My local policeman dropped by last week and told me that farmers and smallholders are worried that people might soon start stealing their eggs, chickens and even this season’s lambs. Though the village in which I live is only 20 miles from Downing Street, this is a different world – one in which those with their finger on the pulse realise the desperate plight faced by the self-employed thanks to the coronavirus.
There is no doubt that the Chancellor’s financial support package is unprecedented in size and scope. The announcement that the government will pay up to 80 per cent of workers’ wages up to £2,500 will certainly allow many firms to go into hibernation and should keep people in work. It has been welcomed by the trades unions and many well-established businesses.
Equally, the loan offer that has been made to companies which meet certain criteria will certainly suit some successful concerns. For example, this week I heard of a small independent pub chain which is keen to borrow £5 million in order to buy up distressed competitors. For enterprises like this one, the economic crash is an opportunity and the government is there to help them.
When one looks at the overall picture, however, the measures introduced by Rishi Sunak do not address some very basic questions. On a practical level, I am not convinced that the banks will be able to process large numbers of applications in short order. At the same time, many firms will worry about taking on yet more debt and will decide that company liquidation is the only way out. It is a sad inevitability that there will be many business casualties.
But aside from these criticisms, one of the most pressing problems surely lies with the 11 million people who do not earn regular wages. Some of them run their own limited companies. Others act as sole traders. Many, of course, work on zero hours contracts or are employed seasonally. Together, this group makes up one third of Britain’s workforce yet, so far, little has been done for them.
If somebody in this bracket runs out of cash, the fact that there is a VAT referral or a mortgage holiday in place will be irrelevant. And while the statutory sick pay that is available to these people is to be welcomed, the £94-a-week on offer simply isn’t enough for a family of four to live on. With all of this in mind, my best guess is that by the middle of April millions of people will be unable to afford sufficient amounts of basic food and household goods. They need help from the Chancellor.
In the past there was a culture, particularly among the self-employed, of saving for a rainy day. But after years of low interest rates and the impossibility for those aged under-40 of owning their own property, it has evaporated. The concept of thrift is an alien one to younger generations. Many live not just a hand-to-mouth existence, but one that is based upon hire purchase agreements and mounting credit card debts. Time is now the enemy of these people, who work in a huge variety of sectors from hairdressing to computer programming.
The Government’s key priority today is, of course, the health of the nation, followed by the economy, but I don’t think enough thought has yet been given to the societal impact of this situation or, indeed, to law and order. If the Government is perceived to be helping big corporate entities while throwing to the wolves the 11 million-strong army of men and women described above, the reaction could be very ugly. The idea of wages still being paid to somebody who works for a mothballed company, and a family living next door whose main earner is self-employed not being able to buy staple foods, is unthinkable.
In the middle of a national emergency, something has to be done to make us believe that we really are all in this together. The only solution that I can see that could be implemented quickly to help the 11 million people who do not have a fixed income would be the introduction of helicopter money, the policy which results in cash being distributed to individuals directly.
If £1,000 was paid every month for the next three months into the bank and building society accounts of the adult population, the cost to the country would be £120 billion. This is a vast sum but it could, in fact, be a small price to pay if it maintains national unity in our troubled nation. The Irish government is already implementing such plans. It won’t be long before Donald Trump does the same in America. Rishi Sunak must follow suit. Otherwise, I fear my local farmers will be proved right.