Having waited more than a year for a budget, Britain has now had three in the space of nine days. The third in the series was the biggest, and the most crucial, of the lot.
Things have moved on apace since Rishi Sunak delivered his first package to parliament on 11 March. That one set aside £12bn for dealing with the coronavirus, but was never going to be enough given the scale of the health emergency, the widespread dislocation to business and the flaws in Britain’s economic model.
There were two big elements to the chancellor’s announcement on Friday: a job subsidy scheme that will provide employers with 80% of a worker’s wage up to a limit of £2,500 a month, and a strengthening of the welfare system through more generous universal credit, higher working tax credits and an increase in child benefit.
The first is to try to prevent firms laying off staff in their millions. The second is to act as a backstop in the inevitable cases where businesses fail.
Some of this looks like closing the stable door after the horse has bolted. There has a bipartisan approach to dealing with the crisis until now, but eventually someone in Labour’s ranks is going to hurl back at the government the charge George Osborne levelled at Gordon Brown: that he failed to mend the roof while the sun was shining.
The accusation against Brown was unfair, but is far more appropriate today. Britain entered this crisis with an underfunded health service close to breaking point, a tattered welfare safety net, and a labour market where millions of jobs are insecure and workers only one pay packet away from penury.
Back in the budget, Sunak set aside £1bn to help protect jobs and incomes. That was never going to be enough, and he has now been forced to go much further by the shuttering of much of the economy.
There are three tests by which Sunak’s package will be judged: does it hit the right targets, is it big enough and is it in time?
Taking those points in reverse order, the Treasury has probably acted in the nick of time. There is no hard data for how the economy has been performing in the past couple of weeks, but such evidence as there is from restaurant bookings and cinema visits suggests activity has collapsed. Many firms have been giving the government until the end of this week to come up with proposals before deciding what to do.
The government’s package is big, and while the wage subsidies will initially last for three months Sunak said his scheme would run for as long as was needed. He has borrowed the idea from other European countries – such as Germany, Denmark and Sweden – and cannot really be accused of being stingy.
As for whether it hits the right targets, the Covid-19 pandemic will still cause much economic distress, but the fact that Sunak won warm praise from the TUC shows he has gone a long way to delivering what was demanded of him.