Furlough: Superhero Scheme or Political Con?
Furlough. The scheme to save us all, outclassing European equivalents. The governments attempt at avoiding an economic collapse that would plunge the country in to mass unemployment and a financial black hole. For once, someone stood up and grasped the solitary, shared, moral fibre in government. Tory hero and pin-up Rishi Sunak; immortalised in Superman memes across social media as he held back the redundancy tsunami.
But the ‘Great Culling’ still crept on. Summer 2020 had HR managers bulk-writing redundancy consultation letters. Urgently getting them done before the furlough scheme ended. Some began contract negotiations, moving people to 80% pay permanently, especially in hospitality. Employees had no choice; agree or go unemployed. Saying these were negotiations is, at best, generous. For many, they felt forced in to gratitude for having a job, not having the income to afford union membership. The employment market shifted. Skilled workers became minimum wage earners; new jobs had significantly lower pay. Companies realised a person previously earning £40k a year, would work for minimum wage. Hyenas scavenging on desperation as, like throwing dead weight from a hot air balloon, staff were disposed of in preparation for furlough ending. Careers disappeared overnight.
Entering lockdown 2 and 3, the precedent was set. Furlough stayed or the government faced a backlash. The scheme was reworked disastrously until settling on employers paying tax and National insurance contributions. Furlough covering 80% of the pre-tax wage up to £2,500 a month. The Conservative’s problem: they were spending money like no conservative government before them. To stand any real chance of political survival, they needed a game plan. But one was already in play. It had been since March.
Furlough: saving jobs. And political careers.
History will remember 2020 unemployment statistics favourably. The shameful reality of a political smokescreen saving people from an overburdened benefits system ravaged by austerity. Supporters celebrate the government guiding us through the greatest crisis in generations and the deepest recession ever, without millions unemployed. Detractors lambast the poor planning and actual support the scheme offers. Employers still face large liabilities in the form of tax and national insurance to pay for non-productive staff. This can amount to thousands, even millions per year. Add to this that many of these businesses are unable to trade during lockdown, and you have a boiling pot of simmering debt, with not even a proverbial pot to pee in. In simplicity, furlough keeps people employed and the economy moving. Not something anyone could logically disagree with. But many get angry when that support means businesses becoming burdened with costs, without an income. It makes many people fully aware their employment is only reliant on the goodwill of their company. But when numbers are crunched, they are an expense to be saved and face potential unemployment daily.
History will portray furlough’s fiscal damage as pandemic response and taxation matters; because HMRC deal with the claims. But the kickback received by the government is the book-balancing this creates. The welfare system looks healthier; the country more economically stable. Combine immediate losses from reduced economic activity with VAT reductions implemented to support business, and you have a tax system with an insurmountable debt burden. A debt to be repaid by the coming generation as the elite sit planning their next quail hunt, fearing they too may bear some of the burden of increased taxation.
Tax increases are generally considered a Labour stalwart and Conservative avoidance. It is likely we will see no tax rises this coming year in a political move to retain confidence of the people, the real pain coming in 2023 or 2024. With councils recently urged not to send business rates bills until post-budget, further business rates relief is likely. Another ploy to keep businesses adequately subdued. Tax freezes will gain support from many across the country who are already struggling. They always do. But like a buy-now-pay-later plan, we always end up repaying at some point. Politicians then arguing we had to secure the future of the country; yet the debt has now come due. Austerity round one will feel like a practice run.
In typical Conservative spin it will be them working in favour of the people whilst blaming the electorate for the crisis we are in. Labour having abstained at every opportunity. Historical statistics will show expected taxation shortages but less unemployment shock than previous downturns. With one scheme they have saved their chums millions on payroll; created a market where employers can pay less for more; economic and employment statistics have been manipulated; and the party have created a twisted historical narrative that will allow them to claim success from the ashes of failure.
