The coronavirus crisis is causing untold grief, anxiety, and economic damage. Tackling it requires cross-party commitment. In that spirit we in the Labour party are meeting with the government and sharing our ideas as constructively as possible.
However, we wouldn’t be doing our job right now if we didn’t also point out to the government where its response to coronavirus ignores key groups of people. Highlighting the gaps in what the government is doing will help to ensure we have the best package of measures to support wages, welfare, and wellbeing.
The government has now announced three separate sets of measures, as it tries to react to the scale of the crisis. It announced some initial measures in the budget a fortnight ago. It returned last week with a plan for businesses, acknowledging that its budget announcements did not go far enough. Then last Friday, the chancellor, Rishi Sunak, announced some major new protections for workers, including a job retention scheme: this allows “furloughed workers”, those granted leave, to have up to 80% of their wages paid for by a government grant up to a level of £2,500 a month. Workers who would have otherwise might have been laid off can remain on the payroll.
We welcomed the direction of the job retention scheme. But, unfortunately, in the days since that announcement, it’s become clear that the scheme is full of holes. Four groups of people need urgent assurances.
First, the self-employed and dependent contractors (those who are self-employed but provide a service as part of someone else’s business, such as Uber drivers) are not covered by the scheme’s guarantee of up to 80% of their wages. The self-employed are a diverse group, including cabbies and child-minders, plumbers and actors. The Federation of Small Businesses has been calling for the self-employed to be valued and protected. We agree.
It’s true that there is some variation in what self-employed people are paid. But the same job retention-scheme cap of £2,500 can apply to the self-employed. Recent average earnings can be used to estimate their income. Any inaccurate reporting can be picked up in tax returns filed for 2019-20. The self-employed deserve the same support as everyone else.
Second, the government’s job retention scheme hinges on the concept of “furloughed workers”. What this means is that the scheme only protects workers who have been temporarily been given all their time off work.
The scheme does not cover workers who stay in work on reduced hours, as the chancellor admitted in parliament yesterday. Many businesses do not have the cashflow to “furlough” workers, or need to keep some workers on. It doesn’t seem right that, say, an engineer still working a day a week – or a joiner that still needs to be on site two days a week – can’t receive 80% of their lost wages under the government’s plan.
“That is exactly the same as every other scheme” around the world, the chancellor said in parliament. But it does not appear to be the case. The New Zealand scheme, for instance, does not rely on workers being “furloughed”.
The third group of workers who miss out under the current government response are carers, who have taken time off work to care for people who would previously have been cared for in facilities which have now closed. So parents who take time off work to care for children cannot, it seems, get 80% of their wages covered by the scheme.
When I asked the chancellor about this group, he did not give a clear answer. He said: “Given the time we have available we went with a scheme that could be delivered.” It seems that carers miss out.
Finally, the chancellor said yesterday that any worker on PAYE is eligible for the scheme. But many temporary agency workers and zero-hours contract workers are not on PAYE, and not usually entitled to regular income. It seems they will not be protected by the scheme in its present form.
All four groups were included in Labour’s proposals published last Thursday. Under our plan, all workers at risk of redundancy or in companies at risk of losing significant revenue would have 100% of their wages guaranteed, with up to 90% underwritten by the state and the money going straight into the pockets of workers.
I mention this not to score political points but merely to show that it is not impossible to devise a scheme that caters for the self-employed, carers, those working shorter hours, and workers without a formal contract of employment.
There are some indications that the government will shortly announce a package for the self-employed. This must also be accompanied by proposals to protect the three other excluded groups.
As a result of the announcement made to the public by the prime minister on Monday night, millions of workers are being prevented from earning a living to support themselves and their families through no fault of their own. Those workers so far left out from the government’s protection schemes are no less entitled to support than those having their salaries guaranteed. They too must be protected.
There is too much ambiguity in what the government is saying right now on coronavirus – as we have seen in relation to workers who are able to go to work. The confusion has gone on long enough. People need clarity and security. We hope we’ll get that from the government in the days ahead.
• John McDonnell is shadow chancellor of the exchequer
