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24 September 2020

Rishi Sunak’s uncertain cocktail of measures leaves the UK facing a cruel autumn

The government is divided over whether the Covid-19 crisis is something to be lived with or to be lived through.

By Stephen Bush

Coronavirus is a new era we have to adapt to, rather than a moment we can live through, is the implicit argument of the measures announced by Rishi Sunak today. A variety of old and new credit schemes for businesses have been unveiled, along with news that the furlough scheme will be replaced by a new programme that will mean pay cuts for many people and job losses for many more.

Under the plans, people working at least a third of their pre-Covid-19 hours will have their pay topped up to up to 77 per cent of their previous monthly wage, with the government covering up to a third of their salary for the hours not worked and businesses paying up to a third more. That means that even in the ideal scenario, workers in the hospitality industry are facing a 23 per cent pay cut – with some losing out on significantly more.

The picture is bleaker still for people employed in industries that cannot function in the era of social distancing. Workers in music, theatre, events and aviation, who are unlikely to get close to working 33 per cent of their pre-coronavirus hours, are facing redundancies and layoffs.

As such, it may be that the story behind Sunak’s decision to delay the announcement of these measures until after the legal cut-off point for big businesses to consult over redundancies is not, as Labour wants to argue, because he has been “slow”, but because he wants to obscure that these measures are not going to prevent an autumn of significant job losses.

As I’ve written before, there is a good argument for saying that governments should – rather than focusing their efforts on attempting to preserve the pre-coronavirus world in aspic, or exhorting people to return to pre-pandemic modes of work and consumption – be looking to improve the performance of the lockdown economy and to facilitate, rather than hold back, the changes to the economy and to public life brought about by the coronavirus.

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The downside to that approach is that it will result in a large and painful economic disruption – one that you can really only fix by increasing the generosity and scope of Universal Credit (UC), which Sunak has opted not to do. The ban on rental evictions in England and Wales that was introduced at the start of the crisis has ended, and the small increase in UC’s generosity is set to come to an abrupt end in April. British workers face an unlovely cocktail of policy: on the one hand, they are going to lose jobs and pay, while being left to the mercies of a creaking and patchy safety net.

The underlying cause of the problem is that the Conservative government as a whole can’t decide if it wants to live through, or live with the novel coronavirus. As a result, Sunak has handed out the best part of £2bn to theatres and arts institutions whose workers are at risk of being laid off, the government has exhorted people to return to offices to support jobs that will be curtailed or outright lost. Plus, having spent £500m in August to encourage people to return to restaurants and city centres, the industries that support them – theatres, concert venues and the like – are now being given a package of support that is predicated on the idea they are, at least in the short-term, a casualty of the pandemic.

That confusion at the heart of government means that the government is spending money putting businesses in cryogenic suspension one month and then turning off the life support the next, and will make the autumn much more painful for the British people than it needs to be. It may well be politically painful for Sunak, too.

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