Chancellor Rishi Sunak's new support scheme could mean lost jobs in Edinburgh – Ian Swanson

It was a surprise when Chancellor Rishi Sunak unveiled the Government's furlough scheme back in March. Committing billions of pounds to subsidise the wages of millions of workers no longer able to work does not fit easily with Conservative ideology.

Tuesday, 29th September 2020, 7:00 am
Rishi Sunak was widely praised for the furlough scheme, but its replacement may be less popular (PIcture: Tolga Akmen/AFP via Getty Images)
Rishi Sunak was widely praised for the furlough scheme, but its replacement may be less popular (PIcture: Tolga Akmen/AFP via Getty Images)

But the Covid crisis has turned all sorts of things upside down.

And as a new Chancellor, Mr Sunak won approval for his willingness to be bold.

The Job Retention Scheme was widely welcomed and has allowed firms to keep on staff despite having to close or curtail their business during the coronavirus lockdown.

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Now, however, it is on its way out and the Chancellor has announced a new scheme. It’s much less costly for the Government, but also looks likely to protect far fewer jobs.

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Instead of paying an initial 80 per cent of people’s wages while they were furloughed, with the employers’ contribution gradually increasing over the past few months, the new Job Support Scheme will require staff to work at least a third of their normal hours, paid for by the employer, with the Government chipping in one-third of the cost of the hours not worked, while the employer and the employee bear the rest.

Mr Sunak says it is focused on supporting “viable” jobs – but his definition of viable seems to leave out whole swathes of the economy.

The scheme’s requirement for staff to work at least a third of their normal hours automatically excludes all those sectors which cannot open at all under the Government’s Covid restrictions, including theatres, entertainment, sport, nightclubs and conferences.

Despite repeated pleas for a targeted extension of furlough to help the tourism and hospitality industries in particular, the Chancellor has failed to offer much-needed extra protection to jobs in these areas, both vital to Edinburgh’s economy.

Mr Sunak may have splashed the cash with his Eat Out to Help Out discount meals offer during August. And the extension of the reduced five per cent VAT rate until the end of March is welcome, though many have argued for it to be made permanent. But physical distancing and now the 10pm curfew have left pubs and restaurants struggling. More closures and job losses look inevitable.

The Chancellor has said he cannot save every job or every business, but many of the jobs which his new scheme will not support would be perfectly viable under normal conditions. Labour’s shadow business minister Lucy Powell has argued that in excluding such jobs from the scheme the Chancellor is consigning whole sectors of the economy to the scrap heap.

If the scheme is really about supporting jobs through the crisis so the economy is in a good place to pick up once the pandemic passes, surely hospitality and tourism are prime candidates for assistance.

A reluctance to acknowledge the case for helping these sectors and a failure to provide such assistance will look as if Mr Sunak is allowing a harsh market ideology to replace the more positive, supportive and constructive approach he showed at the start of all this when he announced the Job Retention Scheme.

At its peak the furlough scheme and the similar support for the self-employed were preserving 100,000 jobs in Edinburgh. It would be tragic if his new support scheme meant large numbers were now lost.

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