If the coronavirus crisis was caused by Chancellor of the Exchequer Rishi Sunak, the UK’s most popular member of the government is trying to make sure this isn’t his downfall.
The UK Treasury Secretary again dramatically intervened in the economy on Thursday by extending a vacation program through March and tearing apart his plans from just a few days earlier. While the nation may desperately seek help when England was again banned, the U-turn also follows a series of missteps.
Sunak experienced a meteoric rise when he was promoted to the top position of the Treasury Department a few weeks ahead of a budget in February. He quickly rolled out a package to prop up businesses and jobs and said he would “do whatever it takes to protect the economy”. It was even praised by political opponents like Len McCluskey, the socialist leader of the largest union.
However, in the past few weeks, his promise has exposed its limits as the pandemic spiraled out of control. The northern regions hardest hit by the virus, the Scottish government and the opposition Labor Party have approached him with increasing job losses. Some of the ruling Conservatives have questioned Sunak’s apparent desire to control spending in a crisis.
The Treasury Department refused to fund additional support for businesses in Manchester and to provide free school meals for poorer children during the fall halftime break. This was all the more noticeable when Sunak subsidized food in August to help the hotel industry. A program that some studies claim has made the virus spread faster.
Then, when the infections beat even government scientists’ worst predictions, Sunak announced five times bigger changes in support for jobs within six weeks.
“The Chancellor was one step behind events during this crisis that left many people unsupported,” said Lydia Prieg, director of economics at the New Economics Foundation. “Sunak’s fixation on the urgent cessation of job and income support was deeply wrong.”
The UK has had a particularly hot year as the country recorded the highest death toll in Europe since Covid-19 and infection containment measures emerged behind the curve. Still, Sunak burnished his reputation as an ally of business and as a persistent force in a party that was increasingly agitated by Prime Minister Boris Johnson’s leadership.
The Treasury Department said it has always been reviewing the measures, and Sunak explained to the House of Commons on Thursday why he had switched courses several times in the past few weeks, admitting that this opened him up to critics. “For anyone in the real world, this is exactly what you have to do when circumstances change,” he said.
However, critics say that 40-year-old Sunak accelerated job losses by setting deadlines for assistance. This has in part to do with treating the virus like a temporary economic crisis rather than an ongoing health disaster.
What Bloomberg Economics Says …
“Sunak’s decision to extend the vacation program until the end of March has thrown a lifeline for the economy. However, it will not prevent jobs from being lost – unemployment has already risen and is likely to continue to rise.”
– Dan Hanson, senior economist
On Saturday, he added another month to the vacation program just hours before it ended, before adding another four months on Thursday.
For someone many Tory MPs see as their potential next leader, some of the glitz has now come from the Chancellor. A minister who refused to be named when commenting on Sunak’s performance said he had gone from “deity to demigod”. “Rishi has been slowly dragged into several things he should have done earlier and has not reconciled his fiscal conservatism with the times we live in,” the person said.
Sunak remains the senior cabinet minister in the ConservativeHome website’s monthly poll on Tories. On November 2, the positive rating was 81.1%, although it was 94.8% on April 3. Mel Stride, the Tory chair of the House of Commons Treasury Committee, said the chancellor as a whole “did pretty well” during difficult times.
But Stride also wants Sunak to expand the scope of its efforts to get the country through the pandemic. In the spring, the Finance Committee asked the Chancellor to work out plans to help hundreds of thousands of self-employed who were caught between the rifts of his aid programs. But he doesn’t look like he ever will.
“I find it deeply problematic to have more than a million people who have not received and will not receive support in the future,” said Stride.
Labor has tried to use Sunak’s approach. Finance spokeswoman Anneliese Dodds slammed his “last minute scramble” to repeatedly update support levels, while Leader Keir Starmer accused Sunak of hampering efforts to get an earlier lockdown.
YouGov and Savanta ComRes’ poll this week found that Sunak’s voter approval rating was the lowest since the outbreak began. That initial popularity was largely due to the program he launched in March to pay 80% of the wages of employees on leave, according to Chris Hopkins, political research director at Savanta ComRes.
Sunak’s previous insistence on replacing vacation with a less generous plan, with an emphasis on supporting “viable” jobs, drew the ire of people working in closed industries like events and theater.
“What gave him such a boost was the fact that he was so generous,” Hopkins said before the program was extended. “Of course, some of this support has waned.”
Sunak has now tried to counteract this by paying workers far longer than the planned month of lockdown is expected to last. In a week when Lloyds Banking Group Plc and retailers John Lewis Partnership and J Sainsbury Plc became the latest to announce job cuts, his huge success still met with criticism.
Paul Johnson, director of the Institute for Fiscal Studies, took the move on Twitter, saying that Sunak has apparently not learned anything since March. He said the Chancellor was not aiming for aid and wasting money on it.
“The government’s initial critical approach now risks looking reactive rather than proactive,” said Adam Marshall, director general of the UK Chambers of Commerce, which represents 75,000 companies. “Too often business communities have to speculate about what the latest announcements will bring in terms of financial support.”
– With the support of Kitty Donaldson.
(Except for the headline, this story was not edited by GossipMantri staff and published from a syndicated feed.)