Labour letter to Sunak: Seven ways your winter plan fails Britain’s workers

The Labour Party’s Anneliese Dodds has highlighted seven ways in which the winter economic plan put forward by Rishi Sunak in a parliamentary statement last week “fails Britain’s workers” in a letter to the Chancellor.

Confirming that the furlough scheme will come to an end next month for all sectors, no matter how hard-hit by coronavirus, the Chancellor used an update in the House of Commons to unveil a new ‘job support scheme’.

The new scheme will see eligible employees – working at least one third of their normal hours – have their worked hours paid by employers and their hours not worked paid jointly by the government and their employer.

Labour welcomed the “U-turn” but pointed out flaws in the programme, which is set to start in November and run for six months. Designed to protect “viable jobs” only, it does not offer specific help to sectors such as hospitality.

The Resolution Foundation also pointed out that under the new scheme, it would cost an employer 33% more to employ two people for half their hours than one person full time, assuming an annual wage of £17,000.

In a letter sent to Sunak today, the Shadow Chancellor has listed the following as seven reasons for which Labour believes the latest package of coronavirus support measures will not benefit workers facing a jobs crisis:

1. “Why does the job support scheme make it more expensive for employers to keep workers on part-time than keeping some on full-time and making others redundant? 
2. “Why does the winter economy plan not incentivise or support training?
3. “Why there is no support for sectors most affected by social distancing measures and unable to take staff back?
4. “What will be the impact on self-employed workers who will see a reduction in support from 70% to 20% of their average profits?
5. “Will the Chancellor plug gaps that have left millions of workers without any form of support since March?
6. “Why is there no mention of increasing UK ambitions on green investment to the level of countries like Germany and France?
7. “When will the government present a full Budget to address the true scale of Britain’s economic crisis?”

Commenting on her letter, Dodds said: “Last week the Chancellor should have protected jobs with a proper work sharing scheme that incentivised employers to keep more staff on. Instead, he’s telling British business to start laying people off because no more help is coming.

“This wasn’t by accident – it was by design. The Chancellor’s sink or swim mentality is a throwback to the worst days of Thatcher, and just like in the 1980s people on the lowest incomes will pay the highest price. Britain now faces an unemployment crisis – and it’s got Rishi Sunak’s name all over it”.

Labour has proposed that the ruling Conservatives replace furlough with a scheme that would allow businesses in key sectors to bring back staff on reduced hours with the government covering wages for hours not worked.

The opposition party would also want more conditionality attached to the programme, with rewards for employers who offer their staff high-quality training, treat their workers well and do not engage in tax avoidance schemes.

Writing for LabourList, shadow Treasury team member Dan Carden stressed the need for an “ambitious green recovery” and said: “People need security, but this government is not going to give it to them. Labour’s job recovery scheme would.”

Below is the full text of Dodds’ letter to Sunak.

Dear Chancellor,

It was encouraging to hear on Thursday that you might be willing to work with me, as well as with businesses and trade unions, on the long-term issues our economy faces. It is more important than ever that we do all we can to recover jobs, retrain workers and rebuild businesses.

I would be very grateful if we could meet to discuss the questions I raised during the debate on your economic statement to the House.

In particular, it would be helpful to discuss the following.

1. Whether the Job Support Scheme (JSS) will genuinely recover jobs – as would be the case with the principles of the Job Recovery Scheme that Labour has proposed. In order to be an effective short hours scheme (as with the German model), the JSS needs to make it more attractive to employers to keep workers on part-time, than to keep some on full time and make others redundant. But the design of the JSS, especially the additional requirements on employers, looks set to potentially lead to employers keeping fewer staff on full time and letting others go. In addition, the interaction with the Job Retention Bonus scheme appears to create an additional January cliff-edge. We need to be certain that the JSS is designed in such a way that it limits job losses where possible, rather than risking spikes of unemployment at the end of October and again in January.
2. Why your government decided not to include incentives for employers around staff training within the scheme; and what your government intends to do, beyond changes to employer incentives around apprenticeships, to boost training? As you mentioned during your remarks, our economy is changing- and I am sure you would accept that far more needs to be done to ready people for the jobs of the future? Labour has called for a National Retraining Strategy, backed by bringing forward the £3bn allocated for a National Skills Fund, so that we can do all we can to help those who do lose their jobs to boost their skills and get back into the workplace.
3. What support will be provided for those sectors strongly impacted by social distancing measures and thus lacking the cashflow to take staff back even at just 33% of their usual hours, including many crucial to the UK’s economic future such as in the arts and creative industries, and those in areas subject to additional localised restrictions?
4. What assessment your department has made of the impact of the steep reduction involved in the Self-Employment Income Support Scheme (SEISS) Grant Extension on those self-employed people who are still not able to return to business as normal and will see state support significantly fall during this next phase?
5. Whether the JSS and SEISS Grant Extension will avoid the gaps in coverage that have bedevilled existing schemes? During Treasury Questions on September 15th you implied that those who were not eligible for SEISS had a median income of £200,000 but this is not the case. The £50,000 cap you were referring to is only one reason among many that people have not been eligible for SEISS, and several groups who have been excluded are in significant financial difficulty and have so far not received any government support.
6. Whether the government’s response to the National Infrastructure Commission, which you promised would come this Autumn, will increase the UK’s ambitions on green investment to the level of countries like Germany and France, which appear to be performing much more strongly when it comes to promoting the green technologies (and jobs) of the future? Labour would like to see a Business Rebuilding Programme that – alongside the changes in terms to loan schemes and tax repayments which you announced on Thursday and which we have welcomed – engages with these issues.
7. When we might expect a more comprehensive fiscal statement from the government, given the rumours that there will now be no Budget before the end of the year. We have had two brief “statements” in the last three months but nothing to engage with the true scale of the economic crisis we are facing nor to give a sense of the government’s long-term planning.

Labour are determined to act as a constructive opposition at this time of national crisis. Therefore I would appreciate the chance to work with you on these critical issues.

Yours sincerely,

Anneliese Dodds MP