UK Fiscal Statement: 5 things Rishi Sunak must do to kickstart the economy

by Olaf Stando
Posted on
4 years ago
3 min read

The coronavirus crisis has created one of the most severe economic crises in living memory, and it requires an unprecedented response to live up to the scale of the challenge.

In his Fiscal Statement, Chancellor Rishi Sunak must raise the UK government’s ambitions and put forward a major recovery package of investment and powers to kickstart the economy.

Here are five things the Fiscal Statement must include.

1) An overall investment package of at least £80bn

Boris Johnson has promised “great change” in his supposedly transformative “New Deal” – but for all his comparisons to President Roosevelt, his proposed £5bn of re-packaged spending only represents a tiny 0.2% of the UK’s GDP. Re-announcing recycled cash and falling far short of other European countries is simply not good enough.

The SNP and Scottish Government have been consistently clear that what’s needed is a stimulus programme of no less than £80bn in new money – roughly the GDP equivalent of the ambitious investment being made by other European nations, like Germany.

2) Devolution of the necessary financial powers for Scotland to deliver a tailored response

If the Tory government withholds the crucial funds needed to prevent soaring unemployment and protect people’s incomes, it would put Scotland’s recovery at risk – threatening more job losses and a spiral of cuts.

Scotland can make different choices for an investment-led recovery and build a fairer society – but only if we have the powers that are needed.

That’s why we’re calling for the devolution of greater financial powers, for example over borrowing, so that we can shape our own tailored response and give the economy the boost it needs to rebound from this crisis.

3) Extension of the furlough scheme for as long as each of the four UK nations require it

As Rishi Sunak prepares to hastily wind down the furlough scheme, he must make a firm commitment to maintain it for as long as the devolved nations need it.

In Scotland, we have taken a cautious and careful approach, aiming for a total elimination of the virus as soon as possible – and this has meant lifting lockdown restrictions more slowly and gradually.

Rather than offering no answers on its future for Scotland and threatening to push people and businesses into hardship, the Chancellor must now give workers the much-needed certainty – or devolve the fiscal powers so that Scotland can implement its own job retention scheme.

4) Real action to tackle rising child poverty

On top of a decade of cruel Tory austerity cuts and an extreme Brexit, the economic impact of this pandemic has caused an accelerated rise in child poverty rates.

At least 4.5 million children in the UK are living in poverty, which is a staggering indictment of the Tories’ shameful record. Instead of re-introducing the heartless benefit sanctions regime, Rishi Sunak must take urgent and targeted action, or risk child poverty soaring to 5.2 million by 2022 – as the UK government’s own Social Mobility Commission shows.

The Tories must scrap the callous two-child cap, roll out an emergency basic payment to help families struggling due to the crisis, and uplift the child element of Universal Credit and Child Tax Credit by £20 a week to prevent families from being forced between paying their bills or feeding their children.

5) Take measures to protect jobs and introduce an employment guarantee for young people

Amid soaring unemployment, the UK government must take ambitious action to protect jobs, including a youth jobs guarantee – as the Scottish Government has repeatedly called for.

Rishi Sunak must also implement a temporary cut in VAT to boost consumption – with especially low rates for our hospitality and tourism sectors – as well as a two pence cut to employer’s National Insurance contributions to reduce the cost of hiring new staff.