The Government is ‘sleepwalking into an unemployment crisis’ and risks destroying the prospects of a generation of young people, Tory financier Lord Forsyth has warned.
Ministers’ efforts to patch up the labour market following months of Covid chaos are falling short of what is needed, the influential peer added.
Today the House of Lords economic affairs committee, which he chairs, published a report calling on the Government to step up efforts to get Britain working again.
Warning: Ministers’ efforts to patch up the labour market following months of Covid chaos are falling short of what is needed
‘Time for a New Deal’ urges ministers to invest in job creation, hire more social workers and build up the childcare sector to ‘repair the UK’s social infrastructure’.
Lord Forsyth, a former deputy chairman of JP Morgan UK who served in John Major’s cabinet, said: ‘The Government is sleepwalking into an unemployment crisis. This report is trying to save the prospects of a generation of young people.
‘We think that the Government is assuming that the vaccine means the economy will no longer need support. We think that’s wrong.
‘The sectors with jobs that historically lead labour market recoveries – hospitality, retail and leisure – have been flattened. They are likely to be in a worse state in the spring when wage support ends. Unemployment will spike.’
The warning will set alarm bells ringing for Chancellor Rishi Sunak.
Faced with a £2trillion public debt pile, Sunak cut foreign aid spending and froze public sector pay. But Lord Forsyth said it was ‘a mistake to think about retrenchment before we have a recovery’.
He added: ‘I think that was one of the big errors we made after the financial crisis. Mistakes happen, but it’s when you repeat those mistakes that it becomes unforgivable.’
The Lords economic affairs committee, which includes Test and Trace boss Dido Harding and former BT chief executive Lord Livingston, is recommending priority for ‘green’ projects like cycle routes, making older buildings more environmentally friendly, and switching gas boilers to low-carbon alternatives.
It says support programmes such as Kickstart, which pays businesses to take on young interns, should be widened. Firms should be given larger hiring subsidies for apprentices, the report added.
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