TIME and again, the UK Government looks like it is being caught on the hop by how the coronavirus pandemic is developing.
And, on the crucial issue of support to ward off mass unemployment, it is difficult to hear UK Government announcements of new programmes, and the extension of the furlough scheme Chancellor Rishi Sunak previously repeatedly opposed, as anything but the sound of stable doors being locked after horses have bolted. That is not to say the U-turns are not welcome. They are far better than nothing. But they are almost always too late, and often too little.
It has been evident for many months that the UK Government job support measures were woefully inadequate, and especially so should a second wave emerge in the coronavirus pandemic. This inadequacy has arisen in large part from the long-stated intention to end furlough support on October 31, delivered in that belligerent Tory no-matter-what tone.
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History was telling us a second wave was likely so the UK Government, including the Chancellor, should have been prepared for this.
Being prepared, when it came to job support, should have been relatively simple.
It involved taking a longer-term view, like that adopted by the French and German governments, which swiftly adopted a two-year horizon. What the UK Government response should never have included was what at times looked very much like an ideological drive to scale back the furlough scheme swiftly and end it soon afterwards.
Unemployment has surged, with far worse to come, and this rise has undoubtedly been exacerbated by the consistent refusal through the summer and autumn to provide certainty for businesses and their employees over support for jobs. Many of the jobs supported by the furlough scheme, contrary to the impression Mr Sunak has at times given, are perfectly “viable” in the medium term. The problem has been, in terms of recent flawed UK Government policymaking, that there is no work in the immediate term for many people in jobs supported by the furlough scheme solely because of the impact of the coronavirus pandemic.
Mr Sunak’s move, effective from the start of August, to insist employers make significant and increasing contributions towards the furlough scheme certainly looks to have forced the hands of many businesses which moved in the run-up to this point, and subsequently, to cut jobs.
Some would have axed jobs anyway, but many more would likely have not, if the UK Government had continued to make available what is taxpayer money (not the Tories’ own cash) to fund 80 per cent of the wages and salaries of furloughed employees up to £2,500 a month.
Mr Sunak, of course, repeatedly refused pleas from politicians from other parties, experts, and business to consider extending the furlough scheme. He refused to extend it even for those specific sectors, such as hospitality and tourism, and aviation, bearing the brunt of coronavirus-related restrictions.
Eventually, as the second wave of Covid-19 continued to develop, he belatedly began to relent a bit and said in September the coronavirus job retention or “furlough” scheme would be replaced by a new job support scheme.
However, to qualify, employees had to be able to work at least one-third of their normal hours.
Then, as things got worse and restrictions had to increase to slow the spread of coronavirus, he changed this late last month to a minimum of 20% of hours. This still, of course, did not solve the problem for those unable to work any hours. This followed the UK Government’s October 9 announcement of a tweak to the planned job support scheme so it would pay two-thirds of wages and salaries of furloughed workers up to £2,100 a month where businesses had to close because of coronavirus restrictions, amid local lockdowns.
The inadequate job support scheme had in itself, from the outset, represented a U-turn. During the summer, Mr Sunak had given the impression that his job retention bonus, offering £1,000 per post for employers which took furloughed workers back on and retained them through to the end of January, would be a central plank of Tory efforts to ward off unemployment. Along with the Eat Out to Help Out scheme and some retraining opportunities.
It was abundantly clear at the time that the policies in place beyond his planned end of the furlough scheme were woefully inadequate. It did not need the benefit of hindsight to ascertain that.
The message from Mr Sunak was all about how the UK Government had been very generous and would by the end of October have been providing furlough support for nearly eight months. There was even a narrative about how it was not fair to give people false hope by keeping them in jobs that essentially no longer existed.
However, there was no reason why many of the jobs supported should no longer exist, given that some sectors remained wholly or partially closed as a direct result of coronavirus, not because the economic model had changed. The thing which threatened these jobs was lack of Government support.
