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John Glen responded for the Government today to an Urgent Question on the Coronavirus from Greg Clark.  The former Business Secretary said that firms are laying workers off now, and that the massive loans scheme that Rushi Sunak has announced “is not enough to prevent that”.  It’s worth also clocking what other Conservative MPs said.

Iain Duncan Smith agreed with Clark: a recent Cabinet Minister from the Conservative centre-left was thus teaming up with a former Party leader from its centre-right.  Bob Stewart raised the prospects of freelancers and the self-employed.  Bernard Jenkin called for “far more radical measures”.  Nickie Aiken wants National Insurance Contributions suspended.

Peter Aldous recommended that “the Government…support payroll costs far more directly”.  Joy Morrissey supported tax incentives, advice and support for the self-employed.  Richard Graham worried that “the business interruption loans package will be too clunky for most small and medium-sized businesses, and the cash grants will take too long to get to businesses before decisions are made about jobs”.

Tobias Ellwood spoke of government funding some salaries “immediately”.  Anthony Mangall asked the Treasury to look at VAT rebates.  We list these contributions to give readers a flavour of the norm-defying transformation of opinion across a cross-section of the Conservative backbenchers.  They recognise that emergency surgery is essential if the economy is to be kept alive.

Glen was responding for the Government at the despatch box because, as he told the Commons, the Chancellor was “meeting the TUC, the CBI, the British Chambers of Commerce, and the Federation of Small Businesses”.  The Minister repeated that the meeting was undertaken with “a view to urgently developing new forms of employment support to help protect people’s jobs and incomes through this period”.

We believe that Sunak knew only too well, even as he made his second major financial statement to the present crisis yesterday, that his package wouldn’t be enough: that for the Government to mimic the insurance market, as our columnist Ryan Bourne has put it, won’t provide firms with the confidence they need to carry on operating as usual – even if the total value of the Chancellor’s package was potentially worth a third of public spending.

So why didn’t he go further?  Clearly, because what will have been daunting him is not whether to deploy an even bigger bazooka, but how to do so.  This site has called for some very left-wing means: direct payments to employers, on the condition that they don’t lay off their staff, and to workers themselves.  It has also urged some very right-wing ones: tax cuts and deregulation.

On direct payments, one of the main arguments against trying to rush in a Universal Basic Income scheme in present circumstances is that our tax and benefit system is not set up to provide it.  An uncompromised scheme of that kind would demand the creation of a new payment system capable of paying out to billionaire and pauper alike.  That is not the way our tax and benefit system works.

Essentially, it has two main vehicles: HMRC, working hand in glove with the Treasury, and the Department of Work and Pensions, and its network of Jobcentres.  The Government could use HMRC’s records as the basis of payments to the employed, for whom records will mostly be up to date, and also for the self-employed, for whom they will be less regular.  The state might have to pay out on the basis of the most recent sets of earnings.

The more simple the payments are, the easier they will to administer (but also the more expensive).  There is a vogue for using statutory sick pay (SSP) as the main vehicle.  It ends after six months and not all workers are eligible for it.  So it might have to last for longer, be more widely available – and rise in value.  SSP comes via employers who are then reimbursed, but the Chancellor is also ready to pay grants to smaller businesses.

The welfare system for people of working age covers some of both those who don’t have jobs and those that do.  Ministers should ease the conditions that govern access to Universal Credit – the main aim of which, after all, is to help get and keep people in work.  Duncan Smith was surely right to argue that the floor for the payments should be pushed up.  The Government should also ease debt deductions from benefits.

On tax, it makes no sense for Ministers to be distributing more money through a revised SSP or new flat payments or Universal Credit while simultaneously raking it back in tax.  That implies a council tax and national insurance holiday – as well as a wider business rates one – and an income tax break too at the standard rate for workers, who are going to find their living standards hard-hit.  Self-employed people would gain from a VAT payment waiver.

Italy has suspended mortgages, rent and household bills.  So should we.  That means the Government effectively standing behind the entire economy.  The Chancellor has already doubled his original hardship fund, and in due course will have to go further.  Where will the money come from?  Crudely speaking, from borrowing and if necessary printing – the route that both Donald Trump and now the ECB are taking.

On deregulation, Robert Jenrick is to relax the constraints that govern pubs, and Bourne has a mass of other suggestions: relaxing licensing requirements, child-staff ratios for childminders, overtime, agency worker rules, Sunday trading regulations.  If the rule that nothing is so permanent as the temporary applies to higher state spending, there’s no reason why it shouldn’t to cutting through red tape.

We suspect that Sunak will be planning an announcement as soon as Monday, if he can get his ducks in a row.  That is both dizzying fast and worryingly slow.  It is fast, in the sense of tearing up the known financial and economic order.  And it is slow, because traditional media will fill the news gap, with social media acting as an outlier, for the next three days, with its usual mix of leaks, scoops and unattributable briefings.

This is all very well when it’s business as usual, but different altogether when the world is upside-down.  Mixed signals have been sent over herd immunity, the scale of testing and, today, a potential shutdown of London.  There is a case for running the daily press conferences right through the weekend, to clear up speculation in the Saturday and Sunday papers – though these obviously wouldn’t be fronted by the Governments’ top team.

So the Chancellor must scramble not only to get his next package of measures in place, but rush too in order to ensure that the Sunday press is briefed in an orderly way.  He deployed a big bazooka in the Budget.  Then an even bigger one earlier this week.  Now he must reach for the biggest one of all.

146 comments for: Sunak needs a big, big, bigger bazooka

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