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Chancellors partial U-Turn welcome but not enough

October 12, 2020 10:54 AM

ll[p (Photo by Colin Watts on Unsplash)Here in Suffolk we are fortunate that covid infection rates remain low although there is some indication they may be gently increasing reflecting growth across the UK. In the major conurbations they are not so lucky with infection rates and new hospitalisations growing very quickly. The press are full of stories of a new three tier set of restrictions to be introduced next week

In areas where rates are high, restrictions and closures of businesses are being ordered just as the furlough system is being wound down risking the bankruptcy of many hospitality businesses and even higher unemployment

Against this background the decision of the Chancellor to reverse course and maintain payments to businesses forced to close is welcome. Firms whose premises are legally required to shut over winter as part of local or national restrictions will be entitled to grants of up to 67% of employees' salaries up to £2,100 a month. This is less generous than the original furlough, which paid 80% of employees' wages up to £2,500 a month, but is a higher level of taxpayer support than in Rishi Sunak's winter economy plan announced two weeks ago.

However Northern leaders have described the government's plans as "an insult" and a "kick in the teeth" that will not stave off the threat of economic disaster under new lockdown restrictions.

Liberal Democrat Treasury Spokesperson Christine Jardine added:

This partial U-turn by the Chancellor after pressure from the Liberal Democrats and others is welcome, but not enough. Losing a third of your income overnight if you work in hospitality could push many people over the financial edge.

Of course the Government must support those it tells to close, but help shouldn't be limited to just some parts of the UK - it's needed right across the country.

People are struggling in every area and the economy as a whole is on the ropes. Business needs certainty and a clear strategy - not chop and change, knee-jerk reactions. The Chancellor needs to expand furlough support urgently and across the whole economy until June 2021.