‘INEQUALITY’ ALERT:
‘Measures save landlords and banks not families’
THE GOVERNMENT’S response to the coronavirus crisis will widen inequality across the UK, a new report has claimed, as a third of small businesses said they were considering redundancies due to the pandemic.
Financial measures brought in to deal with the lockdown are protecting landlords and banks more than families, according to a report from the IPPR thinktank, which said Government schemes “left (the) poorest to shoulder most economic risk”.
The report found that 45 per cent of the cost of the work furlough scheme in response to the coronvirus outbreak will be spent on rent and debt repayments.
The IPPR said this amounted to “an implicit bail-out of landlords and banks”.
The money would amount to £10bn under a three-month shutdown and £21bn if the lockdown continued for six months, the report said.
The furlough scheme sees people paid 80 per cent of their wages up to a maximum of £2,500 a month.
Chancellor Rishi Sunak announced yesterday he was extending the jobs furlough initiative to October and that changes would be brought in with employers having to share some of the cost from August.
He said “I’m extending the scheme because I won’t give up on the people who rely on it. Our message today is simple – we stood behind Britain’s workers and businesses as we came into this crisis, and we will stand behind them as we come through the other side.”
He said he had held talks with unions about the future of helping people back into work, telling the Commons: “It is something that weighs heavily on my mind – every person who loses their job through this difficult period is a person that this Government is determined to stand behind.”
He added that this could include providing training or helping businesses to create new jobs.
But the IPPR study said families in upper pay brackets who are still able to work are likely to be spending less and saving more while low-income families on furlough will be gradually and increasing debt.
“Better-off households will make significant savings from curtailed ‘discretionary’ spending on holidays, hotels, restaurants and cultural and leisure activities, but as poorer household spend less on these they have little scope to make such savings,” the IPPR said.
“The long-term effects of rising indebtedness on the one hand, and a likely rebound in asset prices on the other, are likely to further widen inequalities between the working poor and the assetowning wealthy.
“Without steps to actively redress these inequalities and to ensure the risks of the crisis are fairly shared, the UK’s economic recovery is likely to be slow, uneven and unfair, worsening existing structural imbalances.”
Among the measures called for by the think-tank are to “explore the possibility of a freeze on rent, debts and bills for some struggling households, without new debts accruing, within current legal frameworks”.
Meanwhile, the Federation of Small Businesses (FSB) also warned of the threat posed to millions of livelihoods by any sudden retraction of support for small firms.
In a survey of 5,471 small business owners, four in 10 enterprises have been forced to shut. Of those, 35 per cent are not sure whether they will ever re-open.
In response to the strain being placed on them, more than one in three of small employers are considering, or have already made, redundancies.
The IPPR’s executive director, Carys Roberts, said: “IPPR’s research finds that while millions of people across the country are seeing a hit to their incomes, the government is underwriting the income of banks and landlords without any obligation to take a similar hit. That amounts to an implicit bailout.
“The Government must urgently ensure that its programme of support is protecting those who need it. And as we emerge from this crisis, it will be critically important to rebuild a fairer economy, with those whose incomes have been protected contributing more.”
Millions of people across the country are seeing a hit to their incomes,
The Institute for Public Policy Research executive director, Carys Roberts,