Sunak bails out business as Test and Trace system flounders
Image credit: REUTERS/Toby Melville
Chancellor Rishi Sunak has announced an emergency multi-billion-pound bailout aimed at supporting workers and firms through the second coronavirus wave.
The 'Job Support Scheme', which replaces the current furlough system from 1 November 2020, will be made more generous in an effort to persuade firms to keep staff in work.
There will also be grants of up to £2,100 per month available for firms in 'Tier 2' areas of England, primarily aimed at helping the hospitality and leisure venues which have seen their earnings plummet due to the restrictions on households and large groups mixing.
The financial package, which could cost the Exchequer around £13bn over the next six months, came as there were further signs of trouble with the £12bn NHS 'Test and Trace' system.
A total of 101,494 people tested positive for Covid-19 in England at least once in the week to October 14, according to the latest Test and Trace figures, the highest weekly figure since the system was launched in late May.
However, just 59.6 per cent of close contacts of people who tested positive were reached through the Test and Trace system – its worst performance to date.
At a Downing Street press conference, Boris Johnson – who had previously promised a “world-beating” system for the UK – said: “I share people’s frustrations and I understand totally why we do need to see faster turnaround times and we need to improve it.
“We need to make sure that people who do get a positive test self-isolate – that’s absolutely crucial if this thing is going to work in the way that it can.”
The government’s chief scientific adviser, Sir Patrick Vallance, said problems with the system could be “diminishing the effectiveness” and there was “room for improvement”.
Sir Patrick told the press briefing: “It’s undoubtedly the case that test, trace and isolation becomes much more difficult to have an impact once numbers are high, it’s much more effective when numbers are low.”
He added that it is “really important to concentrate on numbers of contacts, isolation as quickly as you can and getting things back as quickly as you can – ideally you get the whole process done within 48 hours”.
Justin Madders, Labour shadow health minister, said it was time for ministers to admit that the private companies being paid millions of pounds to help run the system “aren’t up to the job”.
Madders said: “To have over 40 per cent of people not even being contacted by the test and trace system is an interstellar-sized black hole in the government’s plan to reduce transmission.
“How much longer are we expected to put up with this dangerous failure before ministers admit that the likes of Serco just aren’t up to the job?
“The need for a circuit-break is absolutely critical now and that time should be used to fix Test and Trace once and for all.”
The rising number of Covid-19 cases also led to Stoke-on-Trent, Coventry and Slough being moved into the government's Tier 2 from Saturday, while talks are ongoing between the government and Warrington, West Yorkshire and Nottinghamshire about accepting the toughest Tier 3 restrictions.
Sunak’s package of extra support, announced just days after London was moved into Tier 2, provoked fury from northern politicians who have seen their economies suffer due to long-standing coronavirus curbs.
In an effort to address that criticism, Sunak said the business grants will be available retrospectively for areas which have already been subject to restrictions since August, and come on top of higher levels of additional business support for areas moving into Tier 3.
Around 150,000 businesses in England could be eligible, the Treasury said, at a potential cost of more than £1bn.
The changes to the Job Support Scheme will apply across the country and could cost the Exchequer £6bn if two million people take up the offer for the entire six months of the scheme.
Instead of only being open to people in “viable” jobs working a third of their normal hours, it will now cover employees doing just 20 per cent of their usual work and who will receive at least 73 per cent of their usual pay.
The amount that employers are required to pay to top up their wages has also been reduced to just 5 per cent of unworked hours, down from 33 per cent.
Extra help for the self-employed will see the amount covered by grants increase from 20 per cent of profits to 40 per cent, meaning the maximum payout will increase from £1,875 to £3,750.
This will amount to a potential further £3.1bn of support to the self-employed through November to January 2021, with a further grant to follow covering February to April 2021.
Explaining why he has been forced to introduce extra measures just weeks after setting out his winter economy plan, Sunak told MPs that even businesses which can stay open are facing “profound economic uncertainty”.
The Chancellor said hospitality industry chiefs have given a clear message that “the impact of the health restrictions on their businesses is worse than they hoped”.
In an indication of the continuing problems in northern England, Boris Johnson told a business conference: “I have to be honest with you, this winter is not going to be easy but I am certain that the people of northern England will confront this crisis with the fortitude and selflessness we have seen throughout.”
In the Commons, Sunak acknowledged the strain the second wave of the virus had placed on communities living under coronavirus curbs and warned of “difficult days and weeks ahead”.
“I understand your frustration, people need to know this is not forever. These are temporary restrictions to help control the spread of the virus,” he said.
Shadow chancellor Anneliese Dodds branded Sunak’s announcements “a patchwork of poor ideas rushed out at the last minute” and questioned why “this is the right thing to do now, but wasn’t when parts of the North and Midlands” were put under restrictions months ago.
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