A difficult economic balancing act
Chancellor will need help to plot the best course through the Covid crisis
Chancellor Rishi Sunak’s announcement that the UK Government is to carry on providing some support for businesses as the pandemic continues was accompanied by a sigh of relief from many who feared job losses on a frightening scale with the end of the furlough scheme on 31 October.
At its peak, the scheme saw nearly ten million people paid 80 per cent of their wages by the Government and there are still nearly three million on partial or full furlough leave. Had this extraordinary measure simply been ended, many would have lost their jobs.
Its replacement, the Job Support Scheme is significantly less generous – the state will cover up to 22 per cent of wages, capped at just under £700 a month, of staff who can work at least a third of their usual hours – but then there is little question that it had to be.
Labour Shadow Chancellor Anneliese Dodds welcomed what she called a U-turn by the Government, saying “there’s much in this state - ment that we do support”, but she questioned whether the new system was as effective as it could be and asked how the Government would ensure “value for public money”.
And she added that the decision had come too late for people who had already lost their jobs because their employers expected had Government support to run out next month – a tragedy for anyone in that situation.
The reaction from business was mixed. While CBI Scotland praised the Chancellor for acting “decisive - ly” in a “spirit of agility and collabo - ration”, the Scottish Tourism Alliance said the new scheme was not enough to stop “mass redundancies” as many firms in the sector are still closed because of the current restrictions.
The Chancellor stressed he could not save every job and that he had sought to concentrate support on those “which have a genuine prospect of being viable and providing long-term security”.
In doing so, he is, quite rightly, trying to strike a balance between protecting the UK’S economy and protecting its finances, which is an almost impossible task for anyone given the underlying uncertainties.
So, in plotting the best course through this crisis, Sunak will need to retain the “agility” spoken of by the CBI, to be open to help from the business community, unions and even opposition politicians, and to be willing to make “U-turns” when required.