Chan­cel­lor’s much-hyped mea­sures can only tin­ker at the edges of our one-me­tre-plus world

The Daily Telegraph - Business - - Front Page - Rus­sell lynch

Rishi Su­nak’s lat­est bid to help out hos­pi­tal­ity firms that are suf­fer­ing a Covid-19 cat­a­clysm is a head­line grab­ber, but the Chan­cel­lor didn’t men­tion the ele­phant in the room: so­cial dis­tanc­ing. VAT cuts and even Au­gust restau­rant vouch­ers are bet­ter help than noth­ing. But up against the one-me­tre-plus world we have to live in un­til a vac­cine is dis­cov­ered, it is just an ex­tra pair of hands push­ing the Sisyphean boul­der up the hill. To il­lus­trate the point, here’s a per­sonal ex­am­ple. My Au­gust hol­i­day plans in­volved camp­ing in the Lake District. But two weeks ago, an email from the camp­site warned there would be no toi­lets and no show­ers; the block has to re­main closed be­cause the site doesn’t have the staff to clean them in the peak sea­son. Against eight days of that, not even a 15pc cut in the price would per­suade me to go.

So too with the “eat out to help out” ini­tia­tive, where we can par­tially dine on Rishi’s dime at an es­ti­mated £500m tab to the Ex­che­quer. All well and good, but ca­pac­ity has been slashed

dra­mat­i­cally due to so­cial dis­tanc­ing. Even if peo­ple over­come their nerves about go­ing out, how will restau­rants re­act? The risk is that din­ers will find that the cost of their meals has risen to re­flect the state’s £10-a-head largesse as de­mand surges. Many eater­ies will be tempted to ease up on so­cial dis­tanc­ing to take ad­van­tage.

A £3.8bn stamp duty cut mean­while sounds bold, but ar­guably is of lim­ited im­pact when many such first-time buy­ers were ex­empt on pur­chases up to £300,000 al­ready. Deals may be brought for­ward to take ad­van­tage of the hol­i­day by peo­ple who were al­ready in­tend­ing to move, with a re­sul­tant drop in de­mand next year.

‘A bolder de­ci­sion would have been to cut em­ploy­ers’ NI con­tri­bu­tions and raise the em­ploy­ment al­lowance’

But with just £1,500 in tax to be saved on the av­er­age pur­chase price of about £200,000, will that make a dif­fer­ence at the mar­gin when con­sumer con­fi­dence around bigticket pur­chases is at record lows?

As for the fur­lough bonus, ac­coun­tants say the £1,000 in­cen­tive will have a neg­li­gi­ble ef­fect on hir­ing and fir­ing de­ci­sions and smacks more of a PR

stunt. A bolder de­ci­sion would have been to cut em­ploy­ers’ na­tional in­sur­ance con­tri­bu­tions and raise the em­ploy­ment al­lowance, but the Chan­cel­lor may be keep­ing that in the locker for an au­tumn Bud­get po­ten­tially over­shad­owed by a deep­en­ing jobs cri­sis.

Su­nak has made a habit of un­der­promis­ing and over-de­liv­er­ing – but not yes­ter­day. This is a Chan­cel­lor who doesn’t want to of­fer “false hope” to those in dan­ger of los­ing their jobs.

And his dark hint over the “medium-term” fix­ing of the pub­lic fi­nances – a Ban­quo at this “eat out to help out” feast – will worry busi­nesses and house­holds alike.

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