Last week the Chancellor Rishi Sunak unveiled his “winter economy plan” – a new set of economic measures to replace the furlough scheme. I believe that the plan is deeply flawed and risks consigning whole sectors of the economy, which generate billions in tax revenue and employ more than a million workers, to the scrap heap.
The announcement included a mixture of new measures and some which had already been announced – a new ‘jobs support scheme’, the extension of the self-employment income support scheme and 15% VAT cut for the hospitality and tourism sectors, and support for businesses to repay government-backed loans.
In his plan the Chancellor failed to mention businesses that are not able to operate, because they are either shut down completely or trading with hugely reduced capacity including: the wedding industry, events and exhibitions, major parts of the night-time economy, festivals, sports venues and theatres. These are important parts of our economy in south Manchester.
There was no acknowledgement at all about their plight or the fact that they will be forced to remain fully or mainly closed for the next six months. The vast majority of these jobs are perfectly viable in the long term, and deserve support from government during the period of pandemic restrictions.
New analysis by the Labour Party, using Office of National Statistics employment data, shows that more than a million workers in these sectors have been simply dismissed as “unviable” by the government. None of the additional measures announced by the Chancellor last week will assist them.
The government’s ‘Job Support Scheme’ is only open to those employers who offer their employees at least a third of their usual hours – impossible for those industries still closed.
The scheme is also fundamentally flawed because, for every two members of staff, it is cheaper for a company to bring back one member of staff full-time and fire the other, than to have two workers working part time.
Schemes in other countries have been successful when there have been appropriate levels of financial incentives for businesses to retain workers in viable jobs, for example the German kurzabeit. In contrast, Sunak’s scheme does not provide businesses with adequate support- this could lead to a cliff-edge of redundancies when the Job Retention Bonus expires in January.
In contrast, Labour is proposing a proper Jobs Recovery Scheme. The scheme would incentivise targeted businesses to bring back more workers part-time, instead of bringing some back full time and letting others go.
Labour’s proposal would also go further than the government’s new scheme, including a training component to ensure that workers can use the time from their reduced hours to gain vital new skills; more conditionality to better target public money; and targeting to specific sectors
The Chancellor failed to mention whether local authority discretionary grants would be extended, writing off one option for supporting businesses still locked down or struggling.
He has also once again failed to provide any new support – or any hope – for the 3 million people excluded from his support schemes; a glaring and desperately disappointing omission.
Moreover, the failure of the government to implement an effective test, track and trace system means that many businesses left out of support have no idea of when they can safely reopen. The Chancellor’s “winter economy plan” is completely inadequate and needlessly puts hundreds of thousands of livelihoods at risk. Along with Labour colleagues, I will do everything possible to press the Government to provide the support for excluded workers and businesses that is long overdue.