On Wednesday 25th November, the Chancellor Rishi Sunak laid out the government’s plans for spending next year. In his Spending Review speech to MPs in the House of Commons, Sunak highlighted the dire economic forecasts by the Office of Budget Responsibility (OBR), which could see the UK economy contract by 11.3 per cent – the sharpest drop in 300 years.
Despite growth returning as restrictions are eased, Sunak pointed out that the UK’s “economic output is not expected to return to pre-crisis level until the fourth quarter of 2022,” with the “economic damage […] likely to be lasting.” He then added: “Our economic emergency has only just begun. So, our immediate priority is to protect people’s lives and livelihoods.”
Sunak explained that the OBR expects unemployment to peak next year at 7.5 per cent (2.6 million people). So among the packages of measures unveiled in the Chancellor’s review was a pledge of £4.6 billion to drive the UK’s economic recovery through creating jobs for the unemployed.
Of this £4.6 billion, nearly £3 billion will go towards a three-year Restart Programme, to help those who have been unemployed for over a year, find work. A further £1.6 billion will go towards the kickstart scheme in 2021/22, which is aimed at giving young people six-month work placements.
However, many professional bodies and campaign groups have criticised the Chancellor’s Spending Review, calling it “inadequate” given there was little of note for business owners and the self-employed.
Liz Barclay, CEO at BackinBusiness.org.uk called the statement “inadequate” saying “yet again, the Chancellor has failed to understand the vital role freelancers and small businesses will play in this recovery.”
“The freeze in public sector pay, coupled with the job losses in the private sector and the increase in personal debt, means that the Chancellor has killed off consumer confidence, at a time when it needs to be stimulated. This will hit small businesses hard and as a result, we’re not going to see any innovation, risk-taking or job creation anytime soon.”
Echoing Barclay’s thoughts was Mike Cherry, Federation of Small Businesses (FSB) Chairman: “A government which claims to be pro-enterprise had very little to say about the importance of business and private sector job creation.
He added: “This Spending Review was a missed opportunity to help small business owners – not least those who have been excluded from support measures. We have put forward proposals for a workable Director’s Income Support Scheme and we need to see them taken forward.”
Seb Maley, CEO at Qdos, was also critical of the Chancellor for failing to address the gaps in government support: “The Chancellor didn’t even acknowledge the gaps in the Coronavirus support in his speech, despite mounting pressure to tailor the help available. I find it remarkable that the government continues to ignore calls to provide millions of freelancers and small business owners with the support they clearly need.”
“The Spending Review marked a golden opportunity to plug the gaping holes in the support packages, which continue to destroy the livelihoods of some of the UK’s most dynamic and important workers.”
Campaign group ExcludedUK described the Chancellor’s responses as “mere fallacies” and added that many are facing “severe hardship” and continue now eight months on without little or no support whatsoever.
And it is not just industry bodies urging the government to help those that have fallen through the cracks. An all-party parliamentary group of MPs recently wrote a letter to Rishi Sunak, calling on him to resolve the problem.
Mel Stride, chair of the committee, wrote: “The committee deeply regrets that the concerns in the first report of our inquiry into the economic impact of Coronavirus, gaps in support, have not been addressed.”
While Sadiq Khan, London Mayor tweeted in response to the review: “It’s appalling that the government has once again failed to recognise the three million people who have fallen through the cracks for financial support. They are the engine of our economy, they deserve better – and I’ll continue to fight their corner.”