Furlough – is clinging on to the status quo holding us back from the future?
Last week the government announced further investment into the UK’s furlough scheme. While gratefully received by many, is it risking clinging onto the status quo - holding us back from innovations that could change our lives for the better?
Ben Clark is the Director of Future Worlds, the startup accelerator at the University of Southampton. He shares his view on the need to build forward better:
As of three weeks ago our country has invested about £54bn in the furlough scheme, so we might expect the extension announced in last week’s budget to cost a further £20bn. Spending around £70bn on furlough is central to addressing Sunak’s priority of emerging from the third lockdown without triggering mass unemployment and a wave of business failures so we can “build back better:” it is essential that we do what we can now to reduce immediate misery, so the effort should be applauded.
However, looked at another way, the £70bn spent on furlough is a monumental investment in trying to cling on to the status quo, to protect what we had before. But, it is widely recognised that post lockdown we will not simply return to how we were before. Not least, as a country, we will be servicing the repayments on the £394bn the government has borrowed this year, which, at the 0.76% interest rate currently paid on that debt, will cost us around £3bn per year just to service the interest before repaying the capital.
The reality of life, in normal times as well as in crisis, is that businesses rise and fall. Just 35 years after the FTSE 100 was launched in 1984 only 30 of the original 100 companies still existed. In the wake of every crisis in the past new companies have been launched to address the new reality. Many of us will have used services like WhatsApp, Spotify, Pinterest, Uber, Airbnb and Groupon to get through lockdown, yet all of these were launched in 2008 or 2009 in the wake of the last financial crisis. And if these lockdowns had happened 20 years ago, where would we have been without BBC iPlayer and Netflix when all the Blockbuster video shops would have been closed?
Blockbusters’ staff would have been furloughed, which would have been important, but, rather than only looking to protect the past and ‘build back’, we need to show similar commitment to ‘building forward better’. We need to invest heavily in the talented pioneers who will create the companies of the future. Many of the services we rely on to overcome our next crisis will be launched in the wake of this one. Big corporate opportunities for graduates have been hit hard by the pandemic, so many of our brightest young people will choose, or be forced, to create their own opportunities for themselves, and many of those will be in tech. As they do so, they will create opportunities for others as well, and they will ‘build forward’ a better future for our country and our world. For everyone’s benefit we need to invest as much as we can in enabling the success of these founders and we need to train people for the new jobs in tech they will create.
This was posted in Bdaily's Members' News section by Katherine Adams .
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