The Spectator

It’s time to end furlough – and let the British economy recover

At the start of this year, Britain looked as if it would be the first major country to vaccinate its way out of lockdown. Kate Bingham and her team had secured Britain a supply of effective jabs delivered at the fastest rate in Europe. This opportunity was then squandered as the government was swayed by advice from Sage advisers, who kept underestimating the vaccines’ effectiveness. Sage produced no fewer than nine scenarios for Covid hospital cases by mid-August, all of which have proved vast overestimates. The government’s reliance on such advice has come at a heavy cost.

In America, where most states lifted lockdown restrictions months before Britain, the economy has recovered to pre-pandemic levels. Britain’s economy has been kept down for far longer, but what we have seen so far suggests there is huge potential for recovery. There are many more job vacancies than before the pandemic. Because of competition, pay is rising — with average earnings up 8.8 per cent over the past year. There are reports of companies fly-posting to recruit workers, and employees quitting their jobs in the belief that they’ll soon find a new one with better pay.

Furlough needs to end before it is allowed to become a permanent part of the benefits system

It’s possible to view this in a less favourable light: to complain about the ‘cost of labour,’ or ‘inflation-busting’ pay rises. Employers have already expressed concern about a Brexit-induced shortage of immigrant workers, as if the government has a duty to supply people willing to do skilled work for unskilled wages. Care homes, for instance, have got away with paying far too little (less than supermarkets do) to employ people whose jobs are hugely important. Another example is the food processing industry, where many companies have neglected to invest in automation because they could find cheap labour so easily.

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