Amazingly, today we are half way through the government's furlough scheme. This technically began on 1 March, and is as currently announced a three month arrangement.
Best estimates now suggest that maybe 9 million people are on this scheme. That is three times more than the government expected. The cost may be £24 billion, at present.
And now comes my ‘but'. And this is a very big ‘but'. But because the government has not announced any extension to this scheme, and nor has it given any indication that lockdown will cease by the end of May, well advised large employers who know that they have to undertake a statutory consultancy period with their staff on redundancy arrangements will begin issuing redundancy notices to maybe millions of people tomorrow, because if staff cannot be paid after 1 June when the furlough scheme ends that's when notice has to be given and the consultations need to begin. For smaller companies (employing less than 100 people) the date when notice is required is later: they will need to issue the redundancy notices at the end of the month.
Of course, not all employers might do this. But I expect that many will. And the moment they do three things will happen.
First, this will hit the headlines.
Second, the government will have to decide on an exit plan, about which it seems extraordinarily ill-prepared, not least because its own gross misinformation on Covid-19 deaths gives it no wriggle room to announce any such plan as yet.
And third, it's going to have to either admit that the proverbial and the fan are really going to meet for millions more people on 1 June, or it is going to have to finally step up to the mark and actually do something real about planning for the economic impact of coronavirus very, very soon, which to date, this scheme apart, it has almost wholly failed to deliver upon.
What do I actually suspect? First, a look of alarmed surprise. Everything else about this crisis has, after all, caught the government out. I think this will too.
Thereafter, there will be panicky reassurance.
That will be followed by a period of inaction, during which promises of ‘action soon' will be made.
After that an inadequate plan will be produced. Expect smaller percentage support, or a cap on the percentage of a workforce that may be covered, and maybe it will cease to be a grant and become a loan. All of these will open the floodgates of redundancies, by the way. But the only people who will be surprised by that will be in the government.
What will not happen, yet, is any announcement on ending the lockdown. The Messiah Johnson has to return before that good news can be pronounced.
In summary, we ain't seen nothing yet, including on the scale of this government's incompetence.
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My continuing straw poll of government competence which had been running at 30 (out of 100) has dipped in the past week to 20. The latest pronouncement of testing “for all” in the care sector is incredible. My back of the envelope calculations of 1.5 million sector occupants at current daily rate of 18000 is 85 days during which many would have to be tested again. Where does basic numeracy exist within government?
This is indeed going to be a big issue. I have to agree with Guy Standing and his article on the Progressive Economy Forum on March 28th, Unconditional Basic Income would have been a far better option than the furlough scheme, it would be faster and less bureaucratic (although perhaps not as much in value fro those on higher salaries). But at least it would allow people to take up work that they might have been able to do from lockdown. As it is, those on furlough aren’t allowed to work at all.
https://progressiveeconomyforum.com/blog/the-job-retention-scheme-makes-no-sense-basic-income-does/?fbclid=IwAR0MssfFp0ZF7DfhejC5LW0CerLxt7Q1q6mmpwAHmECcJK1CUPwxIFVmHNw
Julian
Downham Market
Norfolk
Guy and I are talking, often
Already today
Excellent. I had a long chat with Guy in 2018 when I was organising an event on UBI for London Futurists at UCL Birkbeck. He seems to have a very good grip on the issues. The only anti-UBI presentation was from a futurologist author friend of mine, Calum Chase. But his objection wasn’t quite what UBI supporters expected. He objected to the word ‘Basic’, arguing that in a future highly automated and abundance economy it should be better than just basic. So I now talk about UBI being the initial step to UCI, Unconditional Comfortable Income 🙂
FYI Calum has written an interesting book ‘The Economic Singularity – Artificial intelligence and the Death of Capitalism’ which is worth a read.
Julian
Downham Market
Norfolk
The article by Guy Standing cited above is very good advocating a basic income scheme to deal with financing the population through the covid crisis rather than the hotch-potch of schemes in place at the moment. His analysis is sound but he states that the payment should be given to every legal resident in the UK but not for non-residents, migrants or “illegal” people. Does he expect these people to starve or wander about homeless spreading the virus?
