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It was only a matter of time. When Rishi Sunak set out his ‘Winter Economy Plan’ just a few weeks ago, many (including this newsletter) warned that it was inadequate to the sheer scale of the looming problems threatened by the Covid second wave.
Back then, he delighted some Tory MPs and newspapers with his bullish rhetoric that “we must learn to live with it and live without fear”. Well, fear is stalking the land among those who can see their jobs and businesses disappearing across the north, and it now seems the Treasury has finally been scared enough by the political consequences that he is doling out some extra support.
Of course the chancellor will never admit that this is a U-turn on his plan to withdraw furlough, even though local furlough is exactly what this looks like. The government will pay two thirds of the salary of each employee (up to £2,100 a month) in any pub, bar or restaurant forced to shut down in the new local lockdowns expected next week. The 67% is less generous than the 80% of full furlough however. Exactly what people should do to cope with the loss of a third of their income remains unsaid.
Although the help is welcome, it’s no surprise that several local council leaders have already suggested it’s too little, too late. They were distinctly underwhelmed by the presentation given them tonight, confirming the earlier warning from the mayors of Greater Manchester, the Sheffield and Liverpool city regions and North Tyne that the plan did not “appear to have gone far enough to prevent genuine hardship, job losses and business failure this winter”.
And it wasn’t just last month that many warned Sunak that he should go for a targeted version of furlough, it was many months ago. In his rushed announcement today (a Tweeted video clip is hardly a statement on the floor of the Commons), he said his expanded Jobs Support Scheme would be “for closed businesses”. But what about all those closed sectors of the economy, such as aviation and creative industries, effectively shut down by government regulation?
As the Resolution Foundation put it this afternoon: “The delay in putting [the scheme] in place will have come at a high price in jobs lost.” It rightly says that the Job Support Scheme itself needs further reform to persuade bosses to cut hours rather than jobs. Another U-turn may well be on its way in a few weeks if employers simply go for the bottom line.
What makes the government’s position all the more politically dangerous is the latest growth news, with this morning’s GDP figures showing that the hoped-for ‘V-shaped’ recovery now looks like a stuttering spike on the nation’s economic electrocardiogram. Sunak’s Eat Out To Help Out scheme may have done too little on consumer spending and too much in spreading the virus.
The bigger problem is that these local lockdowns look like they are going to slowly creep across the entire country. The three-tiered system of controls may well leave most areas in the top two most serious categories and only a shrinking handful in the lowest one. Only today, on a call to MPs, I’m told Matt Hancock made clear things were getting worse everywhere.
The south has so far escaped much of this, but with London due to get new curbs, the counties around it could follow very quickly. I understand public health officials in Essex, for example, are pushing for tier-two restrictions that would mean a ban on household mixing.
The lack of grip on the virus or from both No.10 and No.11 Downing Street is what will worry their MPs most. The PM suggested last week he would hold weekly press conferences from now on, but he failed to do a single one this week. Sunak too appeared so afraid of scrutiny that he didn’t make this announcement in a No.10 press briefing, but via pooled broadcast clips.
There will probably be a Johnson address to the nation next week, but voters in the north can be forgiven for thinking they are being treated like fools this weekend. If the virus spreads south, that may be a perception that spreads more widely among the electorate too.