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Sunak aims to prevent a generation being ‘left behind’ due to coronavirus crisis

Stefan Rousseau

By David Hughes, PA Political Editor, and Sam Blewett

Rishi Sunak is to set out emergency plans to keep people in work as the coronavirus crisis hits the economy.

The Chancellor’s proposals, which include a £2 billion scheme of taxpayer-funded work placements for young people, are aimed at preventing an entire generation being “left behind”.

He is also expected to announce a stamp duty holiday to temporarily exempt the first £500,000 of homes purchased in England and Northern Ireland from the tax in an effort to revive the housing market.

At a Cabinet meeting on Wednesday morning, Mr Sunak told ministers that the Government had supported businesses and families through the “first phase” of the crisis but now needs to help the economy as it reopens.

He said the Office for Budget Responsibility and the Bank of England are both predicting “significant increases in unemployment”.

A Downing Street spokesman said Mr Sunak outlined that young people are “particularly vulnerable” because they are two-and-a-half times more likely to work in the sectors that have been closed.

“The Chancellor emphasised that we don’t want that generation left behind and that is what today’s economic update will focus upon,” the spokesman said.

The “kickstart scheme” will create hundreds of thousands of state-subsidised jobs for 16 to 24-year-olds who are claiming Universal Credit and at risk of long-term employment.

It comes on top of the furlough scheme which has seen the state pay the wages for nine million jobs.

While Mr Sunak is expected to largely rely on borrowing to fund his package, the Government will eventually need to act to control the public finances.

Institute of Fiscal Studies director Paul Johnson said some of the extra spending may turn out to be permanent, rather than short-lived emergency measures.

“He is going to be worrying about the cost of all this, but he is not going to be worrying about it this year and possibly not next year,” he told BBC Radio 4’s Today programme.

“But in two or three years’ time – partly because the economy will be smaller than we expected and tax revenues will be lower, and partly because I think significant chunks of this extra spending will be permanent – at some point he is going to have to come back and pay for this.”

Labour will push Mr Sunak to “avoid additional floods of redundancy notices” by developing a “flexible” furlough scheme in areas where local lockdowns are put in place.

The Treasury acknowledged that young people are more likely to be furloughed under the job retention scheme which is being wound up and is due to end in October.

The new scheme for 16 to 24-year-olds will see the Government cover 100% of the minimum wage for 25 hours a week, with bosses able to top up wages.

Shadow chancellor Anneliese Dodds said the Government is “yet to rise to the scale of the unemployment crisis” and said the priority should be to abandon its “one-size-fits-all” approach to ending the job retention and self-employment schemes.

“In addition, older people who become unemployed, and those living in particularly hard-hit areas, will also need tailored support,” she added.

Liberal Democrat leadership candidate Layla Moran said the package “will sadly be too little, too late for many of the corona class of 2020”.

However, TUC general secretary Frances O’Grady welcomed the measure as a “good first step” to prevent mass youth unemployment.

“But we’ll be checking the small print to ensure every job provides proper training and a bridge to steady employment,” she added.

And CBI director-general Dame Carolyn Fairbairn said the plan “will be a much-needed down- payment in young people’s futures”.

“By investing in skills, the Government can lessen the potential scarring impact of the pandemic for the next generation,” she added.

Among the job measures already announced are a £111 million scheme for firms in England to get a £1,000 bonus if they offer unpaid traineeships.

Thousands of jobs have been cut as businesses struggled through lockdown, with Royal Mail, Centrica, easyJet and British Airways among those affected.

Meanwhile, on the eve of the speech, the Unite union said 2,200 DHL workers involved in the production of Jaguar Land Rover’s vehicles were told they could lose their jobs.

The 2,200 proposed redundancies comprise just under 40% of the entire DHL workforce on the contract, it added.

In his speech, the Chancellor will also detail a £3 billion green package, with grants for home-owners and public buildings to improve energy efficiency.

It will include £2 billion for households to insulate their homes and make them more energy-efficient, but campaigners said the funding pales in comparison to the economic and environmental crises.

Mr Sunak has also been urged to consider an emergency VAT cut to stimulate consumer spending and stem the 14% slump in GDP forecast by the Bank of England this year.

The UK’s unemployment rate could also soar to 14.8%, with job losses comparable to the 1930s, according to the Organisation for Economic Co-operation and Development (OECD).