3rd Report - Employment and COVID-19: time for a new deal

The government's response

What the committee recommended 43

1. 1
   The COVID-19 pandemic has affected different businesses and people in different ways. Conclusion · paragraph 8
2. 2
   We congratulate the Treasury for acting swiftly and boldly at the start of the COVID-19... Conclusion · paragraph 11
3. 3
   How the Government responds to rising unemployment in 2021 will be critical to supporting the... Conclusion · paragraph 18
4. 4
   The Government will also need to plan economic and health policy further ahead and set... Conclusion · paragraph 19
5. 5
   In previous reports we have set out the effects of Government inaction and underinvestment in... Recommendation · paragraph 20

See all 43 recommendations and conclusions

Sources

• 3rd Report - Employment and COVID-19: time for a new deal ↗The committee's report, parliament.uk
• Government response to report, 'Employment and COVID-19: time for a new deal' ↗The government's response, 12 February 2021, parliament.uk

Recommendations and conclusions 43

1. 1
   The COVID-19 pandemic has affected different businesses and people in different ways. Conclusion · paragraph 8 Conclusion (the committee's words)

   The COVID-19 pandemic has affected different businesses and people in different ways. The young and the low paid have experienced substantial damage to their livelihoods and prospects. They have suffered the highest number of job losses and the biggest losses in income. In contrast, other businesses and groups of workers, including many of the highest paid workers, have experienced little or no financial hardship and their savings have risen because of the lockdowns and the unavailability of many services. These different impacts and experiences should inform how the Government designs policy to support the recovery.
2. 2
   We congratulate the Treasury for acting swiftly and boldly at the start of the COVID-19... Conclusion · paragraph 11 Conclusion (the committee's words)

   We congratulate the Treasury for acting swiftly and boldly at the start of the COVID-19 pandemic to protect businesses and jobs. The scale of Government’s intervention cushioned the impact of the economic shock on the labour market. However, the labour market is expected to weaken significantly when the Job Retention Scheme ends in 2021 and unemployment will rise.
3. 3
   How the Government responds to rising unemployment in 2021 will be critical to supporting the... Conclusion · paragraph 18 Conclusion (the committee's words)

   How the Government responds to rising unemployment in 2021 will be critical to supporting the recovery and reducing the extent of ‘economic scarring’. Over the next 12 to 18 months, the Government will need to shift public spending away from untargeted wage subsidies and towards policies that are more tightly focused on creating job opportunities.
4. 4
   The Government will also need to plan economic and health policy further ahead and set... Conclusion · paragraph 19 Conclusion (the committee's words)

   The Government will also need to plan economic and health policy further ahead and set out criteria for how these policies will interact and change in response to the course of the pandemic. The Government will need to be flexible so that it can react to changing circumstances, but this should not prevent it from providing more certainty to businesses and workers.
5. 5
   In previous reports we have set out the effects of Government inaction and underinvestment in... Recommendation · paragraph 20 Recommendation (the committee's words)

   In previous reports we have set out the effects of Government inaction and underinvestment in areas which include skills and training, social care and Universal Credit. The COVID-19 pandemic has emphasised the urgent need to take action in these areas. In this report we build on our earlier work and set out how the Government can join up policies to build a sustainable recovery in line with the Government’s longer-term policy objectives. These include meeting the net zero carbon emissions target, improving the UK’s social infrastructure and implementing the levelling up agenda. The Government should support people to find routes into employment, including into jobs which support these objectives, by enhancing the UK’s skills and training system.
6. 6
   The COVID-19 pandemic and associated lockdowns have led to unprecedented public spending to support jobs. Recommendation · paragraph 24 Recommendation (the committee's words)

   The COVID-19 pandemic and associated lockdowns have led to unprecedented public spending to support jobs. The Government should not repeat past mistakes by withdrawing economic support too soon. Over the next 12–18 months it will need to continue to spend to generate a sustainable recovery and to address rising poverty and unemployment.
7. 7
   The Government will need to restore order to the public finances in the future, but... Conclusion · paragraph 25 Conclusion (the committee's words)

   The Government will need to restore order to the public finances in the future, but this should only become a priority once the recovery has been established.
8. 8
   It was understandable that the Government attempted to tailor wage support to the course of... Conclusion · paragraph 35 Conclusion (the committee's words)

   It was understandable that the Government attempted to tailor wage support to the course of the pandemic and towards more viable businesses. Once COVID-19 cases began to increase again in the autumn, it was forced to make a series of policy reversals on the level of wage support it would provide before finally extending the Job Retention Scheme until the end of March 2021. This created a significant amount of uncertainty for businesses and employees and put jobs at risk.
9. 9
   We are disappointed that the Government did not make training more integral to the Job... Recommendation · paragraph 42 Recommendation (the committee's words)

