YCL: Summer Budget “less than a drop in the ocean compared to what is really needed”

The Executive Committee of the Young Communist League released a statement last night (8 July 2020) in response to the Government’s Summer Budget.

The Chancellor’s summer budget announced today fails to deliver the real investment required to support working people and Britain’s youth amid the ongoing COVID-19 pandemic.

The so-called ‘kickstart jobs scheme’ for young people, whereby the government promises to invest £2bn into a fund to subsidise minimum wage six-month work placements for young people at risk of long-term unemployment is less than a drop in the ocean compared to what is really needed to fight off the looming unemployment crisis. Youth unemployment stands at least 10.9%. There are well over 500,000 unemployed 16-24 year olds in Britain and this number is set to rapidly increase as the furlough scheme is withdrawn and pandemic related economic shock persists.  

Even on current youth unemployment numbers, the Tories £2 billion fund amounts to less than £4,000 per unemployed 16 – 24 year old in Britain. This would scarcely cover the wage cost if every young worker employed under the scheme was paid the under 18 £4.55 per hour rate – never mind those on the higher 18 – 20 and 21 – 24 year-old rates. This isn’t even taking into account the duration and cost of running the scheme itself.

Tory cuts, free market obsession and a refusal to intervene to protect jobs means another generation is set to be thrown on the scrapheap.

The government have said the fund will support employers to pay minimum wage placements for six months, targeted at hospitality and retail, two sectors particularly hit by the COVID-19 Pandemic. Whilst these sectors are in need of support, this scheme fails to address the scale of the problem and the need for massive levels of investment to redress the economy. Britain’s youth deserve better than poverty pay and fixed term employment. We deserve a future worth living for.

There is no incentive for employers to pay more than the minimum wage, which is especially low for under 25s. There is also no incentive to maintain contracts beyond the six month period of the government subsidy. As has been the case for several years, these schemes only serve to subsidise big business and benefit  the ruling classes, to protect their profits against losses. 

Not only this, the scheme makes no attempt to offer solutions for apprentices, nor has it guaranteed training of any kind. The idea that this scheme will be used to support young people to find work, rather than simply subsidising big business is naive at best. Small businesses are also fearful they will be hung out to dry behind large corporations able to exploit the system for workers they would have been employing anyway. 

We need investment in apprenticeships as part of a green new deal, not six month minimum wage work placements to support corrupt employers on the high street.

Next on the Chancellor’s so-called bonanza of investment- “Eat out to help out”. Leaving the terrible branding of the scheme aside, the 2-4-1 voucher scheme entirely misses the point. Families in Britain are struggling to put food on their own tables and many are going hungry. Food Bank use has surged even higher over the last three months as unemployment has surged and universal credit has failed to protect those in greatest need. This voucher scheme does nothing to protect the poorest in society but instead incentivises well-off families to eat out and support large chain restaurants. While schemes were reportedly being considered throughout the week that would see families supported with up to £500 of vouchers for food, it is perhaps unsurprising that the Tories have instead opted for a paltry £10 meal deal instead. 

The idea that Sunak’s paltry offering is anything like a self-styled Tory Roosevelt ‘New Deal’ is laughable.

We need structural welfare reform to support the poorest of families, not 2-4-1 voucher schemes to further subsidise wealthy families.

As part of the wider program of investment the Chancellor announced further cuts to VAT and stamp duty. Stamp Duty has been cut, “to support those to take the first step on the property ladder”. In reality, stamp duty only applied to those in England buying homes valued at more than £125,000- this has now been bumped up to £500,000. On what planet does this do anything to support working families, homeowners or otherwise? People are unable to pay their rent, they’re not worried about the next rung on a property ladder, which could collapse at any second. As we’ve already seen throughout this crisis, the government are totally unwilling to support renters in need, nor are they supporting the building of affordable homes. The cut to VAT for the hospitality sector, whilst welcomed in the sector, does nothing for working families unable to afford it regardless. Not only this, the cut is estimated to cost the Government around £4.1bn. Rather than cutting VAT, the government should go after tax dodgers estimated to cost the government around £33 billion each year. Instead, by further squeezing the resources available, the government have all but assured the public that austerity is on its way.

We need tax reform now to ensure the wealthy are paying their fair share, we don’t need cuts to Stamp Duty to help the rich buy bigger houses.

These three schemes announced today are emblematic of the failure of this Tory Government. The TUC said it was a “good first step”. This may be the case, but it is nothing in comparison with what is required to support young people, renters and working families. 

Never forget that £1,300 billion was handed over by the British state to rescue City of London banks and markets during and after the 2007-8 financial crisis.

We have to mobilise a ‘Popular Front’ alliance against Tory policies that put the interests of big business above those of working people and the youth.

We need economic reform now!

The time for piecemeal schemes that subsidise big businesses is over!

Executive Committee
Young Communist League

8 July 2020
London, Britain

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