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11 January 2021updated 30 Aug 2021 10:45am

Why Rishi Sunak can’t escape blame for the Covid-19 crisis

The Chancellor recklessly encouraged workers back to offices, diners to eat out and told the public to “live without fear”. 

By George Eaton

In a cabinet of duds, Rishi Sunak is typically regarded as having had a good crisis. After becoming Chancellor in February 2020 at the age of just 39, he is now the country’s most popular politician and the favourite to succeed Boris Johnson as Conservative leader.

Sunak’s popularity is not hard to comprehend. In the early months of pandemic, as Johnson fatally prevaricated, the Chancellor acted decisively by introducing the furlough scheme – paying 80 per cent of workers’ wages up to £2,500 a month – to prevent mass unemployment. Next to his inept colleagues, Sunak stood out for his eloquence, easy manner and air of competence. 

Len McCluskey, the general secretary of Unite, was among his unlikely cheerleaders. “Rishi Sunak’s wage support measures are a historic first for this country, but are bold and very much necessary,” he said.

The Chancellor went on to bribe the public in August through the Eat Out to Help Out scheme, another policy for which he was careful to claim personal credit. But though the hype machine surrounding Sunak continues to deter scrutiny, his approach has not aged well. Indeed, the Chancellor shares responsibility for the lethal second wave of Covid-19 now coursing through the UK. 

Though the British Chambers of Commerce concluded that Eat Out to Help Out had a “fairly marginal” impact on the hospitality and catering industry, the policy did succeed in spreading the virus. A study by Warwick University concluded that “between 8 and 17 per cent of the newly detected Covid-19 infection clusters can be attributed to the scheme”. 

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In view of the restrictions that have since been imposed on businesses, Eat Out to Help Out may have done more to hurt the economy than to stimulate it. But this point has consistently been lost on Sunak. Throughout the crisis, more than any cabinet minister, he has promoted a false divide between “saving the economy” and “saving lives”. In reality, an uncontrolled pandemic serves neither purpose. 

As Devi Sridhar, professor of global public health at the University of Edinburgh, noted when I interviewed her, “The countries that went in hard, dealt with their public health problem and then released had a better economic recovery. In the West, in general, we went into a late lockdown and therefore it was a long lockdown.” It is no coincidence that the UK suffered both the highest excess death rate in Europe and the worst recession of any G7 economy. 

Throughout the summer, epidemiologists warned of the threat of a second wave (and of dangerous mutations). But on 24 September, Sunak, pandering to lockdown sceptic MPs, declared in parliament: “We must learn to live with it [Covid-19] and live without fear.” He urged workers to return to offices just as he urged diners to eat out. 

But fear, it transpired, was entirely rational. The UK has now recorded over 80,000 deaths and currently has more Covid-19 cases per capita than any other major country, with the health service in danger of being overwhelmed (London hospitals have been forced to cancel urgent cancer surgery). Sunak, who consistently lobbied against government restrictions, cannot avoid blame for this. He persuaded Johnson not to impose a two-week lockdown in September, as recommended by Sage, when cases were at a more manageable level.  

Even on a more basic economic level, the Chancellor’s record is a poor one. Despite the threat of a second wave of Covid-19, he initially dismissed demands for the furlough programme to be extended beyond 31 October and cut the wage scheme’s subsidy from 80 per cent to 60 per cent. The furlough wind-down was based on the assumption, in Johnson’s words, that Covid-19 had been “sent packing”. It had not.

Yet the Chancellor dithered and delayed. On 9 October he announced that the furlough scheme would continue but just for workers whose firms were forced by law to close (with a 67 per cent wage subsidy, up to £2,100 a month). Only on 31 October – the day the programme was due to end – did Sunak respond to a second national lockdown in England by restoring the original 80 per cent subsidy and, on 5 November, extending furlough until March 2021.

This slow-motion capitulation came at a cost. “The timing of redundancies coming through very fast as we moved into the autumn is to do with the planning around the Job Retention Scheme and the short notice of it being retained,” Torsten Bell, the chief executive of the Resolution Foundation, told me. Sunak’s haphazard economic policy has contributed to the 819,000 redundancies the UK has suffered since the pandemic began.  

The Chancellor’s reluctance to provide consistent economic support was born of fiscal conservatism as well as complacency. Though he enjoys a reputation as an interventionist Keynesian, Sunak is in reality an unashamed austerian. 

In a speech in July 2015, two months after he was elected to parliament, Sunak said of George Osborne’s promise of a budget surplus: “Britain will live within its means. No more irresponsible borrowing. No more spiralling debt at the taxpayer’s expense. No more passing the debt to the next generation.” In his Conservative conference speech on 5 October of this year, Sunak elevated balancing the books to “a sacred responsibility”. It was this superstitious fear of government borrowing – even with interest rates at record lows – that drove his initial hesitancy to extend the furlough scheme.

Though the UK’s borrowing has rarely been higher (the national debt has exceeded 100 per cent of GDP for the first time since 1963), it has also rarely been cheaper. Such is the demand for British debt from investors that the government has recently sold bonds at negative interest rates (in other words, investors are paying the government to take their money). Rather than sacrificing living standards to meet an arbitrary target, the Chancellor should focus on stabilising the debt-to-GDP ratio through progressive tax rises (once the crisis has passed) and pro-growth investment.

As it is, Sunak has frozen public sector pay, depressing consumer spending power at a time of economic crisis. Though average real earnings in the public sector are 1.5 per cent lower than in 2010, only NHS workers and the lowest paid were spared. Statutory sick pay has not been increased from its derisory level of £95.85 per week (the lowest of any OECD country as a share of previous earnings<span style="font-size:10.0pt;line-height:107%;
mso-bidi-language:AR-SA”>), even as the need for people with Covid symptoms to isolate has never been more urgent

Sunak has also yet to rule out cuts to Universal Credit payments (which he increased early in the crisis), which would cost six million households £1,040 a year, with the bottom fifth losing 7 per cent of their disposable incomes. Unemployment support would fall to its lowest real-terms level since 1992, and its lowest ever relative to average earnings.

Sunak may not have floundered as visibly as some of his cabinet colleagues but he cannot escape blame for the human catastrophe now unfolding. Far from being an exception to the government’s record of failure, the Chancellor has been integral to it.

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