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Masking the problem

“It is on all of us, and we must learn to live with it and live without fear.” Rishi Sunak’s closing words, from his Winter Economy Plan to the Commons, delighted Tory lockdown sceptics. For them, it was a statement of defiance, a two-fingered salute to the damned virus.

But for many people, the fear is all too real: the fear of losing their job in coming months. If you’re an MP, especially a millionaire former banker whose wife is the heiress to a billionaire fortune (as Sunak is), lecturing the public about not being scared is not an entirely great move. Complying with Covid prevention is indeed “on all of us”, but coping with unemployment certainly isn’t.

The package unveiled by the chancellor was welcomed by business and the TUC (in fact he wisely had their representatives flank him on the steps of No.11). There was much to cheer, from the extension of VAT cuts and business loans to the centrepiece of a part-time furlough alternative.

Yet there was a worrying element of fatalism to it all, as if the job losses expected this winter are an act of God rather than politics. Sunak’s talk of supporting “viable” jobs, of a “permanent adjustment”, seemed to neglect the fact that it is his government’s Covid curbs which are directly responsible for many jobs – in hospitality, the arts, aviation – being made unviable.

It was only later in the press conference that he hinted that things would still be bad despite his new policies, pointing to forecasts by the Bank of England and the Office for Budget Responsibility. Sounding almost like a bystander, he said the forecasts “don’t make for good reading” (nearly 10% unemployment, they predict), were “tragedy” but anyway 750,000 jobs had “already” gone.

When asked how many jobs his new schemes would save, Sunak could only say “large numbers of people”. There may be good reason for his vagueness, given that many employers may well think the measures simply don’t suit them. As the Resolution Foundation and others pointed out, it will cost a firm more to keep two people on part time than it would to keep one full-time and sack the other.

And the stark bottom line for employers is what matters most. Many have already decided to lay off staff as the government gradually pulled its support through August and September. The carrot of a one-off £1,000 Job Retention Bonus, payable for each person they kept on until January 31, didn’t feel like a tempting carrot at all.

Similarly, today’s Job Support Scheme may prove too little, too late. Why would a hard-nosed businessman want to pay his staff 55% of their wages for just a third of their working hours? It’s a great deal for the employee, but for a company whose cash flow and customer base is struggling it may simply prove too expensive.

There was nothing today about extending the mortgage holidays that many have depended on, nor any pledge to end the ban on repossessions at the end of October. Unlike the recession of the early 1980s when manufacturing was hit hard, this service industry recession and those repossessed homes could be in the Tory south as much as the Red Wall north. Similarly, support for the self-employed will continue but at a fraction of its current level.

Almost in passing Sunak said that he could “inform the House” (always a sign of something ‘new’) that “we have now provided over £12 billion for test and trace”. With £10 billion earmarked for it in his summer statement, that meant an extra £2bn is being pumped into Dido Harding’s scheme.

With today’s turnaround times for tests worsening yet again (just 10% of them are done within the PM’s own target of 24 hours and care homes are suffering longer delays), that will feel to many like a reward for failure. More charitable observers will just hope that two billion quid will fund the rapid expansion of not just capacity but also functionality.

On Tuesday, Boris Johnson’s new Covid restrictions had the overall feel of being undercooked and unprepared for the sharp rise in cases (today’s new number is even higher than at the height of the pandemic in April). Many expect him to have to return to the Commons in a few weeks with the tougher measures he should have imposed this week.

Similarly, if his own plan fails to stem that second wave of joblessness, Sunak may well have to return with a revised strategy too. He told the FT today that “if you’re asking me if I’m ready to do more as the situation evolves, of course I am”, so the door is open for yet another new plan. The problem is that, like the PM, he may by then have lost control of events. And the jobs lost – like the lives lost – will never return.

Quote Of The Day

“There are reasons to be cautiously optimistic.”

Rishi Sunak

Thursday Cheat Sheet

The UK recorded 6,634 new coronavirus cases, the highest daily total since the pandemic began.

The new NHS Covid-19 App was launched, but it will need around 7 million downloads to have a meaningful impact on the virus’s spread.

‌More than 40 Tory MPs (enough to reverse Johnson’s majority if Labour and others back it) have signed an amendment for next week, arguings MPs should in future get a chance to vote on Covid restrictions.

Rishi Sunak said it was “simplistic” to suggest his Eat Out To Help Out scheme had helped fuel the Covid spike.

Defence secretary Ben Wallace was expressing “a personal view” when he suggested Iraq and Afghanistan were an “illegal wars”, No,10 said.

Liz Truss was warned by Tory MP Crispin Blunt that her opposition to transgender self-ID would not get a Commons majority.

Health secretary Matt Hancock confirmed reports in the ‘i’ newspaper that students may be asked to stay on campus over Christmas if their universities suffer severe outbreaks.

DUP MP Sammy Wilson was photographed on a London Tube not wearing a face mask.

What I’m Reading

Graham Brady, The Man To Watch – ConservativeHome

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