An unprecedented intervention

“We’re setting up a new coronavirus job retention scheme” says Chancellor Rishi Sunak “Government grants will cover 80% of the salary of retained workers, up to a total of £2,500 a month”
 

Rishi Sunak has been Chancellor for just a few weeks, but he has already earned a place in the history books for launching the biggest state intervention in the economy in recent history. Today, he unveiled a package of measures to support workers during the outbreak which will include the government paying the wages of staff who are unable to work as part of a ‘coronavirus job retention scheme’. A system of government grants will mean employees will get 80 per cent of their wages, up to a cap of £2,500 a month. There is no limit to the funding for the scheme, and pay will be backdated to 1 March and will continue for ‘at least’ three months.

Sunak appealed to bosses to keep their workers on and use this scheme, rather than laying them off, and also unveiled help for those who had already been put out of work. He is raising the Universal Credit allowance by £1,000 a year and self-employed people will receive UC at a level equivalent to statutory sick pay, while Local Housing Allowance will cover 30 per cent of rents in a local housing market.

 

Sunak and his colleagues drew up this plan with the help of the TUC, the CBI and others. It was still being finalised in the hour before the Downing Street press conference where it was announced and that perhaps explains why there are some holes in it. Self-employed workers are receiving far less than their PAYE counterparts. There is not yet clarity on the level of pay that will be set for those on zero hours contracts. These questions would be difficult for a government to answer at any time, but given the pace of change and the severity of the outbreak, it is hardly a surprise that the package isn’t perfect.

It also explains why ministers waited until today to tell pubs, clubs, cafes, restaurants and gyms to close their doors after tonight. Anything announced before the jobs package would have resulted in mass lay-offs, leading to an unemployment crisis.

 

Almost as striking as the unprecedented set of measures announced today was the way Sunak delivered them. He didn’t just stick to the money stuff, but delivered a moral message about the need for small acts of kindness between people to help the country through this crisis. It was the first reassuring, rousing message we’ve really heard from any frontline politician. Johnson is a leader who is happy to let his team shine rather than trying to hog the limelight, but there was an uncomfortable contrast between the two politicians this evening.

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