Actively subsidising activities that weeks ago were deemed high-risk seems bizarre
‘Sunak’s statement overall elided the biggest reality weighing down the economy: the virus itself ’
We have moved from economic Phase 1 to Phase 2 of the pandemic. That was the message from Chancellor Rishi Sunak’s summer statement. Gone are the days of enforced lockdowns and relief for jobs and businesses through the furlough scheme. With companies reopening, the additional announcement of £30bn in support was justified to help jobs – with new government schemes to “create” them, protect them and help the unemployed find them.
The Chancellor spoke with admirable candour about what this meant for workers. Yes, taxpayer furlough support was appropriate when the Government had ordered workplaces shut. But continuing furlough indefinitely would give people “false hope that it will always be possible to return to the jobs they had before”, while their skills wasted away. Sunak was brave to say so. So the furlough scheme will be wound down in October, as previously announced.
But it will be replaced with a “jobs retention bonus” for businesses, of £1,000 for any previously furloughed workers continuously employed through to January.
That is a reasonable compromise – easing constraints for firms with viable chances of maintaining jobs, while not doing too much to subsidise unviable ones.
Yet for all his brutal honesty on furlough, Sunak’s statement overall elided the biggest reality weighing down the economy: the virus itself.
Fawlty Towers’ famous “don’t mention the war” episode was temporarily banned from UKTV recently as part of the Great Awokening. For Sunak, the statement had a theme of “don’t mention the virus”.
Much of the Chancellor’s analysis seemed predicated on the idea our economic problems stemmed from an irrational lack of consumer confidence to engage in “social spending”, rather than a pathogen. Hence his new policies to nudge consumers to get back socialising through a temporary VAT cut on “food, accommodation and attractions” from 20pc to 5pc, and a Monday to Wednesday 50pc eat-in discount worth up to £10 per meal through August.
The Treasury admits households have been saving plenty and have paid down debts. So they aren’t avoiding pubs, cafes and restaurants because of being cash-constrained. They are