This is serious. Companies and unions are making it abundantly clear that the new restrictions that the government has imposed in the interests of public health will, as it stands, trigger a steady stream of business failures and job losses in the run up to Christmas. The Treasury says the chancellor has spent the summer preparing contingency plans in case the pandemic required it. Yesterday would have been the obvious time to tell us what those plans are. For reasons which aren’t clear, he didn’t. He will do tomorrow. The chancellor is likely to extend the various emergency loan schemes on offer. But businesses want cash, they don’t want borrow more money.
To that end, Rishi Sunak is also likely to further defer VAT payments.
And the firm expectation is that although the chancellor will end the Job Retention Scheme next month as planned he will replace it with something that looks strikingly similar. The new wage subsidy will not be anything like as generous and will only support people who are back at work. These are important differences. Until now the taxpayer has been supporting the incomes of many who are technically employed but are at home with nothing to do.
The changes reflect the chancellor’s much publicised anxiety that the longer the original Job Retention Scheme went on, them more it is keeping people in jobs that are no longer viable or, as he puts it, in “suspended animation.” There is bound to be an almighty political argument about whether the chancellor has, in effect, extended a scheme he pledged to phase out. But u-turn or not, businesses are unlikely to care. They just want something that gives them a chance of survival. The question they will be asking tomorrow is will the new support on offer be enough.