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Delivering her first major speech since succeeding John McDonnell in the post, Dodds said that while bigger companies were grabbing the headlines it was smaller firms that would be particularly hard hit as mass unemployment grew.
To combat the threat, chancellor Rishi Sunak should upgrade his summer fiscal update into a full-blown Budget for jobs - with a particular emphasis on hospitality and the creative sectors of the economy - she urged.
One immediate measure should be the government extending furlough and self-employed support schemes for areas like Leicester forced into local lockdowns.
Dodds also said the Treasury should not impose taxes on middle and low income earners to fund rescue packages seen so far, and called for an extension of the benefit sanctions freeze that was put in place to prevent penalising jobseekers during the pandemic.
Speaking in London via a Facebook live event, Labour’s lead economics spokesperson singled out small businesses owners and their staff for praise, saying they had “put their life and soul” into their companies only to see it wiped away by the impact of the virus.
“It has been heartbreaking to hear from many of them in recent weeks, how they feel their businesses slipping through their fingers because of a temporary lack of cashflow. Even though with the right, targeted support now, they would be perfectly viable in the long term,” she said.
“The reward for months of sacrifice cannot be a redundancy notice. This week we saw a wave of companies announcing enormous job losses - because the government is refusing to shift from its one-size-fits-all approach.
“Smaller companies have a shorter redundancy period. To avoid the same flood of redundancy notices for workers within smaller companies later on this month, government must act now - and abandon its one-size-fits-all approach.”
This week in just a 48 hour period big companies announced plans to make redundant 12,000 people in the UK, with High Street retailers and in aviation hardest hit by the coronavirus lockdown.
With smaller suppliers often reliant on big chains or factories, Dodds said the focus should now also cover firms with fewer staff.
“We’ve already seen a whole wave of redundancies just being announced, it’s likely that will be mirrored by small businesses, which won’t be hitting the headlines. That will happen every time we see this same one size fits all approach being taken to the withdrawal of support for different industries.”
Dodds added that Leicester, where the government has so far only said firms can “refurlough” staff but not beyond the October expiry date for all other areas, would be a key test of Sunak’s statement next week.
“These support schemes should serve as economic sandbags, ensuring localised second waves of COVID-19 don’t wash away businesses and jobs in their wake.”
Dodds also urged extra help for those who did become unemployed, hitting out at the government’s move to end a sanctions freeze on benefit claimants.
“The DWP are re-introducing sanctions at a time when there are more than eight people unemployed for every vacancy. This Government seems completely divorced from the scale of the unemployment crisis facing us.,” she said.
But Tory party co-chairwoman Amanda Milling MP said: “Under Keir Starmer Labour will say anything to try and score political points and chase headlines.
“We have already provided over £124 billion of support to protect jobs and livelihoods across the country, and this week the prime minister set out how we’ll invest a further £600 billion to ensure we can build back better after coronavirus.”