UK coronavirus live: Sunak extends furlough until end of March; R-value in Scotland ‘hovers’ around 1 | Politics


Rishi Sunak must be getting used to having to rewrite his Covid economic rescue plans, but this was one of the bigger and more significant U-turns he’s yet has to perform. It has multiple consequences. Here are preliminary thoughts on five of them.

1) For the economy

This will protect jobs. The CBI has described the move as “a bridge for business to spring 2021” and the TUC has called it a “positive step”. (See 12.51pm.) Given that almost 20% of firms say they are not confident of surviving the next three months (see 10.33am), that could make a real difference. As Sky’s Sam Coates points out, it will also cushion the economy through the Brexit transition.

Sam Coates Sky

Gosh: Rishi Sunak’s announcement to March creates an enormous safety net underneath the end of the Brexit transition process – into our new deal or no deal with the EU.

That’s a helluva thing

November 5, 2020

2) For devolution

The furlough row erupted because the devolved administrations, and the English regions, are now in lockdown cycles out of synch with what is happening in London and the south-east. (See 9.27am.) Sunak has not committed the Treasury to paying furlough in Scotland whenever Nicola Sturgeon needs a lockdown, which would amount to a significant change in the devolution settlement. But he has given the devolved administrations (DAs) assurances, plus a large wodge of money, that should allow them to keep businesses shut at any point they need to until March. The same will apply if parts of England need to stay in tier 3. That is an important win for the DAs and the regions over London.

3) For the public finances

Government sources say that furlough will cost more than £5bn in November alone. The full cost to March will depend on the extent to which restrictions are lifted. Covid has already sent government borrowing over £200bn this year, but this will add to the bill and make it harder for the Treasury to justify the infrastructure spending spree that Boris Johnson was planning when he won the 2019 general election.

4) For Sunak’s reputation – with his party

Sunak’s Commons statement was unusual because he spent considerably more time trying to justify his U-turn than he did explaining the new policy. (See 12.38pm.) Although he was right to say governments need to be flexible, it was not particularly plausible claiming that circumstances have just changed, because Sage were calling for a lockdown some weeks ago. Sunak seemed personally aggrieved by the charge of inconsistency, and that may be because his remarkable popularity in the Conservative party (by a large margin he is the most popular cabinet minister among members) is partly explained by two factors.

First, he says he’s a fiscal conservative. “This Conservative government will always balance the books,” he told the party conference. And, second, he’s relatively lockdown-sceptic. “Our lives can no longer be put on hold,” he told MPs in September, when he announced his winter economy plan. “We must learn to live with it and live without fear.”

Both these positions are very popular with Conservative party members (although not necessarily with the public at large). But, after today, it is harder for Sunak to present himself in these terms.

5) For Sunak’s reputation – more generally

In many respects it’s a day of humiliation for the chancellor. Just look at the reaction from the commentariat.

From Paul Johnson, director of the Institute for Fiscal Studies

Paul Johnson

Taken aback by ChX statement.

Basically return to March schemes (dreamt up on the hoof in 24 hrs) as if nothing learnt since.

Wasteful & badly targeted for self-employed. No effort at targeting sectors/viable jobs for employees. Big contrast to position just days ago.

November 5, 2020

From the FT’s Jim Pickard

Jim Pickard

here’s the @ft story – it’s hard to think of an economic statement that has been as comprehensively ripped to shreds as Sunak’s September “winter economy plan”

November 5, 2020

From HuffPost’s Paul Waugh

Paul Waugh

Another day, another U-turn

Reminder of what @RishiSunak said in September as he attacked Starmer for calling for extension of furlough

“[That’s} not the kind of certainty that British businesses or British workers need.”

November 5, 2020

U-turns are never comfortable for a politician. But, although damaging reputationally, they are often beneficial in the long run because they eliminate a problem damaging the government. Sunak has achieved this today. As the former government economist Simon French points out, at least now Sunak is ahead of the curve.

Simon French

With the August iteration of Job Retention Scheme extended to end of March, & SEISS levels enhanced (eligibility levels maintained), the Chancellor is now ahead of events – rather than playing catch-up – for the first time since early Sept. Risk of fewer #groundhogdays with WEP

November 5, 2020

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