   We are disappointed that the Government did not make training more integral to the Job Retention Scheme. Many employees will need access to training in the coming months. We welcome the Lifetime Skills Guarantee but note that it will not begin until April 2021. The Government should expedite its implementation.
10. 10
    The Government has not taken action to better target the Self-Employment Income Support Scheme at... Recommendation · paragraph 49 Recommendation (the committee's words)

    The Government has not taken action to better target the Self-Employment Income Support Scheme at those most affected by the pandemic, despite having had months to reform the scheme. Too many people may again receive significant payments despite being largely unaffected, and over 500,000 workers who received no support despite being without work entirely will again miss out because of eligibility rules. The Government should target payments more closely to those who have suffered genuine loss of income.
11. 11
    Lockdowns and tiered regional restrictions are designed to save lives, but they cause significant harm... Recommendation · paragraph 58 Recommendation (the committee's words)

    Lockdowns and tiered regional restrictions are designed to save lives, but they cause significant harm to businesses, putting jobs at risk. The Government should continue to search for ways of supporting the businesses and jobs that are most affected by closure and restrictions.
12. 12
    The Government’s calculation of business support funding for regions in tier 3 was opaque. Recommendation · paragraph 59 Recommendation (the committee's words)

    The Government’s calculation of business support funding for regions in tier 3 was opaque. We were told it did not take enough account of differences between different places. The Government should ensure that the level of support pays due regard to the concentration of businesses, particularly those that are vulnerable to restrictions.
13. 13
    The effects of the COVID-19 pandemic on social and economic life mean that health and... Conclusion · paragraph 60 Conclusion (the committee's words)

    The effects of the COVID-19 pandemic on social and economic life mean that health and economic policy need to be designed in tandem. We note that the Government has published an analysis of the health, economic and social impacts of the tiered approach to restrictions. However, this was not sufficiently detailed to enable Parliament and others to determine the level of business and wage support that was needed.
14. 14
    The Government should publish a framework setting out the business and employment support that will... Recommendation · paragraph 61 Recommendation (the committee's words)

    The Government should publish a framework setting out the business and employment support that will be provided in response to evolving public health restrictions, to provide more certainty to people and businesses. The public health restrictions and fiscal support will differ depending whether the economy is in lockdown, is reopening or is in recovery. The framework should be drafted in consultation with devolved administrations at national and regional level. It should be updated as viable alternatives to lockdowns or tiered restrictions are developed.
15. 15
    We heard that business rates relief had made a significant difference to many struggling businesses. Conclusion · paragraph 66 Conclusion (the committee's words)

    We heard that business rates relief had made a significant difference to many struggling businesses. However, we are disappointed that the Government did not take steps to ensure that it was targeted at those businesses that needed it most. Many supermarket and other retailers that were not closed during lockdown benefited from rates relief despite increased sales and revenue during the pandemic. We commend those businesses that have said they will pay back the money they accumulated from this support.
16. 16
    We welcome the Government’s action to address rising debt among businesses, particularly SMEs, by extending... Conclusion · paragraph 77 Conclusion (the committee's words)

    We welcome the Government’s action to address rising debt among businesses, particularly SMEs, by extending repayment relief to those with Government-guaranteed loans. However, it is likely that a significant proportion of the debt will never be repaid, and indebtedness will weigh on balance sheets for years. The scale of the debt challenge is substantial and will require bold solutions.
17. 17
    The Government should create a new state entity to manage debt and repayments, along the... Recommendation · paragraph 78 Recommendation (the committee's words)

    The Government should create a new state entity to manage debt and repayments, along the lines of the UK Recovery Corporation proposed by TheCityUK.
18. 18
    We are concerned that Government-backed loans will be recovered in the same way as standard... Conclusion · paragraph 79 Conclusion (the committee's words)

    We are concerned that Government-backed loans will be recovered in the same way as standard commercial loans. The COVID-19 loans schemes should be converted into more manageable obligations such as liabilities collected through the tax system or future revenue-linked structures. Repayments could be limited to a percentage of total turnover or profit with the difference covered by the Government guarantee.
19. 19
    The Government’s focus on debt has meant that the role of equity has been overlooked. Recommendation · paragraph 80 Recommendation (the committee's words)

    The Government’s focus on debt has meant that the role of equity has been overlooked. The Government should consider innovative proposals for increasing equity injections into businesses of a sufficient size. We heard that this could be achieved through the private sector with state coordination, or through a new state corporation.
20. 20
    The extended Job Retention Scheme will keep many people employed who might otherwise have lost... Recommendation · paragraph 86 Recommendation (the committee's words)

