Last week marked four years since Rishi Sunak launched the coronavirus job retention scheme or “furlough”.
Like the rest of Europe, we faced a huge Covid-induced potential rise in unemployment. Unemployment was predicted to rise as high as 14% or 4 million out of work, the highest number ever experienced. The long term risk of businesses ruined and skills lost was all too apparent.
This was the nightmare that furlough successfully prevented. HMRC has showed that the scheme was used by 1.3 million employers and protected 11.7 million jobs. Without the scheme people would have lost their jobs, firms would have gone bust and our national economy (which is predicted to grow faster than France or Germany) would have been at a far lower base.
The support provided by furlough was part of the total package of £400 billion spent on dealing with the effects of the pandemic.
That was a huge amount of taxpayer money - but it was absolutely necessary and without it the ability of the economy to avoid a downward spiral, to bounce back and pay for ongoing public services would have been deeply undermined. It was not alas the only macro threat that the Government has had to address on behalf of taxpayers. Putin's invasion of Ukraine contributed to a substantial spike in inflation and increase in the cost of living and again the Government intervened to support households, in particular with energy bills.
Governments have a vital role to intervene in an emergency. However this should never be taken for granted to be able to help Governments need to have their house in order.
In 2010 the Government was spending massively more day-to-day than it was raising in taxes. As a result every year more and more debt was being accrued to be paid off (with interest) by taxpayers over decades to come. It was incredibly difficult but by 2019 the annual deficit had been virtually eradicated. That gave us headroom when we needed it to spend more money through an emergency.
With inflation forced down to 3.4%, lower business taxes to support investment and an NI cut of around £1,050 for the average worker locally we continue to help build a more productive economy for the future – and to help again in emergencies.