The Courier & Advertiser (Fife Edition)
Chancellor unveils new scheme to protect jobs
Sunak’s ‘winter economy plan’ will see workers in ‘viable’ roles have their wages subsidised for six months from November
Rishi Sunak has announced a new multi-billion-pound scheme to subsidise workers’ wages through a second round of Covid restrictions, but many fear the measures are not enough to avoid mass redundancies this winter.
The chancellor said under his job support scheme, which will replace furlough support, workers in “viable” jobs will have three-quarters of their normal salaries paid for six months from November 1.
At a press conference yesterday afternoon, Mr Sunak declined to comment on what defines a job as “viable”, saying: “It is not for me to sit here and make pronouncements on every individual job.
“What I want to be able to do is to provide as much support as possible given the constraints we operate in.
“We obviously can’t sustain the same level of things that we were doing at the beginning of this crisis.”
Mr Sunak’s move mimics the German Kurzarbeit scheme that provides a government contribution to the wages of employees facing short-time working in companies where business is slow.
British workers will need to work at least a third of their normal hours to qualify and their employer will need to pay normal wages for those hours.
As for the remaining two-thirds of a worker’s pay, the government will be paying 22%, capped at a maximum of £697 a month, and the employer will pay 55%.
The Institute for Fiscal Studies think tank said the new plan was “significantly less generous” than the furlough system it replaces.
The IFS also suggested that the end of the furlough scheme will translate into “sharply rising unemployment” as jobs which relied on the state funding will cease to exist.
Scottish Finance Secretary Kate Forbes said the wage subsidy scheme “does not go far enough”, adding: “With only five weeks to go until the end of the furlough scheme, businesses have already taken difficult decisions and now need greater certainty and more time to plan.
“Our analysis suggested 61,000 jobs would be saved if the furlough scheme was extended, and it appears that from the detail this scheme will not provide the support that was hoped for.”
The chancellor’s package of support, dubbed “the winter economy plan”, also includes a 15% VAT cut for the hospitality sector and more loans for struggling businesses.
Firms that have taken out loans will be able to use a new “pay to grow” flexible repayment system, meaning cash can be repaid over 10 years instead of the original six-year term.
Mr Sunak warned he “cannot save every job” and “cannot save every business”, but promised his schemes would keep the economy going “through the difficult winter months”.
He also defended bringing the furlough scheme, which has protected almost a million jobs in Scotland, to an end – arguing it would be “fundamentally wrong to hold people in jobs that only exist inside the furlough”.
“We need to create new opportunities and allow the economy to move forward,” he said.
“The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.”
Shadow Chancellor Anneliese Dodds said the delay in the introduction of the support scheme will have impacted the confidence of businesses.
Responding to Mr Sunak’s statement in the Commons, she said: “I’ve called for the introduction of a system of targeted wage support 40 times. That call has been rebuffed by this government 20 times. It’s a relief this government have U-turned now.
“But we must be open and honest. That delay in introducing this new scheme will have impacted on businesses’ confidence.”
Scottish Tory leader Douglas Ross said: “The level of support that Scotland has received from Rishi Sunak throughout this pandemic has been immense.”
Frances O’Grady, the general secretary of the TUC, hailed it as a “significant step forward”.
She said: “We are pleased...this scheme will provide a lifeline for many firms with a viable future beyond the pandemic.”
The Treasury has been somewhat of a Ministry of Magic under Rishi Sunak – whatever the issue, this chancellor has been ready to pull the proverbial rabbit out of the hat.
At the outset of the Covid crisis, he conjured up the furlough and self-employment support schemes, there was the bounceback loans, VAT cut and, over the summer, Sunak cooked up the Eat Out to Help Out scheme to give hard-hit restaurants a boost.
So, it was with bated breath that the nation waited to see his next trick yesterday afternoon.
There was the usual build-up, a series of slick, polished social media posts followed by a quick grin for the cameras outside Number 11.
In the Commons, there was familiar language about wanting to reassure the “anxious, afraid and exhausted”.
And then, as we’ve now become accustomed, Sunak appeared to snap his fingers and magic the problems away with a raft of new policies.
The job support scheme, pay as you grow scheme, VAT cut and loan extensions would help us through a difficult winter, we were told.
But, much like an audience used to the act, we can see the strings on this trick.
The job retention scheme, in reality, will see the government pay a maximum of 22% of a worker’s wage – much less generous than the furlough offer.
Already experts are warning the package is not enough to stave off mass redundancies.
And Sunak realises this, for if you dig deep into his speech, he admits it.
“I cannot save every job”, “our economy is now likely to undergo a more permanent adjustment”, “we will adapt and evolve to the new normal”.
These comments hint at what we’ve known for a long time, coronavirus will scar the economy for decades to come. Let’s hope Sunak has not cast his last spell.
“But, much like an audience used to the act, we can see the strings on this trick