Coronavirus: Ex-chancellor says UK 'needs to prepare now' for mass job losses

Former Chancellor Alistair Darling. (Sang Tan / AP photo)
A former British chancellor has warned the government that it is urgent to prepare for a new wave of job losses as support for businesses and workers is gradually being phased out.
Alistair Darling, the UK finance minister during the global financial crisis, supported more spending on job creation for public infrastructure projects, more generous social benefits and retraining programs.
He also said that new Chancellor Rishi Sunak should be "flexible" to end the vacation program, and called for a VAT cut to help the recovery by boosting consumer spending.
At a virtual think tank on Monday, former UK minister warned that Britain could face unemployment in the 1980s, with many workers losing their jobs. He said the British government did not solve the problem at the time, but this time it had been "warned" of the impending crisis.
Darling joins a growing chorus of voices predicting a rise in unemployment as the UK government begins to cut subsidies to millions of workers on leave in the coming months.
READ MORE: The poorest are forced to borrow more to survive the crisis
He said the current chancellor had "responded well to the crisis" so far, but wanted "to be flexible" to abolish the vacation program. Sunak should not be afraid to return to the Commons to announce further changes to the system, which has been extended several times but is due to expire in October.
"We have to prepare now," he said. "To be honest, we didn't do it when it came to spreading the virus. We have to be much safer to respond economically."
Darling highlighted the "dramatic" drop in income workers face when they lose their jobs and switch to universal loans, with research indicating an average drop in income of 47%. The difference reflects the much more generous support that the crisis protection system offers than the traditional benefit system.
The welfare system could be improved by fixing "design flaws", including waiting five weeks for initial payments and rules that limit benefits for households with savings, he added.
READ MORE: Three former chancellors fear rising unemployment
He said the government should fund and control small "shovel-ready" infrastructure projects to revitalize the economy and create jobs for the unemployed. However, he briefly warned of a large infrastructure and added: “Magnificent projects take years. We have to move faster. "
Darling spoke at the start of the event on a new report on Britain's wealth gap between the richest and poorest and the precarious state of household finances during the crisis.
The Resolution Foundation study, in collaboration with the Standard Life Foundation, chaired by Darling, compared the experiences of the second poorest fifth of British households to those with the highest incomes.
The analysis showed that one in four poorer families, couples, or individuals had increased their borrowing, often with high-interest credit cards. Similarly, only one in eight high-income households had raised more debt.
READ MORE: British workers have suffered the sharpest drop in wages in decades
A survey also found that the average worker in a decommissioned economic sector had only £ 1,900 in savings in May, compared to £ 4,700 in savings for those who could continue to work from home.
A spokesman for the Department of Labor and Pensions (DWP) said: “This government understands the challenges many face. That's why we've invested over £ 6.5bn in the welfare system, including increasing universal loans and tax credits for workers by up to £ 1,040 a year, and introducing income protection schemes, mortgage holidays and additional tenant support.
“Our work coaches across the country, in coastal, rural and urban areas, help people expand their skills and get into work as we make Britain better. And this government's commitment to improving community opportunities remains steadfast and will be at the heart of the revival. "

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