What is Sunak up to?
Sunak is seen as a possible successor should Boris decide to spend more time painting buses (assuming he’s not pushed under one first). Little wonder: a fresh face, unflustered, articulate and brilliant at PR, with a friendly nickname already (“Mr Yorkshire Tea”). Importantly, he has been in charge of the one government department which has behaved competently during the Covid crisis. The original plan may not have been adequate but Sunak was able to respond to concerns quickly, alter course and introduce the furlough scheme. Above all, its execution was impressive, not something which can be said about other parts of the government’s response. Furlough was essential to making lockdown bearable because it largely removed or mitigated voters’ and businesses’ financial concerns about being ordered to stop work. It supported the rest of the government’s strategy: contain the virus sufficiently, ease restrictions slowly, open up over the summer and hope that this, with an effective testing and tracing system, would be sufficient to see the country through until a vaccine became available.
Well, it’s not working out that way. New restrictions are in place or being contemplated. The test and trace system has been not quite as world-beating as promised, not even a silver bullet, according to the person in charge. So, if we are now reliving what we went through in March – albeit via regional lockdowns covering large parts of the country, total closures in some areas, curfews in others, different tiers with slightly different rules, rather than another national lockdown (not yet anyway) – why is Sunak’s plan not providing the sort of support given in March?
No more “Whatever it takes”. More “As little as I can get away with”. Is now really the time to be talking about “balancing the books” (as he did to conference and despite the fact that the Tories have never achieved this anyway)? His Winter Economic Plan seems designed to undermine – rather than support – the government’s strategy. It is too tricksy, too little, incentivises firms to lay off staff, imposes significant income cuts on people with low incomes, limits eligibility and largely ignores the needs of businesses (including those in supply chains). Crucially, it provides no support at all to businesses under Tier 2 restrictions: allowed to open but so restricted by government in what they can do that they may as well not bother opening at all.
Above all, it risks undermining the government’s health strategy. The argument between Manchester’s Mayor and the government is not, in the end, about the need for restrictions but about who bears the cost, about the lack of any or any effective compensation or support for affected businesses and employees. The government may belatedly increase the financial help offered to Manchester, if the latest reports are to be believed, but this simply moves the argument onto those excluded even from this help as, for instance, food wholesalers have warned.
Having effectively nationalised them back in the spring, Sunak appears now to have decided that the hospitality and leisure sectors and their associated businesses (far wider than simply restaurants and pubs) are unviable, no longer worthy of effective support and that this is an inevitable and permanent consequence of Covid. The miners of our time, though unlike them no redundancy payments are even available. It is a curious decision. People have always socialised, always wanted to and always will. The idea that hospitality, events and all the leisure activities which take place in such venues will disappear is simply unsupported by any credible evidence: whether historical or what we’ve seen on the streets in the last few weeks. People are worried about socialising now because of the virus but this will not last – either because a vaccine will be found or because people will find a way of living with this new risk. Maybe this will turn out to be wrong. Maybe society will irrevocably change but it is not what is happening in Asia.
No – if these businesses are unviable or teetering on the edge of it, it is a consequence of the government’s decision to withdraw the support it previously offered. It is a political choice by the government. And it has political – as well as economic – consequences.
Of course, there may be good reasons for this: the money is too much, it has run out and no-one one can say for how long it will be needed. All very reasonable – but short-sighted. The money spent supporting them up to now will have been wasted. The money needed is enormous. But the cost of not supporting is also vast: a rocketing welfare bill, loss of tax, VAT, NI, council tax revenues, loss of a tax base, the financial and economic consequences of closed businesses and unemployment for individuals, businesses, suppliers, banks, landlords etc. Not to mention the human consequences. It does not help that Ministers from the PM down have reverted to telling untruths about the support on offer and who is eligible, cherry-picking unrepresentative examples and, in the case of Gove, showing a tin ear for people’s concerns. (“Incoherent” to want answers about the effect on the low-paid? That description surely applies to government action.)
Is there really no money left? There appears to be plenty available for consultants, almost regardless of their value for money or competence, and other big projects. Why have tax rises been ruled out? Why not a Covid solidarity tax from those who have been unaffected or done well to help those in difficulty?
It is hard to see too how the Chancellor’s approach fits in with the government’s levelling up agenda. It is perhaps too crude to say that the government’s response reflects Southern indifference to the North (London is affected too). But there does seem to be a failure to understand the extent to which many former industrial areas rebuilt themselves around the leisure sectors and how undermining these now will play with voters in regions which have long felt ignored by central government. And not just voters in general but younger ones – precisely those voters where the Tories are weakest. They have parents and grand-parents who hear how difficult it is to find jobs, when you are starting out after school or university with little or no experience and when those sectors which provide an initial opportunity are closed. Voters may wonder why banks and their employees were rescued despite being largely responsible for the mess they got into while businesses in difficulty through no fault of their own are abandoned.
Is the government’s economic response to Covid now fair? Fair to the businesses most affected, fair to the generation most affected, fair to the regions most affected? Some of its own MPs don’t seem to think so. And if it isn’t, if it is not perceived as such by many of the voters who gave it their backing last December, what will this mean for a party which placed such importance on not letting down these voters. There is, of course a long time before the next election and Labour’s Shadow Chancellor has not exactly made her mark.
But once an impression is created of unfairness and indifference, especially if allied to incompetence, of being willing to countenance large increases in unemployment as a price worth paying – by others, it can be awfully hard to shift. Is this simply the Tory party reverting to type? Panic? Or some other strategy?