Chancellor’s “furlough flip flop causing chaos”, says Anneliese Dodds

Labour’s Anneliese Dodds has accused her opposite in government Rishi Sunak of “causing chaos” during the pandemic with a “furlough flip flop” as the Chancellor prepares to announce new measures.

The government has put local areas particularly in the North of England under coronavirus restrictions, and is expected to unveil yet more rules for Covid-19 hotspots, but avoided offering targeted support until now.

Just three weeks after he announced a winter economic plan including a new job support scheme to replace furlough, the Chancellor is set to reveal a package of support measures for those affected by local lockdowns.

While the details are not yet known, the policy is expected to be that the government will fund up to 80% of staff wages where businesses have been temporarily ordered to shut down due to coronavirus.

Dodds commented: “Once again it seems like the Chancellor has waited to the last possible minute to start listening to Labour and bring in targeted support for those parts of the country under local restrictions.

“It comes just two weeks after we warned the Chancellor not to pull the rug from under millions of workers before the government had a grip on the virus. The Chancellor could have changed course on Monday, but he offered nothing.

“On Tuesday we dragged his minister to parliament – but he had nothing to say either. Media briefings suggest he’s now ready to tear up his winter economic plan before the autumn is even out. This is serial incompetence at the heart of government.”

Dodds declared at the start of the week that Rishi Sunak had “nothing new to say” in his keynote Conservative Party conference speech on the government’s handling of the Covid-19 economic crisis.

Sunak did not announce any new measures in his address to the virtual conference, despite warnings that workers in hard-hit sectors such as hospitality are facing a cliff edge as furlough ends this month.

The Chancellor’s ‘job support scheme’ to replace the job retention scheme does not offer targeted sectoral support and analysis has found that it does not sufficiently incentivise short-hours working.

It appears that the government will now seek to address these criticisms and pieces of analysis by organisations such as the Resolution Foundation by unveiling a new offer to areas of the country under tougher restrictions.

Slamming the Chancellor’s “constant flip flopping on furlough”, Dodds has accused Sunak of “putting 900,000 jobs at risk, leaving workers in limbo and creating chaos in the midst of a pandemic”.

The Shadow Chancellor concluded her comments: “If he doesn’t act now, Britain risks an unemployment crisis greater than we have seen in decades – and Rishi Sunak’s name will be all over it.”

The TUC called on the government this week to adopt a new approach to prevent mass unemployment in the Covid crisis by acting to “preserve jobs and stop family firms going to the wall through a new local furlough scheme”.

Below is the full text of the letter from Anneliese Dodds to Rishi Sunak.

Dear Chancellor,

Seventeen million people live in areas of the country subject to additional local restrictions. Such restrictions have an inevitable impact on local economies. Yet in your party conference speech on Monday, you had nothing to say about support for people living in these areas. On Tuesday, when I asked an urgent question on the same issue, your Government still said nothing. Yet it appears that even more restrictions will soon be imposed on other areas, and today we once again have leaks to the press of a possible change to economic support but with no accompanying detail. Businesses up and down the country cannot plan on this basis. Action is urgently needed. I urge you to:

Provide predictable and consistent support. While Leicester and Oadby and Wigston were provided with a grant for £7.30 per person in their area, £3.49 was provided for residents of the Liverpool City Region, Warrington, Hartlepool and Middlesbrough. No funding at all has been announced for the West Midlands or Greater Manchester, and there is only the promise of “a funding package” for the North East. Government must publish the criteria being used to determine economic support and speed up the pace – so that economic support goes hand in hand with the imposition of additional restrictions.

Let local authorities use funding to help struggling businesses and workers. The trumpeted Local Restrictions Support Grant does not appear to be currently aiding any businesses under current restrictions. The grant is only available to firms ordered to close (or only offering takeaway services), and even then the £1,000 grant for smaller businesses doesn’t even cover the costs of employing one member of staff on minimum wage. The additional 5% payments over which local authorities have discretion can presumably only be deployed if the main grants have been disbursed – so local leaders have little scope to respond. And £1.3bn remains unspent from the discretionary grants scheme, yet local authorities cannot access it. Local authorities should be given more discretion to respond to the needs of businesses and workers in their area.

Ensure the government’s wage support genuinely incentivises employers to keep staff on, even when they have been forced to close. The Job Support Scheme you announced two weeks ago does not work at all for businesses forced to close due to necessary public health restrictions. Press reports today suggest that you have finally acknowledged this – though sadly too late for those who have already been let go as redundancy deadlines have passed. We will wait to see the detail of any new proposals, but I urge you to make sure that this time you design the scheme so that it gives businesses the certainty they need to get through the winter and we don’t need yet more last-minute changes later on. That means a scheme that works for businesses forced to close as a result of either local or national restrictions, and a training element that means people can gain new skills during the time they are unable to work.

I urge you to introduce each of these three measures immediately, so that the millions of people living under local restrictions – and the millions more who fear they might be next – can have hope as we head into a very difficult winter.

Yours sincerely

Anneliese Dodds