In advance of Rishi Sunak’s statement, new analysis from the Centre for Progressive Policy (CPP) suggests that urgent intervention could help prevent 1.2 million people in ‘zombie jobs’ from falling into long-term unemployment when the furlough scheme ends. The government is sleepwalking on skills, and the report argues for a turbocharged Right to Retrain scheme to support over a million workers set to go from furlough to redundancy by October.

As well as the Right to Retrain scheme, CPP is calling on the government to support those whose jobs will no longer exist in October via a new-learners living allowance or by paying half of their apprenticeship wages. The scheme would also address the digital skills gap being created by automation and other longer-term labour market shifts, helping to drive an inclusive economic recovery and fulfil the government’s long term levelling up agenda. This would require, over the course of this Parliament, an investment of around £9.6 billion. But according to CPP’s estimates, if even half of those set to lose their jobs once furlough ends participated in the training scheme, the UK would be on track to see roughly £39 billion in lifetime productivity gains.

The opportunity to protect workers in former Red Wall areas, such as Workington and Bishop Auckland, is even more urgent, addressing a political as well as an economic problem. CPP’s analysis highlights that our skills system fails to reach the people and places set to be hardest hit by the economic crisis.

• Participation in adult education is negatively correlated with deprivation, even though the boost to employment rates is stronger in deprived areas.
• Apprenticeship starts fell 30% in former Red Wall areas between 2015/16 and 2018/19 by comparison to 13% in London and the South East. Apprenticeship starts in the UK as a whole have also been impacted by covid-19, falling by more than 50% in April 2020, compared to April 2019.
• 11% of people in former Red Wall areas have no formal qualifications in comparison to 6% in London and the South East.
• Just 31% of people in former Red Wall areas are skilled to level 4 or above in comparison to 49% in London and the South East.

CPP is calling on the Chancellor to:

• Support the living costs for those in need of training by paying a Learners’ Living Allowance (LLA), equivalent to the maintenance loans available for higher education students. Those still in jobs should be entitled to paid time off to undertake training, with the government covering up to half the salary costs during this period.
• Strengthen existing provision by paying 50% of wages for all young apprentices. This should come with strict conditionalities for businesses, ensuring proper levels of training and minimum wages are adhered to.
• Dramatically expand the Skills Toolkit into a high-quality online learning system for skills training, including regulation and certification, as well as a focus on collaborative development of online courses between learning providers, businesses and government departments.

With unemployment expected to reach the highest level for a quarter of a century, and the skills system currently weakest in the places that will need it most, now is the time for the government to show the same level of ambition as it did when it launched the furlough scheme to upskill the workforce for tomorrow’s economy.

Andy Norman, Research Analyst, Centre for Progressive Policy, said:

“Despite ramping up the rhetoric, the government and Jobcentres aren’t doing enough to protect the livelihoods of millions currently on furlough and all those in zombie jobs that will be redundant in a few months’ time.

The longer you are out of work the harder it is to return, meaning a significant investment on training now is an intervention that will pay for itself over the next decade. This isn’t just about fixing the failures and underfunding of skills policy over the last 30 years – it’s about offering shop assistants, waiters and waitresses, and airline workers a realistic route to re-employment now.

If the Chancellor is serious about recovery, he needs to invest in a turbocharged ‘Right to Retrain’, focusing on digital learning rather than the classroom, upskilling rather than standing still and local rather than national delivery.”

David Hughes, Chief Executive of the Association of Colleges, said:

“Today’s report is a welcome addition to one of the most important discussions on how the country will rebuild after what is likely to be the most severe economic downturn in history. We know from past recessions that it’s young people and disadvantaged adults that struggle most to find a job and are most likely to find themselves made redundant. ‘Turbocharged Right to Retrain’ rightly targets those areas most in need and focuses on how digital infrastructure is key to so many people’s futures.

It is particularly encouraging to see strong recommendations around strengthening the role of local colleges. They stand ready in their local areas to support their communities, including those 16 to 18-year-olds who will require a place in college come September and the adults needing to upskill or retrain as the labour market poses fresh challenges. Colleges are the key to so much of the rebuild and recovery agenda, it is now time for the Government to invest in catch-up support and provide a meaningful education and training place to everyone who needs one, to make sure the rebuild works for all.”

Notes to editors

1. CPP defines workers in ‘zombie jobs’ as the proportion of the nine million people currently furloughed whose jobs are forecasted to no longer exist in October when the scheme ends
2. CPP analysis, based on OECD forecast for the UK to reach 9.7% by October, predicts unemployment in England is likely to rise by 1.2 million by October
3. Productivity benefit is calculated based on research by the Department for Education that estimates the lifetime productivity returns to intermediate qualifications
4. The report can be found online at www.progressive-policy.net/publications on Tuesday, 7 July, 2020, 00.01am
5. About CPP: The Centre for Progressive Policy is a think tank committed to making inclusive economic growth a reality. By working with national and local partners, our aim is to devise effective, pragmatic policy solutions to drive productivity and shared prosperity in the UK. Inclusive growth is one of the most urgent questions facing advanced economies where stagnant real wages are squeezing living standards and wealth is increasingly concentrated. CPP believes that a new approach to growth is needed, harnessing the best of central and local government to shape the national economic environment and build on the assets and opportunities of place. The Centre for Progressive Policy is fully funded by Lord David Sainsbury, as part of his work on public policy. 
6. For more information on the Centre for Progressive Policy, please see www.progressive-policy.net or follow @CentreProPolicy 
7. For interview requests contact Clara Rees Jones at Atlas Partners (Clara.reesjones@atlas-partners.co.uk) or Thomas Hauschildt at Centre for Progressive Policy (THauschildt@pogressive-policy.net)