The government should commit a further £22bn to support up to 1 million workers facing layoffs following the coronavirus outbreak, a thinktank has urged. As pressure mounts on the government to restore business and consumer confidence, the Resolution Foundation said a new work subsidy modelled on maternity pay should be available for workers threatened with redundancy. The statutory retention pay would allow firms to put staff on leave without making them redundant, supporting a million workers via a flat-rate subsidy to employers worth £151 per week for an initial six months.
The statutory pay retention scheme would cost around £3.6bn, the thinktank said, while a more ambitious earnings-linked scheme, in which staff are paid at least two-thirds of their typical salary – above the minimum £151 per week threshold – would cost around £8bn over six months. The Citizens Advice Bureau proposed an alternative “crisis minimum income” of at least £180 a week so everyone has enough money “to protect their own health and the health of others”. Adding to criticism that ministers have moved slowly to protect vulnerable workers from dramatic falls in income, the Conservative former business secretary Greg Clark joined the Labour former prime minister Gordon Brown in urging the government to act immediately to prevent mass job losses by allowing the taxpayer to subsidise companies’ wage bills. Meanwhile, 46 opposition MPs and peers wrote to Boris Johnson and Rishi Sunak demanding “a basic income payment for all citizens to see them through this crisis”. Denmark, Ireland, Sweden and Germany are among the European countries that have already taken action to directly shore up workers’ incomes. Clark, who resigned as business secretary rather than serve under Johnson, raised an urgent question in the House of Commons warning the government that the £330bn loan scheme announced by Sunak as chancellor on Tuesday would not prevent firms from laying-off their staff. “These businesses have no idea when they would be able to pay back the debt that they would incur. It provides no reason to keep staff employed. In fact the reverse, because the smaller the wage bill, the less would have to be borrowed,” he said. Brown said Sunak must do “considerably more” by the weekend to protect people’s jobs. Speaking on BBC Radio 4’s Today programme, he said: “He says he’ll do more but the package should be out now to avoid redundancies being forced upon companies over the next day or two. Sunak announced an expansion of statutory sick pay in the budget on 11 March and a relaxation of benefit rules designed to help vulnerable workers. He has not ruled out adopting a broader package of income support but has said the mechanisms used by other European countries do not exist in the UK. As part of the package announced on Tuesday, the chancellor offered businesses in the hard-hit retail, leisure and hospitality sectors a year-long holiday from paying business rates, with smaller firms also eligible for a cash grant of up to £25,000. Sunak also announced cash grants of £10,000 for the UK’s 700,000 smallest companies and a three-month moratorium on mortgage payments for homeowners in difficulty due to the coronavirus. With the scale of the coronavirus pandemic – and the public health response to it – having escalated since the budget last week, the Resolution Foundation said the chancellor must “step up the scale of support for affected workers and rethink the approach to helping struggling firms”. The thinktank’s report says around 5 million workers are vulnerable to being laid off unless the government goes further. Without giving a forecast for the likely rise in unemployment, the report estimates in its modelling of the potential costs that between 500,000 and 1 million workers could be laid off.
It says fewer than one in 10 of those in the bottom half of earners say they can work from home, and those in the most at-risk sectors and occupations also have less to fall back on given that they are around 25% more likely than average to live in families with no savings. The report says a fresh approach is needed, including the extension of sick pay to 2 million low earners currently excluded and an increase in unemployment benefits and universal credit to £100 per week. It says a rise in unemployment is inevitable as some firms go bust and the self-employed lose work. “To strengthen the safety net that many families will rely on in the months ahead, the government should increase the generosity of jobseeker’s allowance, employment support allowance and the standard rate of universal credit. From April these benefits will pay just £74 a week to a single adult – and just £59 to those under 25) – when losing their jobs,” the report says. “This is the same as they were paying in the early 1990s, despite the economy growing by more than half since then. Increasing their value by around a third to £100 per week (for an adult aged 25 and over) would cost around £10bn a year. Going further to up-rate other means-tested working-age benefits by 10% would cost a further £3bn.”