It feels like a very long while ago – with the passage of time seeming much more protracted amid this crisis than with changing seasons in normal years – since Chancellor Rishi Sunak was pictured in Rothesay with a giant plastic 99 ice-cream cone.
By the time Mr Sunak was boarding the ferry to Rothesay in early August last year, there was already cause for concern over a renewed rise in coronavirus infections in parts of mainland Europe, including Belgium.
However, the bold Mr Sunak seemed undaunted by this. The Chancellor kicked off his visit to Scotland last summer by ruling out an extension of the coronavirus job retention scheme, a programme he himself had put in place in March as the pandemic took hold and which had protected millions of jobs.
Some Conservatives, even though this was the Boris Johnson government’s own scheme, seemed to have an ideological problem with it from the start.
And it was impossible to escape a heart-sinking feeling in early May last year when reading reports that a senior UK Government source believed people were “addicted” to the furlough scheme.
The source was quoted as saying: “People are addicted to the scheme. We’re not talking about a cliff-edge but we have to get people back to work.”
Remember that was early May last year, less than two months after the scheme was launched. It was clear at the time that this comment, as well as being offensive, underestimated ridiculously the protracted nature of what was occurring and what lay ahead. France and Germany had moved swiftly, as the pandemic took hold, to put two-year plans in place.
More than nine months on from this “addicted” comment, it looks even more foolish. And that is saying something.
As we head into what will be a crucial period for coronavirus crisis-related policy, with decisions in coming weeks having a huge bearing on what happens to unemployment and the economy, has the UK Government learned the lessons of its many mistakes on this front? The most hopeful view you could take is that it remains to be seen, which may be way over-optimistic given this Government’s instinct so far when it has come to decision-making on support and its views of how quickly things might return to normal.
In an interview with the BBC’s Good Morning Scotland radio programme, before he boarded the ferry for the island of Bute on August 7 last year, the Chancellor had underlined his continuing opposition to extending the furlough scheme beyond October 2020.
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This was utterly lamentable, but no great surprise. He had after all by this time ignored repeated pleas on furlough from various quarters as the protracted nature of the coronavirus crisis and the inability of huge swathes of the economy to return to normal in the short term had become ever clearer.
Mr Sunak even gave the impression during his trip to Scotland that he believed the UK Government would be doing people a favour by ending the furlough scheme. But his words provided no even-barely-convincing reason why this might be the case, and they remain as unfathomable now as they were then.
His comments signalled a view that people should not be given false hope. But why on earth would it be better to have no or less coronavirus crisis-related support from the UK Government amid a relatively hopeless overall situation?
Asked whether it was time to re-think the decision to end the crucial support scheme, in the context of a projected surge in unemployment, Mr Sunak had declared: “I think it is also wrong to keep people trapped in a situation and pretend that there is always a job that they can go back to. That won’t always be the case. And in those situations, it’s better that we look forward and provide those people with new opportunities. And that’s what our ‘Plan for Jobs’ does.”
He had added: “I’m here in Scotland today to see that plan in action. And whether it’s support for new apprenticeships, new training, or indeed our support for the hospitality industry, all of that is designed to create new opportunities that…will provide them with hope at what is unquestionably going to be a difficult time but that, I believe, is the right thing to do.”
Boris Johnson Picture: Stefan Rousseau/PA
New opportunities were, of course, thin on the ground then and have been since as the second wave of this awful pandemic has taken hold, resulting ultimately in renewed lockdown throughout the UK to reduce infection rates and save lives.
What Mr Sunak seemed to be anticipating last August was a swift return to normal.
Yet this surely looked highly unlikely, given historical experience of pandemics and what we were already seeing by that time on the coronavirus front in mainland Europe in terms of rising infections.
Belgium and Andorra had been added to the UK’s quarantine list the night before Mr Sunak’s visit to Rothesay, as had the Bahamas.
It must also be observed that, even without the grim second wave, there would still have been an urgent and certain need for continuation of the furlough scheme beyond October for those sectors unable to return to normal swiftly. Take, for example, tourism providers and hospitality more broadly, as well as airlines, airports, and aviation and related industries more generally.
