Trickle-down Covid support: Sunak’s statement for business

Elliot Chappell
© HM Treasury/CC BY-NC-ND 2.0

Rishi Sunak this morning outlined an updated package of support for businesses in the Covid crisis. The backlash against his wholly underwhelming ‘winter economy plan‘ and the job support scheme has forced another U-turn from the government. He announced today support for Tier 2 businesses equal to around 70% of that available to those in Tier 3. The Chancellor unveiled a new cash grants of up to £2,100 a month to businesses, mostly to support the hospitality and leisure sectors, and doubled the value of payments to self-employed workers to 40%.

Probably most significant are the changes to the job support scheme. The Chancellor has cut the amount employers are required to contribute towards hours unworked from 33% to 5% and reduced the hours staff need to work to be eligible from 33% of their normal hours to 20%. Now, this is definitely a good thing; it will make the programme actually potentially attractive for employers to enter into, making it likely that more workers will now be supported through the scheme. Under the initial plans outlined, it would have been more expensive for a business to retain two members of staff on a part-time basis than one person full time.

But there are still major flaws. The Chancellor made no mention of those on zero-hours contracts. I can tell you from personal experience working in the hospitality sector that for many, many workers the number of hours put down on paper in your contract nowhere near represents the hours they actually work. Particularly in pubs, bars and restaurants, staff will regularly work a hefty full-time week on a zero-hours contract. And yet the job support scheme relies on contracted hours. Employers can amend employment contracts to make their staff eligible with the government advising them to “make any changes to the employment contract by agreement”. But with an economy rife with these exploitative contracts, underlining many business plans and already offering workers no security in their employment, how many bosses do we think are going to suddenly put all their staff on full-time contracts?

And this is really just indicative of the real problem with the approach to support here: any help for working people comes at the discretion of the employers. All of the changes made today are for businesses; they rightly offer businesses a better package than what was outlined last month. The hope is that this all trickles down to mean more support for workers, through a greater take-up in the job support scheme next month for example. And this approach is nothing new. The Conservatives have throughout this crisis looked to shore up business and then hope that, through some sort of trickle-down process, people can survive. The vast majority of measures, consider the job retention scheme for example, offer support for workers only at the discretion of their bosses. The job support scheme, like furlough, relies on employers applying for the support that their workers need and while lots are nice people and will do so, many others have not and won’t when the new scheme kicks in.

Support from the government directly to people in the pandemic has only been grudgingly given where it exists. Look no further than the Tory plans to claw back the £20 uplift in the standard allowance for Universal Credit – a move that will slash incomes by £1,040 for 16 million households across the UK, just as we face the worst recession in 300 years. Statutory sick pay, a sum the Health Secretary told people he could not live on, is the second-lowest in Europe at £95.85 a week. And the government recently unveiled, to much fanfare and then completely justified widespread ridicule, a £13.20 per-day payment for those forced to self-isolate in the crisis – later updated to £500 for two weeks.

The announcement today is just the latest statement from Sunak underlining a commitment to business over people. Workers on local furlough will get just 67% of their wage, others in workplaces with reduced trade due to Covid will see at most 77%. And the self-employed are expected somehow get by on 40% of their income. None of their costs – rent, bills, food – will go down. We still need a scheme paying 80% of wages, at least. For many, the months ahead look miserable. The Chancellor has rightly given more support to businesses, but left workers at the mercy of their employers. Make no mistake, this is ideological. The Tories are determined that people do not get used to the idea that they should be able to survive even when not bound to their workplace. Support is conditional on the job you are tied to, at the discretion of the person you work for.

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