Rishi Sunak’s coronavirus rescue plan is failing. Labour can help make it work
It is the job of a constructive opposition, and of a shadow chancellor in the midst of the economic crisis brought on by coronavirus, to amplify the concerns we are hearing from the frontline and suggest solutions.
Those concerns are more acute in our country than in many others. There is evidence that key elements of the economic package are failing and that families and businesses across the country are paying as a result.
A key statistic released last week suggested that business confidence has taken a stronger hit in the UK than across the eurozone.
When it comes to the coronavirus business interruption loan scheme there have been significant issues in actually getting cash to businesses. Switzerland has a population of under 9 million, yet it approved four times as many loans within its first week as the UK has done in a month.
I welcomed the chancellor’s announcement on Monday that the government would underwrite loans of up to £50,000, as Labour has urged. However, it remains to be seen whether the new approach will be matched with capacity in the banks. And issues remain for those businesses that require more than £50,000 in support. Labour will keep pushing the government to ensure they get the support they need.
We also need to do more for those whose incomes are threatened. One in 10 of our workforce looks set to be unemployed as a result of this crisis – with all that entails for people’s future prospects, incomes, and the health of them and their families.
Labour has highlighted many of the gaps within existing financial schemes and will continue to push for them to be filled. But the key reason why those gaps are such an income-crushing, insecurity-producing crisis for so many, is because the only alternative is, in most cases, universal credit. Unlike social security in many other nations, this form of income support only replaces around a tenth of what people received when in work.
While some changes to universal credit have been made, the continued failure to change the initial loan into a grant threatens to create even more of a debt crisis among households. Around a quarter of all families lacked £100 in savings even before the crisis began. And we have just had the longest squeeze on living standards, not just in one generation, but in eight.
Labour urges universal credit rethink to protect low-income families
Finally, the government must make existing schemes more flexible to help those who are unemployed to retrain and access new opportunities. This includes making the furlough scheme allow for short-hours working without a loss of income. But beyond that, from Germany to New Zealand, the discussion is on how those hit hard by the crisis can be supported, not just now but in the future – with employment-boosting, redeployment and retraining schemes. Our government must do the same to prevent a generations-long crisis.
History, not least the aftermath of the pit closures in the 1980s and 90s, tells us that an approach where the government shrugs its shoulders will scar our economy for generations to come.
So I will continue to call on the chancellor to work together, with me, with trade unions, with businesses and with local authorities across the country, to develop a plan to protect jobs and get our economy moving again.
• Anneliese Dodds is shadow chancellor of the exchequer
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