Rishi Sunak has outlined a £330bn support package to support businesses and households throughout the coronavirus crisis.
A statement like this has to do two things: the first is that it has to convince British businesses not to panic and assure them that, ultimately, no company will fold because of Covid-19. The second is that it has to actually provide the necessary support to prevent businesses folding because of Covid-19 and to provide the necessary financial firepower to households and families so that they feel safe in reducing their social contact and self-isolating when they experience symptoms.
As far as the first task goes, this was pretty much pitch-perfect. Sunak’s big message was: I really will do whatever it takes, and the most important policy announcement wasn’t any of the multi-billion pound commitments he made, but the promise that the forthcoming emergency powers bill will include a clause allowing him to indefinitely increase the size and scope of his measures to support households and businesses.
That commitment underlines one problem with this statement: it was a work in progress. These were market-facing measures designed to reassure businesses and prevent further lay-offs, which have already started to take place in small and medium-sized enterprises. The government is spending a huge amount of money here and committing to spend billions upon billions more, but the big measure – support for incomes – has less detail: all we know is that Sunak has committed to announcing more detail on the support he is providing for workers and households after further consultation with trades unions and businesses.
That meant there were two big omissions here: what will the government do for people renting and for the self-employed? And what does the government envisage doing to open up the welfare system to more people? The design of Universal Credit means that it can be a very effective tool to give a lot of people a lot of money very quickly – but you’d need to strip out the various barriers to that, from the upper limit on capital and income for people who have high incomes but run into financial difficulty, to the five-week wait for the first payment, which is no use if you have to self-isolate for two weeks or if you lose work due to the consequences of social distancing.
Without seeing more on what Sunak envisages for household incomes it is hard to assess the adequacy of the measures for business. If there is sufficient ambition in terms of what is provided for households, the balance of grants and loans for businesses in this package looks about right, because a lot of the income support for households will, of course, prop up businesses directly and indirectly. We just can’t say with certainty if this is enough, though it is a good sign that the government – which doesn’t have much understanding of the challenges of the gig economy and other precarious work – is planning to consult with the trades unions on this issue.
As I wrote after the Budget, while I didn’t think Sunak’s measures were anything like large enough, what I thought mattered most was that he had shown that he would favour expanding the generosity of existing schemes for workers and relief and grants for businesses rather than trying to invent a new arm of the welfare system, and that he had committed to doing “whatever it takes” to tackle the crisis. Now he has vastly increased the ambition of those measures.
While I think it’s right and helpful for opposition and backbench politicians to call for more detail about support for incomes – the direction of travel here is hugely positive and no-one in a group not to have received specific assurances yet should be too worried.