When it was announced in March, the Government’s Job Retention Scheme was rightly hailed as an unprecedented and inspired policy to save British business.
And yet, as the cost of furloughing more than quarter of the entire workforce passes £20billion, and with still no end in sight, I fear it could end up being the most economically crippling policy in British history.
For proof it is a ticking timebomb in our midst, we need only look at the unemployment figures released yesterday by the Office for National Statistics.
To the surprise of many, they showed that the number of workers on UK payrolls decreased between March and May by only 612,000.
While some jubilant shoppers returned to the high street this week, business owners know that if the two-metre rule remains in place, jobs and even the future of entire companies are at stake
Of course, we must not downplay the individual miseries of those who are now jobless. Nor should we discount the worrying 126 per cent increase in people receiving benefits since March.
But given Britain’s economy has almost entirely ground to a halt due to the lockdown, many might expect that the unemployment figure would be significantly worse.
It would be a mistake, however, to be lulled into a false sense of security. The bitter truth is that unemployment in Britain could still reach an unprecedented level.
For while yesterday’s statistics confirm that furloughing Britain’s workforce has been largely successful in preventing job losses, they also revealed that the scheme has unintentionally hidden the real and devastating impact of Covid-19 on the economy.
Yes, relatively few people have lost their jobs. But make no mistake, the Job Retention Scheme is nothing but a sticking plaster.
By the time the scheme ends on October 31, many may find that the economy has been ruined and they have no jobs to return to.
Such a scenario, where the cash flowing into the Treasury from income tax and VAT receipts vanishes overnight, doesn’t bear thinking about.
All of which is why the Government must change its risk-averse approach to dealing with Covid-19 and get people back to work now.
To start with, a ‘review’ of the two-metre social distancing rule is not good enough – it is too late. While it remains in place, most hospitality, leisure and retail outlets are simply unviable.
Rishi Sunak’s Job Retention Scheme was rightly hailed as an unprecedented and inspired policy to save business, but it could end up being the most economically crippling policy in British history
As the founder of numerous companies, including the Punch Taverns pub chain, I know just how devastating such a regulation will be for businesses.
While some jubilant shoppers returned to the high street this week, business owners know that if the two-metre rule remains in place, jobs and even the future of entire companies are at stake.
It is therefore fortunate that science is on the side of businesses. Just yesterday, Professors Carl Heneghan and Tom Jefferson, from Oxford University’s Centre for Evidence-Based Medicine, revealed that according to their analysis of 38 studies cited by the World Health Organisation in relation to this rule, only one focused specifically on Covid-19 infections – and reported that keeping two metres’ distance from each other had no effect.
And yet this Government seems oblivious to these warnings about the catastrophic impact of social distancing on most businesses.
Instead, it seems to prefer to pay nine million furloughed staff – most of whom I suspect are ignoring the very high risk that their jobs will vanish once the state stops picking up the bill – to have a prolonged holiday courtesy of taxpayers.
But if the PM and his team want to make sure that these workers actually have a future, they have to wake up to the facts and take action now.
I would also urge them to study more of the statistics released by the ONS yesterday, particularly the fact that the number of death certificates citing ‘influenza and pneumonia’ – without Covid-19 as a factor – was actually lower than the five-year average. This strongly suggests that many of those who have sadly perished from Covid-19 would have died from those causes normally.
This does not excuse the appalling death toll in care homes and geriatric wards, but it does reinforce unassailable evidence that this is a disease that almost exclusively targets the very old and very ill.
Pubs such as The Ferry on the Wirral Peninsula are serving takeaway pints, but maintaining a two-metre rule would be ‘devastating’ for business
Indeed, recent Public Health England figures suggested that those aged over 80 are 70 times more likely to die of the disease than those under 40.
That is why if we don’t want to see millions join the dole queue when autumn arrives, everyone under the age of 65 without serious health conditions needs to be allowed to resume their fully normal lives right now – while the vulnerable remain shielded.
It is also imperative that the Government quickly publishes a clear plan to sort out the huge hangover of debt that has been created by previously healthy companies seeking loans and grants.
Firms struggling to recover rapidly from this total economic shutdown do not need billions of debt hanging round their necks.
Fortunately, all is not lost. Even analysts at banking giant Morgan Stanley predict we could be in for only a ‘short recession’.
But to avoid economic turmoil, and for there to be sufficient funding in the form of tax income to pay for a better health service and better social care, we cannot now bungle the economic exit strategy and send the UK into the most fearsome depression of all time.
As it stands, the lockdown is unquestionably the worst political blunder since the First World War. But if we quickly formulate and implement a debt-exit strategy by the end of the month, a sharp recovery is still a possibility.
We are teetering on a knife edge between recovery and catastrophe. Now is the time to set aside past errors and to choose the path that leads to health and prosperity.
- Hugh Osmond is an entrepreneur and the founder of Punch Taverns, one of the UK’s largest pub chains.