There is a history with the Conservatives and unemployment. Those with long memories remember Norman Lamont saying in 1991 that unemployment was a price “well worth paying” to get inflation down and before him, John Major said, “If it isn’t hurting, it isn’t working”. They lived with these phrases for years to come – they were emblematic of a strategy.
Ministers have said this government is different. Indeed, the chancellor, Rishi Sunak, used to say that this is not a time for “ideology and orthodoxy”. But despite the rhetoric, a political choice has been made, representing precisely the wrong philosophical, economic and social way forward for the country. It will be many, many businesses, people and our economy that will pay the price.
This wrong choice starts with the “viability” threshold that rules shut-down businesses out of support. Tens of thousands of businesses and a million or more jobs are in parts of the economy that have been wholly or almost wholly shut down. Weddings, events, conferences, arts, clubs, indoor play, bowling alleys. The list is long. Cinemas, facing a perfect storm of delayed film releases and reduced capacity, are the latest to join that list. The government is essentially consigning thousands of businesses and whole swathes of our economy to the scrapheap.
What will happen to those businesses, those workers left in the cold? The business secretary, Alok Sharma, says they can find “better jobs” or the “welfare system”. This viability test – which deems only those businesses in which employees can work at least a third of normal hours as worthy of support – represents a monumental insult to so many people and the livelihoods they love. A classical musician who has trained for many years, a small business owner in the wedding industry who has built up a fantastic reputation, an events planner, a live performer, a restaurant manager, a sound technician, a supplier, a choreographer, a caterer. The same principle applies – these are jobs and careers that were specifically chosen and loved.
Now they are being told they are not viable because they are shut to help tackle the transmission of the virus. It is outrageous. These are the very businesses and people the government has always claimed to stand up for – those working hard and paying their taxes.
Then there is the misnamed job support scheme. To be clear, this is a million miles from the successful German Kurzarbeit scheme. It demands employers pay 55% support for 33% of the hours, offers half the level of government support compared with the German scheme and, in fact, gives an incentive to employ one person full-time rather than two part-time.
On top of all this, with vacancies well below pre-crisis levels, far from being in the midst of an FDR-style New Deal, there is no recovery plan, no ambition to create jobs on a large scale. Boris Johnson has announced funding for offshore wind turbines which he says could create 60,000 jobs over 10 years – but that is just a very small fraction of the number of jobs at risk right now. While Germany and France are investing tens of billions of euros on green recovery, so far in the UK we have had some retrofit measures for the housing market, a promise of training in six months’ time, and investment in wind energy that, while welcome, is a drop in the ocean.
If there is one lesson we have relearned as a country in this crisis, it is our overriding duty to look after each other – that our fates are bound together. That is why Labour supported the government when it implemented the furlough scheme in March and introduced targeted support for businesses in affected sectors. The principle was that economic support should work in tandem with public health measures.
You cannot foster a spirit of solidarity for six months, and then, when the going gets even tougher, with restrictions being reimposed, revert to a sink-or-swim mentality. That is not the way a business, an economy, or a nation gets through a crisis.
It makes no sense to have supported these businesses and sectors in March, only to write them off in October. These were viable businesses before the crisis, major players for our economy, and would be again afterwards. If they are left out in the cold now, and then told in six months they can reopen, what will remain of these vibrant businesses?
Let’s not succumb to the notion that the government cannot afford to act, because ministers have said repeatedly: “Not acting in this crisis costs more than acting.” They are right. They are spending £9bn on the job retention bonus available from the end of January. Yet by failing to properly target it, they risk the funds going to firms that would have rehired people anyway, while others are forced to make cuts as they struggle throughout the winter. They talk of balancing the books, but simply letting the market adjust will mean people and the public purse will pay the consequences in lost businesses, jobs and higher unemployment.
It may well be that this crisis accelerates changes in the way our economy is structured, but the question is whether this will happen in a planned or unplanned way. If we allow it to happen in an unplanned way, by writing off whole sectors, we will pay a long-term price.
We need to keep supporting businesses through this crisis and not impose artificial tests of viability. We need a job support scheme that works. We need a plan for a green recovery and reskilling that meets the scale of this economic emergency. The decisions we take now will have a profound effect on businesses and our economy for years to come. It is essential that a coalition of forces, including businesses and workers right across the country, persuades the government to take the right path. Whatever the government seems to think, we are still in this together.