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- Ceri Thomas, Editor and Partner, Tortoise Media (Chair)
- Dame Carolyn Fairbairn, Director-General, CBI
- Matthew Fell, Chief UK Policy Director, CBI
The new package of economic measures
Last week was a momentous week, with a big package of economic measures announced by the Chancellor on Thursday. Before the announcement, we were in desperate need of a successor to the Job Retention Scheme (JRS), and further support around loans and access to finance. Firstly, the Chancellor announced the new Job Support Scheme (JSS), essentially a follow-on from the partial furloughing system. Under the new system, the government will cover the hours an employee works, with the hours not worked being covered by a combination of the employer, the government, and the employee – ensuring employees earn a minimum of 77% of their normal wage.
There were also important announcements around the loan schemes, such as the extension of the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS) to ten-year terms. There were also changes to VAT, with an extension of the reduction in VAT due for the hospitality sector, and the ability to spread VAT over 12 months.
The response to the new measures has been generally favourable. The JSS, for example, is less generous than its predecessor, but the package recognises the important of balancing supporting businesses alongside maintaining a sustainable fiscal picture. As Dame Carolyn Fairbairn, the CBI’s Director-General, added: “It won’t help every firm, and it won’t save every job, but it will protect jobs.”
The practicalities of the Job Support Scheme
The Job Support Scheme is primarily aimed at companies that have reopened, as it incentivises employees returning to work. But how effective can this scheme really be for containing unemployment? Carolyn thinks the scheme will be effective for a lot of firms who’ve been trying to keep their staff. And Matthew Fell, the CBI’s Chief UK Policy Director, added that the new scheme will be of particular benefit to SMEs, who often have only one person able to do a particular job, increasing their need to hang on to those skills and capabilities.
But Carolyn recognised that there needs to be more support for the firms the JSS doesn’t help. The Chancellor has shown himself to be good at adapting the various schemes according to need, and there will be more targeted measures needed. But the Treasury were resistant to the idea of a sectoral successor to the JRS, as it’s very difficult to identify the whole value chain when using a sector-based approach. But it’s clear that the hospitality sector, in particular, needs extra support – especially given the new measures.
Unemployment and retraining
The Chancellor didn’t mention the issue of retraining in his announcement, and according to Carolyn, this has to be a huge part of the jigsaw. Although the Treasury did consider adding a retraining requirement to the JSS, they ultimately decided against it. But the government needs to turbo-charge retraining. The economy is changing shape before our eyes, with jobs being lost and new ones created.
Carolyn confirmed that she’d like to see a big commitment from both the business community and government to working together over the coming years to address this challenge. To do it right, we need to start with the kinds of skills we know we need – such as in digital, technical, and engineering. One idea Carolyn put forward is around Further Education (FE) colleges, who we’ve seen provide a good range of online courses throughout the pandemic. Could we create a powerful partnership between FE colleges, businesses and local government to adapt courses to the needs of the local community? Something like this could impact thousands of jobs.
How to ‘incentivise’ people to do the right thing
The government’s new package to support and enforce self-isolation includes a payment of £500 for those on lower incomes who cannot work from home and have lost income as a result. The CBI has long been a supporter of the government providing a version of Statutory Sick Pay (SSP) to enable people to stay at home if they’ve been required to. The Treasury has been resistant to this idea, due to concerns around public finances. But incentives are crucial in encouraging people to do the right thing, and therefore help us control the virus.
Matthew confirmed the important of this issue: “We want a tapering of support that gets less generous over time, but in situations when the government is telling people they can’t work, we think the government should be supporting them.” If employees have a financial disincentive to do the right thing, this will only make things worse.
An update on Brexit
And on Brexit, we’re coming into a critical week – the final week of negotiations between the UK and the EU. And Carolyn feels some cause for optimism – including a recognition on all sides of how deeply damaging not reaching an agreement would be. A possible outcome is a ‘skinny deal’ which focuses primarily on goods and tariffs.
What is clear, though, is that this deal would not be everything we want. It would likely focus on goods, and therefore wouldn’t include enough on services, professional qualifications and data. And it’s likely that even a skinny deal would mean new paperwork at borders – and businesses need to prepare for this. But on a positive note, a skinny deal would at least give the UK a basis to build from – and is clearly preferable to a chaotic, acrimonious no deal outcome. And Carolyn is feeling optimistic: “I’m cautiously hopeful. Where there’s a will, there’s a way.”