When it came to individuals and the health of the overall economy, the correct policy should have been a matter of common sense. People needed support for their incomes and some degree of certainty about the future, to the greatest extent possible. In that sense, money should have been a far greater focus for policy than some sort of philosophical musings about false hope.
The approach at the time from the UK Government seemed extremely short-sighted. This was, after all, always going to be a long haul.
Sadly, the UK Government has proved woefully unprepared for the journey, and still looks so.
There was talk from Tory ranks of an “addiction” to furlough in the weeks after the scheme’s launch in late March.
And there has been an obsession with the cost of the support, which has naturally fallen very sharply anyway as large parts of the economy have reopened.
There has been an inability or lack of willingness on the part of many to weigh the cost of the furlough scheme against the benefits.
What about the importance of preserving incomes and supporting consumer confidence, thereby boosting aggregate demand? And of saving on unemployment benefits that would otherwise have to be paid, if workers can be retained until such times as their employers can reopen or operate at something close to full capacity? A furlough scheme of adequate duration would also deliver valuable benefits by reducing the longer-term costs of health and social care if far fewer people have to face the grim and dismal effects of unemployment.
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Of course, the lack of joined-up, thought-through, long-term support from the UK Government has also constrained the flexibility of devolved nations such as Scotland in making decisions on what is best to tackle the public health emergency.
It is easy to understand the Welsh Government’s irritation that its “firebreak” measures to slow the spread of coronavirus were less adequately funded, in terms of job support, than the new English national lockdown.
In Scotland too, it has been clear that furlough support, or lack thereof, has had to be a key consideration in making already very difficult decisions on restrictions and public health.
And the Scottish Government has this week understandably expressed great frustration over its efforts to secure clarity on whether or not the newly boosted furlough support for the English restrictions would apply to a later lockdown north of the Border, if that were the best decision for public health in Scotland.
Prime Minister Boris Johnson appeared to say on Monday it would and then Secretary of State for Housing, Communities and Local Government Robert Jenrick talked yesterday about it lasting until December 2, the same as for England, with decisions after that up to the Chancellor.
First Minister Nicola Sturgeon tweeted yesterday morning: “We need clarity on this urgently today. I’m sorry to say that @ScotGov has had no more detail now than we did before PM statement yesterday. Woolly words don’t pay people’s wages.”
The furlough scheme in its original form, funded by taxpayers across the UK including those in Scotland, had it been of stated longer duration from the outset and had this been made clear, would have been the ideal vehicle to enable necessary public health decisions while limiting unemployment greatly.
It became inadequate as employers were asked to contribute ever more and particularly as Mr Sunak pledged it would end on October 31, come what may.
Ultimately, the UK Government has had to U-turn on this as well of course, as it has locked down England.
On Saturday, announcing the extension of the scheme that had been repeatedly refused, a press release issued by the Treasury and Mr Sunak said: “Today the Prime Minister said the Government’s coronavirus job retention scheme – also known as the furlough scheme – will remain open until December, with employees receiving 80% of their current salary for hours not worked, up to a maximum of £2,500. Under the extended scheme, the cost for employers of retaining workers will be reduced compared to the current scheme, which ends today. This means the extended furlough scheme is more generous for employers than it was in October.”
Employers will pay employer National Insurance and pension contributions for the hours the staff member does not work in the latest arrangements.
The inferior job support scheme, due to start on November 1, has been postponed until the furlough scheme ends.
The extension of the furlough scheme is a case of better late than never.
However, huge damage has no doubt been done by the previous insistence on ending it far too soon. And the extension is still only short term, which is a major problem.
As the UK Government continues to make policy on the hoof, the extension this time has been triggered by the one-month lockdown in England announced at the weekend.
The extension of the furlough scheme was said in Saturday’s press release to be “part of the Government’s plan for the next phase of its response to the coronavirus outbreak”.
The problem, for businesses and households, is there does not seem to have been much, if anything, in the way of a long-term plan. The “next phase of its response” seems, from an external perspective, like a somewhat glossed-over description of the belated locking of stable doors.
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