    The extended Job Retention Scheme will keep many people employed who might otherwise have lost their job. However, it will not protect every job and the social security system will need to provide an adequate safety net for those out of work. It will also need to provide strong employment support to help people back into work. The Government should use the time provided by extending the Job Retention Scheme to bolster Universal Credit and the social security system, so that it is able to meet the demands of the labour market crisis. Our July 2020 report on Universal Credit set out what should be done.
21. 21
    In our July 2020 Universal Credit report, we set out evidence on the effects of... Recommendation · paragraph 94 Recommendation (the committee's words)

    In our July 2020 Universal Credit report, we set out evidence on the effects of cuts to social security made over the last decade on the poorest. We concluded that Universal Credit had been inadequate for many to live on and that the emergency increase in the standard allowance should be made permanent. This would make a significant difference to many but would be only a small increase in expenditure on the social security system compared with previous cuts to it. The Government should now commit to making the increase in the standard allowance permanent.
22. 22
    The Government should ensure that those on legacy benefits receive an uplift comparable to that... Recommendation · paragraph 98 Recommendation (the committee's words)

    The Government should ensure that those on legacy benefits receive an uplift comparable to that of Universal Credit.
23. 23
    The Government should retain the emergency increase in Local Housing Allowance and set out how... Recommendation · paragraph 102 Recommendation (the committee's words)

    The Government should retain the emergency increase in Local Housing Allowance and set out how the benefit will mirror changes in rents.
24. 24
    The benefit cap was designed to encourage people into work. Conclusion · paragraph 109 Conclusion (the committee's words)

    The benefit cap was designed to encourage people into work. This mechanism will function less effectively when there are substantially more claimants chasing fewer suitable vacancies; therefore, it was a mistake to have allowed the grace period to end for many new claimants. It is not good enough for the Government to review the cap at the “appropriate time”. It should be done now.
25. 25
    We agree that increasing the child element of Universal Credit and Child Tax Credit would... Recommendation · paragraph 114 Recommendation (the committee's words)

    We agree that increasing the child element of Universal Credit and Child Tax Credit would be a better way to target support than a uniform increase in Child Benefit. The Government should assess the merits of these proposals and increase the generosity of social security for struggling families. In addition, there is evidence that spending money on social security can have strong multiplier effects because low-income families have a greater propensity to spend additional income.
26. 26
    Statutory sick pay helps to slow the spread of the virus by enabling those who... Recommendation · paragraph 120 Recommendation (the committee's words)

    Statutory sick pay helps to slow the spread of the virus by enabling those who may be affected to stay home from work. We heard that the cost of providing adequate sick leave to quarantined workers is small in comparison to the cost of them not isolating and spreading the virus further. As a priority, the Government should raise the level of statutory sick pay and expand eligibility to the lowest paid.
27. 27
    We welcome the Restart Programme and the increased funding for employment support services. Conclusion · paragraph 139 Conclusion (the committee's words)

    We welcome the Restart Programme and the increased funding for employment support services. The Department for Work and Pensions should include a greater emphasis on skills profiling in its employment support offer, which can help to redeploy people quickly into growing sectors based on the skills of jobseekers and the needs of the local labour market.
28. 28
    The Government should also examine successful examples in other countries, such as in Sweden and... Recommendation · paragraph 140 Recommendation (the committee's words)

    The Government should also examine successful examples in other countries, such as in Sweden and Austria, of employment services intervening early with declining businesses and sectors to transition workers quickly to more viable employment. These measures could be integrated into the Restart Programme.
29. 29
    The Department for Education and the Department for Work and Pensions should devolve more programmes... Conclusion · paragraph 141 Conclusion (the committee's words)

    The Department for Education and the Department for Work and Pensions should devolve more programmes and resources to local areas, including to combined and local authorities, to employers and directly to education and training providers. This should include increased resources for the design and delivery of employment and training programmes for both young and older people. There is strong evidence internationally that this approach is effective.
30. 30
    Kickstart should be made available to more young people than just those who have claimed... Conclusion · paragraph 150 Conclusion (the committee's words)

    Kickstart should be made available to more young people than just those who have claimed Universal Credit for a minimum of six months. Local authorities and other civil society partners should be able to refer young people not on benefits to the scheme.
31. 31
    The Government should introduce support for young people on Kickstart to look for a follow-on... Recommendation · paragraph 151 Recommendation (the committee's words)

    The Government should introduce support for young people on Kickstart to look for a follow-on job once their Kickstart placement ends. The Government should consider encouraging Kickstart employers to offer apprenticeships for those completing their Kickstart placement.
32. 32
    The Government should introduce a standardised employment contract for Kickstart jobs to provide clear criteria... Recommendation · paragraph 152 Recommendation (the committee's words)

