Sunak tells us to “live without fear” – but offers little comfort to low-paid workers

Labour welcomed another government “U-turn” as Rishi Sunak unveiled a new job support scheme to parliament yesterday. With furlough ending next month, the Chancellor announced that its replacement would protect “viable jobs” in the next stage of the coronavirus crisis, as many businesses and whole industries face lower demand due to restrictions. Echoing the views of anti-lockdown Tory MPs, as well as Labour’s John Spellar, Sunak even declared that everyone “must learn to live without fear”. Unfortunately, the economic measures fall far short of what is required by those in hard-hit sectors, and there is much for people to fear over the coming months.

Anneliese Dodds offered an immediate response to the economic update in the chamber. She used it to stress that Labour has been calling for the introduction of a targeted wage support system repeatedly, and that the new scheme “comes too late for many people who have already lost their jobs”. The Shadow Chancellor also pointed out that Sunak said little of training and retraining, which are crucial if the economy is changing drastically for the foreseeable – and if instead of suspended animation, the government is now aiming only to protect “viable jobs”. Perhaps most importantly, though, Dodds questioned whether the new jobs scheme truly incentivises short-hours working. Does it make employers want to retain more staff on reduced hours than retain some full-time and make others redundant?

The truth is that in many cases no such incentive is presented – and we are talking here particularly about low-paid work. As highlighted by the Resolution Foundation and outlined in our piece on why the new support scheme isn’t up to the job, if we’re talking about a £17k a year job, it would cost an employer more to employ two people part-time under this scheme than it would to employ one full-time person. That is because it will see employers pay 55% of the salary of a worker who will work only 33% of the hours they are being paid for, rather than the one fifth that employers contribute now under furlough. Ministers say the new scheme needs to be considered alongside the job retention bonus, which is the only way it actually works, but the bonus is set to end in January whereas this scheme runs for six months.

What is a “viable job”, according to the Chancellor? You would assume that “viable” means any jobs that could exist once the pandemic is over, or there is a vaccine, or there is an incredibly effective test and trace system. But many jobs that fit into this category will still go down the pan next month because this new scheme is nothing like the German Kurzarbeit in its level of government support. And there was no mention by Sunak of improving Universal Credit, or otherwise helping the unemployed. There is no V-shaped recovery in sight here, but for many UK workers there is much reason to live with fear.