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3 April 2020

Why the government’s measures to help business need to go further

Workers will still be forced to risk their health if the ministers do not introduce a new package of support.

By Bill Esterson

There are those who say we should choose between addressing the health crisis of coronavirus and avoiding an economic crisis. But this is a false choice. If we don’t put health first, the economic crisis will worsen. That’s why the government announcements for self-employed people, which followed those for employed people, were such important steps forward. So, too, were the grants for some businesses with premises and the loan guarantee scheme.

But now there has been time for scrutiny of the schemes and it’s clear there will need to be further changes. Changes that ensure no one faces the kind of financial insecurity that means they are forced to take risks with their health (and that of others) by going out to work. It’s clear now that the government have not gone far enough and there are several fronts on which it should be doing better.

Sick pay still needs to be higher and available for all workers, low paid and self-employed included. Workers who are high risk and need self-isolate or who have caring responsibilities also need real financial support. Private-sector employers in essential sectors must be prevented from discriminating against workers who face additional risks in the crisis.

Many people are without money because they have lost their jobs and their income overnight. Universal Credit needs to be at a living wage rate to avoid hardship and it needs to be available straight away, not after a five-week wait.

The job retention scheme pays 80 per cent of wages for furloughed employees where the business has stopped or reduced working but wishes to start up again after the crisis. It should include those who started a new job in March, including those who changed jobs. 

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The job retention scheme is voluntary, not compulsory. This has meant some employers have sacked their entire workforce without even offering them an opportunity to be furloughed. In marked contrast, other employers have not only offered 80 per cent, but topped it up with a further 20 per cent of their own money. Consideration could be given to how employers who take a more responsible approach might be rewarded.

Some workers who are being paid 80 per cent of their wages are now below the minimum wage. This should be addressed. The scheme also needs to include those businesses which are still trading and where staff are working as in other countries. The gap until the end of April in the job retention scheme needs attention, otherwise some businesses will close because they have run out of cash: these businesses need to pay rent, power, insurance and trade suppliers. If they can’t meet these or defer these payments, they will not be able to retain their staff. 

Payments to the self-employed need to be available now too, not delayed until June. Many have run out of cash. Social security at current levels is nowhere near enough and, like the promised government payment, it is not available immediately either.

Those who do not qualify for the self-employed scheme also need financial support. A payment needs be considered for those who became self-employed too recently and for those who are outside the scheme because of the profit limit.

The crisis has highlighted the need to consider regional inequalities and the precarious nature of work for different groups. Longer-term support will be needed for people whose work has dried up completely and will take time to return. Similarly, social security will need a significant overhaul to address the serious inadequacies which have been exposed.

A form of Universal Basic Income or hardship payment should be considered for the duration of the crisis for everyone not covered by other schemes. Can the council tax system be used, not just for council tax rebates but for much higher levels of support? The Wirral Council Local Welfare Assistance Scheme is an example of what might be possible more widely for the self-employed but will need significant additional funding from central government.

The ambitious schemes announced show that much progress has been made by the government. The principle of comprehensive support for workers and employers has now been established. But the big headline numbers in the government’s financial package have yet to translate into cash on the ground, especially for the smallest businesses. Now the government must examine the detail so that no one is left behind. Only by plugging the gaps in the financial measures can we really ensure that everybody stays at home, protects our NHS and saves lives.