Living standards· Labour market The Chancellor has prevented a grim winter of redundancies – but has failed to fix the faults with his jobs support package 6 November 2020 by Mike Brewer Mike Brewer On Thursday, Rishi Sunak announced that the Job Retention Scheme – where employees can be put on furlough and still get 80 per cent of their wages covered by the government – will continue to the end of March. Self-employed workers can get another three-month grant of 80 per cent of their pre-crisis profits. There have now been five changes to the government’s Winter Economic Plan since it was announced less than two months ago, including the announcement of a new programme – the Job Support Scheme – that is now not due to come into existence at all. Of course, the Government is right to have a plan that changes in response to the worsening public health situation. Had the Chancellor not acted on Thursday, then it could have been a very grim December, with a likely second wave of redundancies and claims for Universal Credit in the run up to Christmas. Based on the Bank of England’s latest estimate that 5.5 million employees could be furloughed during November, the Chancellor’s extension of the furlough scheme is likely to cost around £6.2 billion a month, though the cost should fall as restrictions are eased. This additional support for workers and firms is very welcome, given the way that the virus is damaging our economy. But the repeated U-turns reveal two difficulties that the Treasury has faced. One is of its own making. Ever since the summer, it has been planning its policies rigidly on the basis that we were returning to normal by Christmas. And because it did not build in any flexibility to its plans, every time the virus has got stronger, the Chancellor has had to come back to the House to tweak his economic support package. Another comes from devolution. The devolved nations and city regions were – quite understandably – not happy that the Treasury seemed to be turning full furlough on again only when England –specifically Southern England – needed it. Ideally the economic support package should be tailored to local conditions, perhaps turning the full furlough scheme on or off again depending on the rules in force in each region or nation. But this would have been complicated to arrange – what if you live in Wales but work in England? – and it seems the Treasury have decided that keeping the full JRS going until March is a simpler solution. It should certainly prevent further showdowns with Andy Burnham or Nicola Sturgeon. But if we step back, what is most surprising is that Thursday’s decision means we are back with almost the exact set of economic policies the Government announced back in March when the pandemic first hit. In March, we applauded the Treasury’s rapid response to the pandemic, accepting that a scheme designed in days and introduced in weeks would have rough edges. But the fact that nothing has been done in the months since to smooth those edges and better target their schemes is very surprising, and disappointing. Big gaps remain between those put on furlough, and those whose employer simply made them redundant, who get only Universal Credit if anything. Nothing has been done to target the JRS on firms who are genuinely affected by the pandemic. Instead of the Treasury’s previous plan to only support only viable jobs, now workers in jobs that are unviable for reasons entirely unrelated to the pandemic are protected from redundancy. And the absolutely terrible targeting of the self-employed grants remains, with around £1.3 billion having already been paid to self-employed workers whose business was unaffected by the pandemic. Meanwhile, close to 500,000 self-employed workers who had received no SEISS support still without any work at all in September. The Treasury is right to be prepared to do what it takes to support jobs and prevent an economic collapse, because the costs of doing nothing would be far greater. But that doesn’t mean that money should be sprayed around blindly. We are now eight months into the crisis, and we’ll be in it some months more. Yes, we need to prepared to be bold in terms of policy making. But we also need to learn the lessons of what has, and hasn’t worked, and adapt policies accordingly. Originally published on inews.