Bernard Ponsonby: Another day, another treasury U-turn

Bernard Ponsonby on another u-turn by the UK treasury on furlough.

Bernard Ponsonby: Another day, another treasury U-turn WPA Pool via Getty Images
Sunak: Announced UK wide furlough until March 2021.

Rishi Sunak is the man who is charged with the stewardship of the UK’s finances.

Facts and figures are his business. But even he must be reaching for the calculator to view the running tally of changes of policy on support for jobs during the pandemic.

I won’t rehearse every refinement since March suffice to say that the constant change of ground gives the impression of a Government where policy is made by knee-jerk.

The defence to the charge that he is a U-turn Chancellor for whom consistency is but an ambition was a simple one. Changing course as circumstances change is a strength not a weakness. The wrong thing to do would be to do nothing when new realities demand a change of course.

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It was the decision to introduce another lockdown in England which was the catalyst for the extension of the Furlough scheme by another month. The Shadow Chancellor, Anneliese Dodds said that change was announced five hours before it was due to end by which time employers had already made people redundant in the knowledge that the 80% wage subsidy would no longer be available.

Well today Mr Sunak announced that Furlough would now last until next March with a review of the provisions in January. Businesses he said wanted certainty and he was determined to support jobs and livelihoods.

He said the economic trauma of a new lockdown demanded an extension of the scheme, which, taken with other support measures has cost £200bn. That explains the Bank of England’s announcement this morning of another £150bn worth of quantitive easing or in layman’s terms, printing money.

You can understand why the Chancellor is being forced into committing yet more eye watering sums. He told MPs that the Office for Budget Responsibility (OBR) had predicted a full economic contraction this year of 10%. Unemployment was due to rise to 12% which will involve another two and a half million people losing their jobs.

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What is not known of course is how many jobs the extension of furlough will save. Nor is it known how many jobs have been lost because employers decided to let workers go in anticipation of the scheme ending.

The Shadow Chancellor said this lack of planning meant the policy was no more than an ‘undignified scramble’ and she called on Mr Sunak to apologise to those who had already been made redundant. The Prime Minister looked at her icily whilst his Chancellor played with his paperwork.

He rejected the charge that he was always one step behind the problem arguing that Labour’s position on lockdown was simply all over the place. This was a “once in a century” event he told the House and that flexibility for changing circumstances was a strength not a weakness.

His statement also dealt with the tricky issue of whether or not furlough would apply in the devolved countries if they went into lockdown when England was following a different path. Mr Sunak said it would apply equally across the UK.

The Chancellor said that up front guarantees of money to Holyrood amounted to eight billion pounds. He said the continuing support was “delivered by the Government of the UK for all people in the UK”. It was he said a demonstration of the strength of the Union.

The policy was, however, not a demonstration of sharp politics with a sensitivity for closing down a story which threatened to play to a constitutional narrative.

The issue of furloughing applying if Scotland was in lockdown and England not, has been running since he announced the one month extension of the scheme. Clarification was sought. The Scottish Conservative Leader, not the Chancellor or Prime Minister initially sought to give re-assurance. Then it appeared to be given by the Prime Minister earlier in the week as the Scottish Government continued to argue they had received nothing formally from the Treasury.

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Alison Thewliss for the SNP told Mr Sunak it might be helpful for him to phone the Scottish Finance Minister Kate Forbes. It came at the end of a statement which demanded to know what he was doing to extend the temporary cut to VAT, extra payments to those on Universal Credit and what he could do in relation to sick and redundancy pay.

Thewliss said that Sunak had ‘dingied’ Holyrood and had made a ‘boorock’ of everything. Unfortunately I couldn’t see the faces of the Prime Minister and Chancellor at this point. The Scottish Secretary was not in the Chamber to help out with the translation.

Sunak will hope that his latest policy U-turn will not be lost in translation and that changing policy for new circumstances is not viewed as incompetence.

On the bright side for the Government, the extension has been warmly welcomed and it will provide certainty until March of 2021.

Given the positive noises yesterday about the timescale for a vaccine, Mr Sunak will be hoping this potential game- changer will avoid the need for more debt piled ever higher by a policy, the cost of which, threatens a re-programme of Treasury calculators.