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Source: Labour Party UK

Chancellor’s furlough flip flop causing chaos as he prepares to tear up Winter Economy Plan before autumn is out 

Labour has said Chancellor Rishi Sunak’s decision to tear up his Winter Economy Plan before the autumn is out has caused ‘chaos in the midst of a pandemic’ for hundreds of thousands of workers. 

 While welcoming any support for those labouring under local restrictions, shadow chancellor Anneliese Dodds has pointed out that the chancellor’s furlough flip-flop of recent weeks has created unnecessary anxiety for many and will come too late for those who have lost jobs after he initially removed support for struggling sectors. The shadow chancellor has also set out the support that is needed to avoid more unnecessary delays and damage. 

When the Chancellor was dragged to Parliament to set out his plan to get Britain through the winter two weeks ago, Labour warned it was not good enough to protect the millions of people still on furlough. 

Two weeks on, seventeen million people are living under local restrictions – and analysis from Labour shows 440,000 people still on furlough are now living under localised restrictions and another 430,000 are living in towns or cities on the national watch list. 

New analysis from Labour today also reveals the inconsistency in support given to those areas that have been placed under localised restrictions. The £3m in support offered to Leicester and Oadby and Wigston is equal to £7.30 per person, while the £7m for Liverpool city-region, Warrington, Hartlepool and Middlesbrough equates to just £3.49 per person. The West Midlands and Greater Manchester have not received any funding related to local restrictions. 

Labour’s Shadow Chancellor Anneliese Dodds has today (Friday 9 October) written to Sunak to demand he acts urgently to protect jobs and livelihoods in these areas. She calls for:   

  • Speed and consistency of support – so that local areas receive the same level of support when additional restrictions are introduced, rather than weeks or months afterwards. 
  • More discretion for local authorities – by reopening a £1.3 billion discretionary grants scheme so that they can respond to the needs of businesses and workers in their area rather than waiting for central government to act 
  • Reform of the government’s wage support offer – by ensuring it genuinely incentivises employers to keep staff on, even when they have been forced to close. 

Despite repeated warnings by Labour to replace furlough with a targeted wage subsidy that incentivised employers to keep workers on, the Chancellor introduced a Job Support Scheme that forces employers to flip a coin to decide who stays and who goes.    

This week the Chancellor had two chances to explain what he was going to do to protect jobs and livelihoods in areas under local restrictions – at his speech to Conservative Party Conference on Monday and at an Urgent Question called by Labour on Tuesday.    

Both times he remained silent. Now media briefing suggests he is set to change course at the last possible minute yet again. This flip flopping on furlough is risking 1980s levels of unemployment across the country.  

 Anneliese Dodds said: 

“Once again it seems like the Chancellor has waited to the last possible minute to start listening to Labour and bring in targeted support for those parts of the country under local restrictions. It comes just two weeks after we warned the Chancellor not to pull the rug from under millions of workers before the Government had a grip on the virus. 

“The Chancellor could have changed course on Monday, but he offered nothing. On Tuesday we dragged his minister to Parliament – but he had nothing to say either. Media briefings suggest he’s now ready to tear up his Winter Economy Plan before the autumn is even out. This is serial incompetence at the heart of government. 

“The Chancellor’s constant flip flopping on furlough is putting 900,000 jobs at risk, leaving workers in limbo and creating chaos in the midst of a pandemic. If he doesn’t act now, Britain risks an unemployment crisis greater than we have seen in decades – and Rishi Sunak’s name will be all over it.” 