    The Government should introduce a standardised employment contract for Kickstart jobs to provide clear criteria for ensuring that jobs are good quality. The Government should also consider incentives to help young people move towards jobs with opportunities to develop skills in digital and other growing sectors.
33. 33
    The Government should reconsider the requirement for employers wanting to offer fewer than 30 Kickstart... Recommendation · paragraph 153 Recommendation (the committee's words)

    The Government should reconsider the requirement for employers wanting to offer fewer than 30 Kickstart roles to apply through a representative organisation.
34. 34
    The most significant barrier to hiring apprentices is cost. Recommendation · paragraph 157 Recommendation (the committee's words)

    The most significant barrier to hiring apprentices is cost. Faced with falling numbers of apprenticeship starts and reduced recruitment, the Government should consider raising the level of hiring subsidies for apprentices. At the least it should reconsider its policy of paying incentives in instalments, which does not help employers enough with the upfront costs of recruiting and training apprentices. Incentive payments should be paid upfront.
35. 35
    In the short term, the Government should consider extending the lifetime of apprenticeship levy funds... Recommendation · paragraph 158 Recommendation (the committee's words)

    In the short term, the Government should consider extending the lifetime of apprenticeship levy funds from 24 to 36 months to give employers a further year to use their funds to support the training of apprentices, and ensure that apprentices who were furloughed do not miss out on the chance to complete their training due to expiration of levy funds.
36. 36
    The Government’s Plan for Jobs and the Restart Programme will not be a sufficient response... Conclusion · paragraph 167 Conclusion (the committee's words)

    The Government’s Plan for Jobs and the Restart Programme will not be a sufficient response to the level of youth unemployment which has been forecast.
37. 37
    The Government should join up its skills and training policies under the auspices of a... Recommendation · paragraph 168 Recommendation (the committee's words)

    The Government should join up its skills and training policies under the auspices of a new job, skills and training guarantee, available to every young person not in full-time education or employment for one year. The guarantee should include public job creation and hiring incentives for private job creation. The scheme should be managed at a regional level, with mayors, local authorities and Local Enterprise Partnerships providing coordination, prioritisation and leadership. Local authorities should be provided with adequate funding to deliver these objectives.
38. 38
    The Government’s fiscal interventions have focused on measures to rescue businesses and jobs affected by... Recommendation · paragraph 173 Recommendation (the committee's words)

    The Government’s fiscal interventions have focused on measures to rescue businesses and jobs affected by lockdowns and public health restrictions. The Government should now set out a plan for creating job opportunities. Investment should be directed towards jobs that are: suitable for those most at risk of unemployment; needed across the country as a whole; and most likely to have long-term benefits to the UK.
39. 39
    We heard a range of ideas for how the Government should invest to create jobs. Recommendation · paragraph 174 Recommendation (the committee's words)

    We heard a range of ideas for how the Government should invest to create jobs. In line with these principles, we believe the Government should place investment in the UK’s ‘social infrastructure’ and in meeting its objectives on climate at the heart of a recovery plan.
40. 40
    The UK has an aging population and shortage of care workers. Recommendation · paragraph 183 Recommendation (the committee's words)

    The UK has an aging population and shortage of care workers. The Resolution Foundation said it would take an extra 180,000 care workers just to bring the ratio of carers to the over-70s population back to its 2014 peak. The Government should significantly expand the number of care workers by increasing funding in the social care sector with stipulations that it should be used to raise wages and improve training and conditions in the sector.
41. 41
    The childcare sector has sustained significant damage during the pandemic. Recommendation · paragraph 191 Recommendation (the committee's words)

    The childcare sector has sustained significant damage during the pandemic. The sector can employ large numbers of people across the country quickly and provides a service which helps others re-join the workforce. To prevent further closure of childcare providers, the Government should continue to provide free entitlement funding to local authorities and childcare providers at pre-pandemic occupancy rates until they have returned to normal levels. It should provide transitional funding in line with that provided to schools to help prevent redundancies and ensure providers continue to operate.
42. 42
    The Government should prioritise green projects that can be delivered at scale, quickly, and across... Recommendation · paragraph 202 Recommendation (the committee's words)

    The Government should prioritise green projects that can be delivered at scale, quickly, and across the country. This would help align economic recovery with the Government’s longer-term objectives on levelling-up and climate change. We heard that investment in parks and green spaces, making cities friendlier to cyclists and pedestrians, retrofitting buildings, and switching gas boilers to low-carbon alternatives could create jobs quickly. The Government should also examine expediting renewable energy projects.
43. 43
    Investment in sustainable industries, social infrastructure and in the employment and skills system should be... Conclusion · paragraph 203 Conclusion (the committee's words)

    Investment in sustainable industries, social infrastructure and in the employment and skills system should be a major element of the Government’s ‘levelling up’ agenda and it should help the people and places that have been hardest hit during the pandemic.