Here, we take a deeper look beyond the facts of what Sunak said, discuss the ethos behind the plan, and highlight some early criticism of the Job Support Scheme.
Does the plan go far enough?
At the heart of Sunak’s statement, there was one pessimistic message – that he could not save every business, and could not save every job.
So, while he described the measures in his plan as “radical interventions in the UK labour market”, it was inevitable that there would be criticism that it hasn’t gone far enough, or that certain industry sectors need more support.
The implementation will also be criticised, with some of the most vocal Sunak critics being those who fall through the cracks between the various schemes, such as people who make less than 50% of their income from self-employment or company directors who take the majority of their pay through dividends.
Will the Job Support Scheme work?
The Job Support Scheme is undoubtedly the major measure, it’s at the heart of the Winter Economy Plan just as the furlough scheme was at the heart of the previous plan. Developed with the input of the CBI and TUC, it’s already been praised by both groups, with CBI Director-General Dame Carolyn Fairbairn saying that “these bold steps from the Treasury will save hundreds of thousands of viable jobs this winter”.
However, the implementation will be crucial and it remains to be seen whether the government will address the issues pointed out in the Resolution Foundation’s response to the Job Support Scheme (JSS).
These include that, on a salary of £17,000, it would cost an employer 33% more to employ two people half-time than one person full-time, and that employers may simply keep people on until January to claim the job retention bonus, or cut employees’ hours and not place them on the JSS, cutting their costs and allowing them to claim the retention bonus.
Unless these flaws (as the Resolution Foundation calls them) are addressed, then an awful lot seems to hinge on employers acting responsibly. Those that can afford to plan for a long-term future no doubt will, but others in survival mode will simply do whatever they feel they need to to get through what could be a very difficult winter.
Tough times ahead (even without a second wave)
As for the other measures, there’s little doubt they’ll provide some support for some businesses, while others will see them as mere sticking plasters for the gaping wounds caused by the economic crisis.
To have the best chance of survival, businesses should incorporate these new measures into a long-term (or at least medium-term) financial plan. This will need to include a range of scenarios, one where demand stays the same, one where it slightly increases over time, and a fall back for what happens if there’s a resurgence in the virus and demand plunges once again.
Even if we can keep the virus under control, this will be a very difficult period for businesses across the UK – jobs will be lost and some companies will have to simply stop trading. The hope for Sunak is that what has been announced will provide support to enough businesses to keep the economy going, that his vision of UK businesses soldiering on despite reduced demand is true, and that we continue to recover from the massive economic downturn that followed the coronavirus national lockdown.
If, however, there is a second wave (and potentially another national lockdown), this vision will become a fantasy, and far more drastic action will be required.