COVID-19, Jobs And What This All Means For British Politics


It is not easy being Chancellor of the Exchequer, something George Osborne found out when he was booed at the 2012 Paralympic Games. But for Rishi Sunak, the COVID-19 pandemic has provided him the ability to gain the support of the public, becoming the most popular Chancellor in fifteen years, according to YouGov.

Yet these are exceptional times. The European Commission predicts British GDP could shrink by nearly 10% during 2020, with the COVID-19 pandemic also taking its toll on jobs. Among those to cut the size of their workforce are Boots, Burger King and John Lewis, who between them could sack up to 7000 staff. Meanwhile, figures from the Office for National Statistics point to a gloomy future, with 600,000 employees being removed from the payroll between March and May. many companies still dependent on the furlough scheme, it is likely unemployment will rise further later in the year when the scheme is wound-up, with the Office for Budget Responsibility predicting up to 20% could lose their jobs.

The current economic crisis has come at a key moment in British politics. Both Boris Johnson and Keir Starmer have been in their jobs for under a year and have sought to shift the ideological consensus in their parties. As it currently stands, the ongoing economic crisis and its effect on employment is reinforcing this process.

The Chancellor pledged last Wednesday to assist the ailing hospitality sector through a cut in VAT, a restaurant voucher scheme, and to provide funding for internships for young people. Sunak also announced that a £1000 bonus would be paid to companies who brought their staff back from furlough.  The Prime Minister also promised that this would not be paid for by a return to austerity, making future tax rises inevitable, and representing a break with the thinking of past Tory governments, who have emphasised low taxes coupled with low government spending. Instead, the party is embracing an increasingly interventionist approach in the economy.

Although this is partly because of the immediate realities of COVID-19, a large increase in unemployment gives longer-term political challenges for the Tories. The Conservatives made big gains in 2019 Labour’s ‘red wall’ in the North, but these communities have since seen their economies decimated by the recession accompanying the pandemic. To ensure these seats do not fall back into the hands of a newly emboldened Labour Party, the Conservatives will have to mitigate any growth in unemployment in these communities.

Yet they are also aware that the economic fallout from COVID-19 is going to have a destructive impact on younger people. A report by the Resolution Foundation has noted that 9% of young people have lost their jobs so far, the highest of any age group. Coupled with growing anger over racial injustice, there is a fear that a return to high youth unemployment could spark similar unrest to that experienced in 2011, when anger over austerity and police violence lead to riots across England. By tackling youth unemployment head-on, the Government would prevent the creation of a lost generation who would otherwise represent a political threat to the Conservatives.

What does this all mean for Labour?  The party has criticised how the government has targeted support, with the Shadow Chancellor, Anneliese Dodds, calling for support to be focused on those industries which have struggled the most. In particular, the party has been critical of what they see as the government wasting money on projects such as the job retention bonus, which they argue will not help protect employment, as it won’t target those companies that are struggling to transition the most out of lockdown.

As with the Conservative’s shift towards economic interventionism, Labour is sticking with the ideological shift of its new leader, towards the centre. Instead of simply pushing for large-scale investment, Starmer is presenting his party as the compassionate, yet competent, alternative to the Conservatives and a future government in waiting. When it comes to the next general election, Starmer will be able to dodge Tory accusations of fiscal recklessness and instead portray Labour as the party of economic responsibility. With this being a weakness for the party since the 2008 financial crash, it would represent a breakthrough for Labour’s political chances.

The COVID-19 pandemic is already having a destructive impact on the UK labour market. Both Labour and the Conservatives were undergoing a shift before the pandemic broke, but the ongoing economic crisis is reinforcing the view in both parties that they must change. They know that the next election may well be defined by this pandemic, and so how they respond now is important. For the Conservatives, this means embracing state intervention in the economy, whilst for Labour it takes the form of demonstrating competency.



History and Politics student. Loves studying, participating and writing about politics.

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