Rishi Sunak makes U-turn with furlough extension
UK chancellor of the exchequer opts to extend the furlough programme until March
London — If the coronavirus crisis was the making of chancellor of the exchequer Rishi Sunak, the most popular member of the British government is trying to make sure it doesn’t end up being his undoing.
The UK’s finance minister made a dramatic intervention in the economy again on Thursday by extending a furlough programme until March, ripping up his plans of just a few days earlier. While the nation may be desperate for aid as England went into another lockdown, the U-turn also follows a series of missteps.
Sunak had a meteoric rise when he was thrust into the treasury’s top job in February just weeks before a budget. He swiftly rolled out a package to shore up companies and jobs, saying he would do “whatever it takes” to protect the economy. It even drew plaudits from political adversaries such as Len McCluskey, the socialist leader of the biggest union.
In recent weeks, though, his promise exposed its limitations as the pandemic got out of control. Northern regions hit hardest by the virus, the Scottish government and the opposition Labour Party rounded on him with job losses increasing. Some within the governing Conservatives questioned Sunak’s apparent desire to control spending in a crisis.
The Treasury refused to fund extra support for businesses in Manchester and to pay for free school meals for poorer kids over the autumn midterm break. That stood out all the more after Sunak subsidised dining out in August to help the hospitality industry, a programme some studies say may have hastened the spread of the virus.
Then as infections started to outstrip even the worst-case projections of government scientists, Sunak announced major changes to job support five times in six weeks.
“The chancellor has been one step behind events throughout this crisis, which has left many people without support,” said Lydia Prieg, head of economics at the New Economics Foundation. “Sunak’s fixation on urgently winding down support for jobs and incomes was deeply misguided.”
Britain has endured a particularly torrid year as the country recorded the highest death toll in Europe from Covid-19 and measures to restrain infections appeared behind the curve. Yet Sunak burnished his reputation as an ally of business and steady force in a party getting increasingly agitated with Prime Minister Boris Johnson’s leadership.
The Treasury has said it’s always kept measures under review and Sunak on Thursday explained to the House of Commons why he’d shifted tack several times in recent weeks, acknowledging it opened him up to critics. “To anyone in the real world that is just the thing you have to do when the circumstances change,” he said.
But critics say Sunak, 40, hastened job losses by setting deadlines for support. That’s partly a function of treating the virus like a time-limited economic crisis rather than a rolling health disaster.
On Saturday, he extended the furlough programme for an extra month, just hours before it was due to end, before adding another four months on Thursday.
For someone many Tory MPs consider their potential next leader, some of the shine has now come off the chancellor. One minister, who declined to be named when commenting on Sunak’s performance, said he’s gone from “deity to demigod.” “Rishi has been dragged slowly to several things he should have done sooner and has not reconciled his fiscal conservatism with the times we’re living in,” the person said.
Sunak still remains the highest ranked cabinet minister in the ConservativeHome website’s monthly poll of Tories, with a positive rating of 81.1% on November 2, albeit down from a high of 94.8% on April 3. Mel Stride, the Tory chair of the House of Commons Treasury Committee, said the chancellor overall has “done pretty well” in tough times.
But Stride also wants Sunak to broaden the scope of his effort to get the country through the pandemic. In the spring, the treasury committee urged the chancellor to devise plans to help hundreds of thousands of self-employed workers who fell between the cracks of his assistance programmes. But he doesn’t look like ever doing so.
“To have a million plus people who haven’t received support and are still not going to receive support going forward, I think is deeply problematic,” said Stride.
Labour has tried to capitalise on Sunak’s approach. Finance spokesperson Anneliese Dodds slammed his “last-minute scramble” to repeatedly update support levels while leader Keir Starmer sought to blame Sunak for hindering efforts to go into lockdown earlier.
Polling this week by both YouGov and Savanta ComRes showed Sunak’s approval ratings among voters at their lowest since the outbreak began. That initial popularity was largely down to the programme he started in March paying 80% of the wages of furloughed employees, according to Chris Hopkins, political research director at Savanta ComRes.
Sunak’s prior insistence on replacing furlough with a less generous plan, with a focus on supporting “viable” jobs, drew the ire of people working in shuttered industries such as events and the theatre.
“What gave him such a boost was the fact that he was being so generous,” Hopkins said before the programme was extended. “Some of that support has naturally ebbed away.”
Sunak has now sought to address that by paying workers for far longer than the planned month of lockdown is due to last. His largesse still ran into criticism in a week when Lloyds Banking Group and retailers John Lewis Partnership and J Sainsbury became the latest companies to announce job cuts.
Paul Johnson, director of the Institute for Fiscal Studies, slammed the move on Twitter, saying Sunak appeared to have learnt nothing since March. He said the chancellor is not targeting the aid and thus wasting money.
“The government’s initially decisive approach is now in danger of looking more reactive than proactive,” said Adam Marshall, director-general of the British Chambers of Commerce, which represent 75,000 companies. “Too often business communities are left to speculate what the latest in a string of announcements on financial support will bring.”
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