What would be the difference between legally resident and migrants? There are plenty of people on ILR visas who are legally resident but are “migrants” (in the sense of having migrated here in the past).
As for non-residents, I’d agree, if the are living somewhere else there’s not a reason for this country to help them even if they are UK citizens. (As an aside, this is the same way the NHS works – you cannot – legally – jet back to the UK from, say the US when you need medical care).
For “illegal immigrants”, that’s an interesting case but presumably the government doesn’t know who they are, they wouldn’t apply for fear of being detained, and so the problem doesn’t really arise.
9m instead of the anticipated 3m? One would expect/hope thet the government is using computer models of the economy to derive some of the anticipated outcomes. If they are and it’s out by a factor of three god help us.
This news is very disappointing.
Already the Chancellor has slipped in that ‘we can’t help everyone’ in his speech already getting public consent and lowered expectations to things like this in my view.
If the Government’s own plans were working, this would not be necessary, even if the parties concerned were already planning on doing this.
Post Covid, no doubt these sacrifices will be used to make those of us still in work look bad with the expectation that we will forced to accept pay reductions and reductions in working conditions because were are ‘lucky’ and that it is ‘only fair’. You’ll see.
If I knew how, I would set up an automatic email forwarder to send your posts to my MP. Not that it will help the useless twit to understand anything.
Thanks for keeping this up.
Hi Richard,
I can foresee already the headlines when all of this has passed, “We need to pay all this money back and this will require tightening of the belts and austerity…..”.
Which sadly means the very people now who are risking their health and working extensive hours – for example NHS and care home staff – will (pardon my French..) be right royally screwed over by government with budget cuts and pay cuts in real terms going forward.
What a way to thank them for their efforts!! Whilst at the same time £10,000 can be miraculously found for MPs to help them with working from home!!!!
Robin
I will be fighting that, I promise you
I very much hope this will be fought Richard. What does it say to everyone who is still working, furloughed or redundant? Cynical to say the least.
Basic income as general does not work
Unless you look at it through rose left wing tinted glasses. BUT… and a huge but for me… I think it might work short term with some caveats.
A realistic timeline… 8 to 10 weeks from now economy should be up and running (if not) we will all be dead anyway.
Available to those who have savings or less than 10k… savings are for a rainy day anyway.
Money is to be paid back over 20 or so tax years to make it minimal.
Have to have paid tax in your life time… this is an absolute must…otherwise you deserve nothing in my books.
Any thoughts. Actually really interested to know. Thanks
@Chris
It would work – it’s basic security – the very purpose of government surely!
Have a look at this:
http://www.progressivepulse.org/economics/universal-basic-income-is-basic-security
@Chris
It would work – it’s basic security – the very purpose of government surely!
Have a look at this:
http://www.progressivepulse.org/economics/universal-basic-income-is-basic-security
I’m not sure how anyone can say Basic Income does not work. Where’s the evidence that it doesn’t work? All of the trials so far have shown that it does work. Although it is necessary to define what is meant by working. The Finnish experiment for example didn’t show an increase in employment. But that’s not what UBI is for. UBI is to provide security and opportunity. It allows those who are living from hand to mouth – or rather just existing. It can be also do implemented in a fiscally neutral way too. It’s certainly not seen through ‘Left Wing rose tinted glasses’ as it probably has more supporters on the political right than it does on the Left. Milton Friedman and Fredrich Hayek come to mind, hardly Left wing. This is because it maintains markets, and rectifies the job market which is a monopoly of the job suppliers. It allows people to walk away from bad, underpaid, hopeless jobs and find something better, which may include staring their own enterprises (which the pilots often demonstrate). So there is a very strong evidential base that shows UBI can work -but with the caveat that it hasn’t been tested within a whole, country with it’s own currency as yet. Which is why I’m not so sure about the Spanish proposal for UBI as they have the complications of being in the Euro. Ironically I think the UK has a better chance of implementing as it never joined the Euro and ironically Brexit means we don’t have the European Bureaucracy to consider. I say ironically as I was a remainer. Even Universal credit could be adapted as a delivery mechanism for a decent UBI if the absurd and I think artifical delays are taken out of the system
Julian
Downham Market
Norfolk
Hi Richard,
Read this today;
Comment upon a speech by Charles Humbert before French Senate 13/07/1914 upon the preparedness of the French Army.