Ends

  

Notes to Editors 

  Text of letter from Anneliese Dodds to Chancellor Rishi Sunak 

 Dear Chancellor, 

Seventeen million people live in areas of the country subject to additional local restrictions. Such restrictions have an inevitable impact on local economies. Yet in your party conference speech on Monday, you had nothing to say about support for people living in these areas. On Tuesday, when I asked an urgent question on the same issue, your Government still said nothing. Yet it appears that even more restrictions will soon be imposed on other areas, and today we once again have leaks to the press of a possible change to economic support but with no accompanying detail. Businesses up and down the country cannot plan on this basis. Action is urgently needed. I urge you to: 

  

  • Provide predictable and consistent support. While Leicester and Oadby and Wigston were provided with a grant for £7.30 per person in their area, £3.49 was provided for residents of the Liverpool City Region, Warrington, Hartlepool and Middlesbrough. No funding at all has been announced for the West Midlands or Greater Manchester, and there is only the promise of “a funding package” for the North East. Government must publish the criteria being used to determine economic support and speed up the pace – so that economic support goes hand in hand with the imposition of additional restrictions. 

  

  • Let local authorities use funding to help struggling businesses and workers. The trumpeted Local Restrictions Support Grant does not appear to be currently aiding any businesses under current restrictions. The grant is only available to firms ordered to close (or only offering takeaway services), and even then the £1,000 grant for smaller businesses doesn’t even cover the costs of employing one member of staff on minimum wage. The additional 5% payments over which local authorities have discretion can presumably only be deployed if the main grants have been disbursed – so local leaders have little scope to respond. And £1.3 billion remains unspent from the discretionary grants scheme, yet local authorities cannot access it. Local authorities should be given more discretion to respond to the needs of businesses and workers in their area.
  • Ensure the government’s wage support genuinely incentivises employers to keep staff on, even when they have been forced to close. The Job Support Scheme you announced two weeks ago does not work at all for businesses forced to close due to necessary public health restrictions. Press reports today suggest that you have finally acknowledged this – though sadly too late for those who have already been let go as redundancy deadlines have passed. We will wait to see the detail of any new proposals, but I urge you to make sure that this time you design the scheme so that it gives businesses the certainty they need to get through the winter and we don’t need yet more last-minute changes later on. That means a scheme that works for businesses forced to close as a result of either local or national restrictions, and a training element that means people can gain new skills during the time they are unable to work.

I urge you to introduce each of these three measures immediately, so that the millions of people living under local restrictions – and the millions more who fear they might be next – can have hope as we head into a very difficult winter. 

Yours sincerely 

Anneliese Dodds 

   

  • HMRC provide data on cumulative employments furloughed by local authority, which shows that 3.5m employments have been furloughed under the Coronavirus Job Retention Scheme in local areas now under local restrictions or on the amber watch-list 

https://www.gov.uk/government/statistics/coronavirus-job-retention-scheme-statistics-august-2020 

  • The latest Business Impact of Covid Survey from the ONS estimates 9.4% of the private sector workforce is on furlough. This is equivalent to around 2.4 million workers.  

https://www.ons.gov.uk/economy/economicoutputandproductivity/output/datasets/businessimpactofcovid19surveybicsresults 

  

Annual Population Survey, accessed via nomis, October 2020, https://www.nomisweb.co.uk/query/construct/summary.asp?mode=construct&version=0&dataset=17 

  

  • This suggests that 25% of cumulative employments furloughed remain furloughed in mid-September. Applying this to areas under local restrictions or under the amber watch-list currently, suggests that 870k employments remained furloughed in these areas in mid-September 

  

Additional notes on areas under localised Covid-19 restrictions 

  • Inconsistency of funding: £3m for Leicester/Oadby and Wigston is equal to £7.30 per person. £7m for Liverpool city-region, Warrington, Hartlepool and Middlesbrough is equal to £3.49 per person. The West Midlands and Greater Manchester have not received any funding related to local restrictions.  
  • Businesses in hard-hit sectors: within the red list, there are 22,635 businesses in the 10 hard-hit sectors, and a further 36,715 in the amber watchlist. Together almost half (44%) of all businesses in these sectors across England are located in red or amber local authorities 
  • Employees in hard-hit sectors: within the red list, there are 232,455 employees in the 10 hard-hit sectors, and a further 329,165 in the amber watchlist. Together almost half (46%) of all employees in these sectors across England are located in red or amber local authorities 

MIL OSI United Kingdom