SOFTENING the economic impact of the pandemic is a costly business but make no mistake the UK Government isn’t “paying” for this. It’s all of us through our system of taxation and borrowing.

So, let’s disabuse ourselves of the notion of free money; or that anyone is doing a kindness. In a time of recession, increased public spending means increased public debt.

Now that we’ve got that out of the way let’s talk about the dangers of returning to economically illiterate austerity politics. In a time of crisis, people get hoodwinked. It’s happened countless times throughout history.

Income tax was introduced in 1799 as a temporary tax to pay for the Napoleonic Wars. Back then it was 1% to 10% in the pound. We know the end of that story.

Remember the financial crisis of 2008? The banks almost blew up the economy and were “too big to fail”, so taxpayers had to bail them out with an underwriting of up to £1.2trillion in the UK alone. By 2017, the National Audit Office had confirmed that the government had recovered all but £58bn of the bailout. It was ostensibly a paper accounting exercise.

Yet the bailout, credit crunch and recession were a plausible ruse to tell citizens across the UK they had to endure the pain of austerity. It was a “MacGuffin”. The great film director, Alfred Hitchcock, popularised this expression. He would use an event or object to drive a movie plot while it had nothing to do with what was happening.

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So, the 2008 crisis became a plot device to justify slashing welfare and public spending from 2010 onwards. In truth, austerity was a political ideology for a rich elite who despised the “undeserving poor” and wanted to put a bit of stick about.

While immoral, any economist would tell you this was bad economics. You need a fiscal stimulus in a recession, otherwise the tax take goes down; which is precisely what happened as our national debt rocketed.

Are we starting to see the pandemic being used as a MacGuffin to do some regressive politics? Tell-tale signs are emerging, and the chancellor has alluded to a fiscal reckoning in his Autumn budget later this year.

Over the weekend a panelbase poll appeared for The Sunday Times suggesting “a majority of Scots believe the Scottish government should abandon its flagship policy of free university tuition fees in favour of a graduate tax, to help the country out of the economic crisis”.

It’s only one poll, but it never ceases to amaze me how anyone my age or older who got a free tertiary education could have the brass neck to pull the ladder up for young people. Or indeed, mature students who never had the chance to go to university or college in their youth for all sorts of understandable reasons.

Last week the chancellor set out the second wave of the government’s economic response to Covid-19. It was pitched as a £30bn stimulus package, but is it even as much as that? The £1000 bonus to employers if a furloughed member of staff is kept on until the end of January 2021 is costed at around £9.4bn and could materialise as a fraction of that.

A cut on VAT from tomorrow for six months for restaurants (including food and non-alcoholic drinks), hotels and attractions will be very welcome to the hospitality sector. The £2bn kickstart scheme for young workers on universal credit is a good positive.

Almost £4bn has been earmarked to stimulate house sales by removing stamp duty on most transactions in England and Northern Ireland – with Scotland and Wales receiving financial consequentials to make their own devolved arrangements.

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All of this is worth around 1% of UK GDP – contrast Germany which announced an economic stimulus worth 4% of its GDP, or Japan who are investing 20% of their GDP in jobs and the economy.

Certainly, the chancellor’s announcements are likely to generate less than half the stimulus that refunds of missold payment protection insurance gave to the UK economy. Consumers got back around £50bn of their own money and spent it – it was fuel in our economy’s tank.

Two things are clear to me. First, we are going to have to invest a lot more public money to prevent UK unemployment dwarfing the levels that destroyed communities back in the 1980s.

Unless the pandemic is met with a vaccine some jobs are going to become uneconomical. This will necessitate a huge investment in retraining and supporting people into different career paths.

Second, the pandemic can’t be used to burden younger generations by taking away precious life chances and opportunities. Nor can it be used to falsely justify another round of austerity politics that will make the lives of those with so little even more insufferable.