Rishi Sunak has promised to do “whatever it takes” to support households and businesses through the worst of the coronavirus outbreak as the global health emergency threatens to plunge Britain into a recession and unleash widespread social and economic disruption.
In a far-reaching budget statement placing the government response to the pandemic at its core, the chancellor said he was making £12bn of emergency spending firepower available as part of a three-point plan to keep public services running as smoothly as possible as the virus spreads.
Branding the war chest one of the most comprehensive economic responses of any government anywhere in the world, Sunak warned that the fallout from the disease would have a dramatic short-term impact on families, jobs and growth.
“I know how worried people are,” he said. “What everyone needs to know is that we are doing everything we can to keep this country, and our people, healthy and financially secure.”
Speaking just hours after the Bank of England unleashed the first emergency interest rate cut since the 2008 financial crisis to stage a coordinated fightback between No 11 and Threadneedle Street, Sunak said the impact on the economy would be temporary. However, the Office for Budget Responsibility warned the chances of a recession this year were growing, especially if the disease causes widespread disruption.
In a multi-pronged approach to cushion the blow, Sunak’s maiden budget included a £5bn Covid-19 emergency response fund to ensure that the NHS and other public services get enough funding as the situation develops.
As the infection rate climbs in Britain and the number of confirmed deaths increased to eight, the chancellor indicated that more funding would be made available if needed, amid fears that the health service might struggle to cope as the situation worsens. “Whatever resources the NHS needs to deal with coronavirus it will get,” he added.
In addition to the emergency Covid-19 response fund, Sunak said the budget would give the NHS £6bn more than previously planned over the next five years, as part of the biggest leap in government spending since the early 1990s.
Measures to support companies included additional breathing space to pay taxes, business rates being abolished for smaller retailers this year, government-backed loans to provide short-term funding and a promise to companies facing rising staff sick pay bills to the tune of £2bn across the economy. He warned that as many as 20% of the workforce could be unable to work at any one time as the virus spreads.
Statutory sick pay will be made available for workers advised to self-isolate, while individuals can get sick notes by calling NHS 111 rather than visiting their local GP. Access to benefits will be made faster, while a minimum income requirement for receiving universal credit will temporarily be removed.
Taken together, Sunak said the “extraordinary measures” for workers and firms represented £7bn of support. “We will protect our country and our people,” he added.
Labour has largely been supportive of the government’s efforts to be led by the science on coronavirus so far, but the shadow chancellor, John McDonnell, said there were serious problems with Sunak’s package on sick pay.
“There unfortunately appear to be major holes in the coronavirus package, with no extension of statutory sick pay to those on zero-hours contracts, nothing for others without a contract of employment, and no suggestion that sick pay levels will be increased, and no new money for our struggling social care system,” he said.
He also highlighted the decade of cuts to health and social care services that mean they are “utterly ill-prepared to deal with the outbreak, and unfortunately the impact of the crisis is likely to be sharper because of a fundamentally weak economy and the crisis in public services created by actions of Conservative governments”.
Ian Blackford, the SNP’s leader in Westminster, also accused the government of failing to pay a high enough rate of sick pay for many people to live on. He said the “meagre” rate of £94.25 per week rate was “poverty pay” by comparison to the rate in Ireland of £266 per week, and other countries such as Germany and Austria where it is £287 per week. The UK currently has the second lowest rate in the EU. “The Tory government is failing millions of workers by refusing to increase the UK’s meagre statutory sick pay rates to at least the EU average,” he added.
Tory MPs were for the main more supportive. Alan Mak, a Conservative backbencher, said he felt the government had acted “quickly and decisively” to help people through the coronavirus, while Rob Halfon, the Tory chair of the education committee, said the package was good and it was welcome that it would be reviewed if more money was necessary.
However, a few Tory MPs are privately concerned that the public mood is beginning to turn against the government’s decision to hold off on social distancing measures, even though the financial package would go down well. “People are starting to ask why we aren’t doing more. I support the government overall. But more needs to be done to explain to my constituents why we are asking people to stay home if they’re ill and why we aren’t testing more people,” said one Conservative MP who supported Boris Johnson’s leadership bid and is on the pro-Brexit right of the party.
The package of measures and government response to the outbreak included:
£5bn for the NHS and public services to meet extra demand as the outbreak develops.
£7bn for businesses and workers, including extending statutory sick pay for people advised to self-isolate.
A local authority hardship fund worth £500m to help people with council tax relief.
A business interruption loan scheme to support £1bn of lending to small firms.
Grants worth £2.2bn for small businesses, and dedicated helpline for companies that need need a deferral period on their tax liabilities.
Business rates will be abolished for small retailers with a rateable value of less than £51,000.
Relaxing the requirement for people to physically attend a jobcentre to claim benefits.
Cutting waiting times on claims for Contributory Employment and Support Allowance to day one instead of day eight
Companies with fewer than 250 staff will be compensated for their sick pay bills by the government for up to 14 days, potentially helping 2 million firms to save a combined £2bn
Michael Gove, the Cabinet Office minister, indicated Brexit talks may be delayed by coronavirus.
