear that the Job Retention Bonus is good value for money as it’s not effectively targeted.
The Chancellor should carefully consider whether a targeted extension of the Coronavirus Job Retention Scheme (CJRS) and/or other targeted support measures might be required
The legacy of the crisis will be a sharp rise in the level of public debt,they say and possibly an ongoing rise in borrowing.
This will make the job of stabilising the public finances in the long-term more difficult.
At the next fiscal event, the Chancellor should set out an initial roadmap of how he intends to place Government finances on a sustainable footing. The Committee notes that tax increases too early are likely to stifle economic recovery.
In order to prevent “levelling up” becoming an empty slogan, the Government should produce a strategy underpinning it that defines clear objectives and includes the indicators it will use to gauge success at the next fiscal event. The Government should clarify whether it plans to close productivity, health outcomes and education outcomes gaps, and how it intends to do so.
The Eat Out to Help Out Scheme has ended, and the continued VAT cut on hospitality and leisure may not be enough to encourage consumers to continue to spend. The Chancellor needs to consider whether additional measures to stimulate consumption are warranted
Commenting on the report, Rt Hon. Mel Stride MP, Chair of the Treasury Committee, said:
“The Committee’s disappointment that the Government did not implement our recommendations to help those who have fallen through the gaps in support persists. Our second report of the inquiry focuses on emerging challenges as lockdown measures are lifted.
One such challenge is to target assistance effectively at those businesses and individuals who need it. The Chancellor should carefully consider targeted extensions to the Coronavirus Job Retention Scheme and explain his conclusions.
The key will be assisting those businesses who, with additional support, can come through the crisis as sustainable enterprises, rather than focusing on those that will unfortunately just not be viable in the changed post-crisis economy.
This requires a very difficult set of judgements; it is where careful analysis and creative thinking will be critical.
As the Committee has said throughout the crisis, the Chancellor must continue to show flexibility in his approach. We hope that the Treasury’s unwillingness to implement the recommendations from our first report is not a sign of how it will respond to this one.”