Unite the Union has warned today that there is “no more time to lose if we are to prevent a jobs loss tsunami from sweeping through communities this summer” as the UK prepares a bailout plan.
The Chancellor has signed off on a plan called ‘Project Birch’. It will aim to save strategically important companies whose failure would otherwise “disproportionately harm the economy”, according to the Financial Times.
Those firms eligible would have already exhausted support options developed by the Treasury during the Covid-19 crisis, such as the coronavirus business interruption loan scheme.
Commenting on reports of Rishi Sunak’s plan, Unite’s assistant general secretary for manufacturing Steve Turner said: “It’s very welcome news that a rescue plan for UK PLC is finally taking shape.
“We have to see the details, of course, but as trade unions we’ve been working hard with our industrial partners to persuade government of the need for long-term support for core industries and to build our way out of this crisis, saving jobs and skills.”
The FT report describes the Chancellor’s allies as saying the Treasury would not “initially” seek equity stakes in such companies, with the preference being to extend loans with the taxpayer “at the top of the hierarchy of creditors”.
The Treasury commented that such support would be offered “on a ‘last resort’ basis”, adding: “We are putting in place sensible contingency planning and any such support would be on terms that protect the taxpayer.”
Earlier this month, Sunak announced that the job retention scheme would be extended until October, and furloughed employees would be allowed to work part-time from August – but employers would have to start sharing the cost of paying salaries.
Further details of the changes accompanying the extension of the furlough scheme are promised by the end of May. They will likely determine whether employers lay off workers or keep them furloughed.
Unite’s Turner said: “We still need to ensure that proposed changes to the job retention scheme do not undermine a plan to recover and rebuild and that workers continue to get their wages, but in these moves to put a financial floor under major employers and their vast supply chains then we have the beginnings of a plan taking shape.
“What we also need, and urgently, is phase two of the job retention scheme, a recovery phase to assist us rebuilding our economy, supporting flexible and short-time working while we pull the economy out of its deep freeze and attempt to stimulate demand.
“These measures must come quickly and go hand-in-hand with an immediate and strategic programme to create new green jobs as part of a just transition to replace those that we know will not be coming back.
“Recovery from this huge health and economic shock cannot be piecemeal. It has to be a national, systematic effort of the government, employers and unions in a partnership to repair and reshape our economy.”
Although 7.5 million jobs have been covered by the furlough scheme, unemployment has risen. Over two million new claims for benefits were made in the two months following the start of the lockdown.
Around 935,000 businesses have used the job retention scheme and a further 440,000 claims were made on the first day of the government’s equivalent income support scheme for the self-employed, the Resolution Foundation has said.