Government wage scheme needs reform – not ideological cutbacks

Reports today that the government is considering cutting wage support for workers on furlough risks causing hardship and undermining confidence just when we should be thinking about how to rebuild the economy.

Thanks to trade union pressure and the willingness of ministers to put practicality ahead of ideology, the UK responded to the coronavirus shutdown with a potentially massive Job Retention Scheme.

This grants firms up to 80 per cent of the wages of workers on furlough – those kept on payroll but not working – plus some other additional costs.

With 6.3m jobs temporarily laid off by 800,000 companies, claims amounting to £8bn have been lodged with HM Revenue & Customs.

Consider the widespread hardship and chaos if this had not been available.

We’ve already seen 2.3 million individual Universal Credit claims - more than five times the usual levels - since the lockdown started on 16th March.

Many more workers would have been pushed into an inadequate social security system and many more businesses forced to shut down without the support of the furlough scheme.

As the government thinks about when and how to emerge from lockdown, it is quite right to start looking at how a phased return might work.

The TUC has set out its own suggestions for the Job Retention Scheme including:

• maintaining the scheme as long as lockdown is in place
• increasing the flexibility of the scheme to support short-time working, to enable people to return to work gradually
• ensuring the scheme still protects those who cannot work, including those who are shielding or caring for someone shielding, parents who cannot work while schools are closed, and those who are ordered to self-isolate by the contact-tracing programme.

These proposals would avoid a cliff-edge end to the scheme, just as the chancellor has said he wants.

And they would allow businesses, charities and other organisations that have closed their doors to start working towards reopening when it is safe to do so.

But today’s coverage raises the spectre of ideology trumping practicality with talk of workers and firms becoming addicted to the wage subsidy scheme.

This is an offensive characterisation of workers who have simply responded to a business request that they stay off work as their workplaces have shut or family members have required care or shielding.

And it’s also not fair to those bosses obeying public health instructions and helping their workers weather the economic shutdown caused by lockdown.

We know that most businesses are desperate to restart when they can, and workers to return to the jobs they enjoy – and full wages.

Any suggestion that people could be paid less than 80 per cent of their wages is completely unacceptable.

This would simply mean hardship for workers and their families, many of whom are already suffering.

Of course, the Job Retention Scheme can’t do all the work needed to get us back to work.

The TUC has put forward other plans including a Job Guarantee Scheme for unemployed workers.

And we have set out the health and safety measures to protect workers when they have to work outside the home.

Right now we should be thinking about the best way of ensuring the economy bounces back in the future, rather than resorting to tired stereotypes that bear no relation to the reality of workers’ lives.