“Whatever it takes”. Those three little words can have huge power in a crisis; while also leaving no doubt about the gravity of the situation. In 2012, Mario Draghi’s use of the phrase marked the turnround in the eurozone debt crisis.
Now we know that the UK chancellor Rishi Sunak really meant to repeat it. His announcement that the state will pay to support jobs — through a new Coronavirus Job Retention Scheme — takes Britain into entirely new territory.
This is a generation-defining moment, created by a pandemic which has left businesses on the brink, and fearful households retrenching. With more than 200,000 people already laid off in the leisure and hospitality sectors, there was no time to lose. Mr Sunak announced a blizzard of new measures to support businesses and workers and strengthen the social safety net. The most prominent, the “job retention scheme”, will see the state pay four-fifths of the wages of workers, up to £2,500 a month.
Some may see this as an astonishing move from a chancellor who had previously been a fiscal hawk, and from a Conservative party which has been regarded as especially rightwing. But it was essential.
The paradox of this public health crisis is that it actively requires the slowing of economic activity, to combat the pandemic. As hospitals fill and doctors and nurses work punishing shifts with little respite, the government has had to order the closure of pubs, restaurants, cinemas, and leisure centres. It is trying to protect the National Health Service from horrendous pressure. The challenge is not to avoid the inevitable downturn but to prevent a 1930s-style depression. We must save businesses to ensure that we can stumble through this darkness to daylight on the other side.
“The speed of our eventual recovery,” Prime Minister Boris Johnson said on Friday afternoon, “depends on our collective ability to get on top of the virus now.” Everything else must be subservient to that cause.
Mr Sunak’s plan is to help people survive through the crisis and ensure that consumer confidence recovers as rapidly as possible once Covid-19 subsides. He is tackling what Franklin D Roosevelt described in 1933 as the “nameless, unreasoning, unjustified terror which paralyses needed efforts to convert retreat into advance”.
Mr Sunak’s moves seem pretty comprehensive. Building on the £350bn package announced earlier in the week, he has accelerated and extended the duration of interest-free business loans. He also extended sick pay to the self-employed, who make up about a sixth of the UK workforce and do not get sick pay or redundancy payments. He increased welfare benefits for vulnerable households and helped with rents.
Importantly, these policies sound relatively straightforward to deliver. The retention support package, while unprecedented, can probably be modelled on the current system for statutory maternity pay. This is essential in a crisis, to ensure that help gets to where it is needed fast enough.
This is the definition of “whatever it takes”: thinking fast and flexibly. Until now, the combined efforts of the Bank of England and the Treasury have been formidable, but within conventional frameworks. Tuesday’s suspension of business rates was very welcome, but did not apply to all sectors. While loose monetary policy can help, few businesses want to take on debt in a pandemic. And tax holidays do not put cash directly into people’s pockets.
More was required. As I listened to Mr Sunak and Mr Johnson, I felt that this was about as close as you can get to a government of national unity without a political coalition. The Conservative government has come together with the Trades Union Congress and business groups to lay these plans and co-ordinate them. Perhaps it is too much to hope that this might leave a lasting legacy. But there is no doubt, as the chancellor said, that “we will be judged by our capacity for compassion”.
I hope that this will be a wake-up call to those fortunate enough to have healthy bank balances to think about small businesses. On Monday, a small builder I know had his two big contracts postponed by clients who were understandably reluctant to have workers in their homes. But astonishingly they do not seem to have even considered paying in advance. On Tuesday, I found my drycleaner’s shop full of orders that had not been collected — or paid for.
The least we can do, right now, is to pay what we owe. It is shameful for the relatively wealthy people to thoughtlessly worsen the already precarious lives of those around them. Britain is becoming more Victorian, but without the old-fashioned sense of obligation.
The British economy faces an additional self-inflicted challenge after three years of uncertainty over Brexit, and an additional vulnerability to EU protectionism. Last week the health secretary, Matt Hancock, had to appeal to British industry to make medical equipment including ventilators, after the EU imposed an export ban. This felt like a Dunkirk moment: but not one that should make anyone feel nostalgic.
In the spirit of the moment, I hope Mr Johnson will urge Europe to collaborate rather than compete in fighting this virus and if necessary postpone the trade talks.
We cannot know the long-term consequences of this unprecedented intervention by the state. Nor can we say how these measures will be rolled back once the need for them fades. But that is for tomorrow. Today, the fight is on. And, as Mr Sunak said, “it’s on all of us”.
The writer is the author of ‘Extra Time: Ten Lessons for an Ageing World’
Get alerts on Coronavirus pandemic when a new story is published