As the situation got worse in mainland Europe through August, Mr Sunak’s Eat Out to Help Out scheme in the UK, offering state-subsidised dining to encourage people to visit restaurants and boost the hospitality sector, continued.
And Mr Johnson was in late August declaring it was time for people to be heading back into offices.
First Minister Nicola Sturgeon emphasised in late August she would not “intimidate people back to work” before it was safe. Her comments came after a message emerged from the UK Government that people continuing to log on from home were more “vulnerable” to losing their jobs.
It seemed plain, even at the time, who was right on this front, given the pandemic.
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The big question at this stage is what the UK Government will do next on furlough and broader support for people and businesses. The furlough scheme is due to end on April 30. It seems clear large parts of the economy will not be able to get back to anywhere near normal by then. Think about the hospitality sector, or anything to do with international travel, for example.
We have already seen so many misjudgements from this Conservative Government on support for jobs amid the pandemic.
There has already been a grim surge in UK unemployment, with far worse to come.
The unemployment woe has undoubtedly been exacerbated by Mr Sunak’s consistent refusal through summer and autumn to provide certainty for businesses and their employees over support for jobs.
Mr Sunak’s move, effective from the start of last August, to insist employers make significant and increasing contributions towards the furlough scheme certainly looks to have forced the hands of many businesses which moved in the run-up to this point, and subsequently, to cut jobs. Some companies sadly seemed to be champing at the bit to cut jobs anyway, but many good businesses have been focused on retaining employees throughout this pandemic. However, some of those commendably looking to retain their staff would have been unable to afford to contribute to the furlough scheme given they had no revenue coming in, and very significant fixed costs, for the likes of premises and insurance.
Of course, if we want a swift recovery once we are through the worst of this, retaining jobs and skills and protecting the supply side of the economy is what it is all about. Not to mention the ultimate benefit to the public finances from mitigating the surge in unemployment, from the perspective of welfare and long-term health and social care costs.
Mr Sunak was, of course, eventually forced by events to extend the coronavirus job retention scheme. And increase the level of UK taxpayer support again. He performed this spectacular but essential U-turn in various stages.
The scheme currently covers 80% of the wages and salaries of furloughed workers, up to £2,500 a month, although employers have to pay national insurance and pension contributions.
At times, given some of the comments you hear, it is important to emphasise this is not the Conservatives’ own money which is funding the furlough scheme, in case anyone had been left with that impression. It is money raised from taxes throughout the UK, including in Scotland.
Businesses of all sizes are paying big sums of money to retain furloughed staff.
The DRG restaurant chain, which includes the Di Maggio’s and Café Andaluz brands, has 630 of its 650 staff on furlough.
Co-founder and director Mario Gizzi said last week: “Many people don’t realise that the furlough scheme, while welcome, still leaves businesses with significant staff costs if your aim is to retain people rather than cutting jobs.
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“For us, that means we are still paying £100k per month in staff costs such as national insurance, pensions and holidays, while having no revenues coming in.”
The DRG emphasised it was very keen to retain all of its 650 employees, noting this would enable it to reopen quickly and effectively, while adding that this depended on the lifting of restrictions and the ability to return to some sense of normality. In the meantime, it said it was very keen to see additional government support for employers in the current situation.
If you think of the number of businesses across a raft of different sectors in a similar situation, it gives you an idea of the scale of what is at stake with the policy decisions that are made from here.
We are at a crucial point on the road.
What happens on the unemployment front will dictate much of where we go from here, and it will also crucially determine the capacity or otherwise of businesses to drive economic recovery.
Vaccine success has given us a route out of this terrible situation.
The furlough scheme will need to be extended for the many employers which cannot return to normality on May 1, on terms that are affordable and with sufficient notice.
And adequate additional taxpayer support will be needed to help businesses in some situations.
While some of this additional support will be arranged through the Scottish Government, the money will have to be put up in the first place by Westminster, given it has the big tax-raising powers throughout the UK.
So what next Mr Sunak, on the furlough scheme and support for businesses? Are you going to get it right this time?