Chancellor unveils Winter Economic Plan - Part 3

By Gareth Jones

Today the Chancellor Rishi Sunak announced a revised package of financial support for business and a more generous UK job support scheme for workers.

Unveiling the plan at the House Commons this lunchtime, and later in the afternoon during the Downing Street briefing, Sunak acknowledged that with rising cases and new restrictions affecting large parts of the country, the UK was facing a hard economic winter and added that he would make no apology for “acting fast” during this time.

The announcement will mean that the Job Support Scheme (JSS), which is set to replace furlough in November, will be more generous than the one announced a month ago, with employers paying less and staff having to work fewer hours before they qualify. The scheme will apply to businesses forced to close in Tier 3 and a part-time JSS scheme for all other business affected by restrictions. The Chancellor announced grants for struggling companies in the hospitality, accommodation and leisure sectors in areas under Tier 2 restrictions — including London and Birmingham (and will be back-dated in areas which have lived with these restrictions for week, such as Manchester). Sunak also said state grants for self-employed people unable to carry out their usual work from November 1 will be doubled, from 20% of previous earnings to 40%. 

Today’s announcement has been welcomed by business groups, such as the CBI and UK Hospitality, who described it as hugely generous package which had come just in time. The Prime Minister joined the Chancellor at the Downing Street briefing later today, where he said that these measures "will protect people's livelihoods" and reiterated that he favours a middle approach between another national lockdown and an uncontrolled virus. 

While it is clear that these measures will go some way to soften the impending cliff edge associated with the end of furlough, Sunak’s latest package -- his third within a month -- raises further questions about the government’s overall approach and whether public health measures and economic support measures are sufficiently joined up. With cases rising, and more and more lockdown measures imposed over the past few weeks, it had been clear for a while to many local leaders and businesses that the existing economic package would not be enough. Government critics will further point out that while large parts of the north of England were in lockdown, there was no extra support – but as soon as London went into Tier 2, sufficient support was found. It also raises questions as to why the Government entered a bitter dispute with Andy Burnham, Mayor of Greater Manchester, over business support in the region, when the Chancellor subsequently announced backdated grants two days later. 

There are increasing rumours and suggestions about differences between the Prime Minister and Chancellor - with the PM’s approach supposedly more focused on maintaining business and jobs until a solution (a vaccine) to the pandemic can be found, while the Chancellor is increasingly concerned about the state of government debt and the prospect that we will be living with this virus for much longer that we originally expected, hence the desire to let market forces return. This tension could explain the slightly haphazard nature of today’s announcement - an announcement the Chancellor clearly did not want to make.