“One detail above all caught the attention of the French public, and particularly the nation’s mothers: the army was woefully short of boots; if war broke out, Humbert declared, French soldiers would have to take to the field with only one pair of boots, plus a single thirty-year-old reserve boot in their knapsacks. The speech triggered a political sensation. In his reply Minister of War Adolphe Messimy did not deny the substance of the charges, but insisted that rapid progress was being made on all fronts. The deficiencies in artillery provision would be made good by 1917 .” (This is 1914).
The Sleepwalkers; How Europe went to War in 1914; Christopher Clark 2013.
Some things don’t change!?
Sunak’s 4th or whatever budget he is on in as many weeks is still pathetic as far as workers are concerned. Inconsistent because it is not fair in terms of subsistance funding for workers.
Here is an example of a friend from today. He started a new job as a freelancer in February, when all he did was get training for which he was paid £200. He started his work on 1st March and was stopped mid march just two weeks working a periodhe earned £1000 nearly. He was on track to earn £2000 for March.
He has been put on furlogh and he is being offered 80% of £200 the training fee – ! £160 a month!
Not 80% of the £2000 he was expecting to earn in March.
Not even of the £1000 he did earn in half a month.
It is bonkers – a complete British civil servicejobs worth level of bonkers.
Sunak and the tories are taking the proverbial.
In the meantime another friend in a building project is being forced to carry on working. When the rest of the country is laid off for a covid sabbatical.
We need another bite at this covid budget and get it right.
Agreed
DunGroanin, re your friend’s experience, compare with the Swiss approach to the problem, which was linked from a posting on Progressive Pulse yesterday:
https://www.swissinfo.ch/eng/covid-19_swiss-lead-way-with-crisis-loans-to-small-businesses/45670144
The Universal Basic Income solution seems the most sensible one just now. It provides for people’s basic needs, such as food, etc, without a ton of bureaucracy to wade through. The furlough thing seems incredibly complicated and full of loopholes and exceptions that will leave a large number of people unsupported during this awful time.
If people’s financial needs are taken care of during the lockdown, they’ll be less likely to be demanding an early end to the lockdown. Which, if it’s to work, has to be kept in place for a good long while yet.
For those opposed to Universal Basic Income on principle (I’m certainly not one of these) there could be a cap set on how long it would be available. Maybe a month or two after lockdown ceases and people can get back to work and receive a paycheck. The UBI can be withdrawn then?
Or what’s left of work….
If we could have delivered a UBI now I would have strongly supported one for the time being
I regret that the mechanisms just did not exist
The furlough scheme is incredibly complex and the responsibility has been passed to employers, or their payroll agents, to do all the calculations. Apparently the HMRC portal for receiving the data is due to go live next Monday. Having been involved in the set up of the portal for Country By Country Reporting (Thanks Richard!) I’m aware of the amount of work involved and the time taken to get it up and running — many months rather than a few weeks. I will be very surprised if there not significant issues with the opening of this new portal given the huge demand on Day 1.
I agree with Richard that the setting up a brand new mechanism for UBI is impractical in the short term — when it is most needed.
Interesting results from the most recent Ontario UBI pilot (that was cancelled part way throug for purely political reasons and even analysis was obstructed). But they managed to make an analysis anyway:
https://www.youtube.com/watch?v=Fv4qG2yyZxU
https://en.wikipedia.org/wiki/Ontario_Basic_Income_Pilot_Project#Early_project_cancellation
Julian
Downham Market
Norfolk
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