What’s the safest way for Rishi Sunak to wind down his wage-support furlough scheme? Well, start by finding the correct language. The imagery in the current political talk about “weaning” businesses off an “addiction” is absurd.
When the chancellor introduced the coronavirus job retention scheme on 20 March, he said it was to “protect, as far as possible, people’s jobs and incomes”. There will be trouble if, less than two months later and with lockdown still in place, companies and their workers are portrayed as needy infants or addicts who should know better.
None of which is to deny that the furlough scheme, which guarantees 80% of wages for laid-up employees up to a maximum of £2,500 a month, will require reform when current arrangements expire at the end of next month.
The Treasury cannot afford to spend £10bn-plus a month indefinitely. On the other hand, it would be self-defeating, having spent so heavily already, to squander the benefits by withdrawing support overnight. Even more jobs would lost instantly. The sooner Sunak rules out the “cliff-edge” option, the better.
Beyond that, though, the trade-offs are fiendishly difficult, as a few statistics from an Institute of Directors’ poll of its members illustrate. Only half thought they could operate at pre-crisis levels under physical distancing rules. More than one in five thought they could work at less than half capacity. And 53% of firms thought it would take more than a month to return to pre-lockdown levels of activity even if lockdown ended and demand returned to normal.
There is no painless way through that thicket, as Sunak understood when he placed the conditional “as far as possible” clause around his job-protection ambitions. Some sectors, such as the airline industry, will just emerge smaller and there’s no point pretending otherwise.
It should, however, be possible to ease transition elsewhere, even if the 80% rate of wage support has to be reduced gradually. The persuasive appeal from business is for flexibility. So allow full-time workers to return on a part-time basis with wages topped up by the state. And ditch the requirement for a furloughed worker to be rested for at least three weeks; companies may have little visibility on demand from one week to the next, so move to weekly or even daily arrangements.
Those technical tweaks are relatively easy to adopt; they’re open to abuse, but so is the current set-up. It is vital that Sunak gives details very soon on how a physically distant economy will be supported. Delay and uncertainty can also cost jobs.
Footasylum must be saved for the nation, or least for buyers of trainers and sportswear, says the Competition and Markets Authority. JD Sports, which bought its much-smaller rival for a mere £90m last year, must undo its purchase and find a buyer.
Peter Cowgill, the chairman of JD Sports, detected the influence of Sports Direct’s Mike Ashley at work. He’s probably wrong on that score because the CMA’s boffins are quite capable of coming up with odd decisions under their own steam.
Cowgill’s substantive grumble seems fair. Yes, as the CMA said, Footasylum is “a close competitor” with JD in the sense that both chains operate in the same market. But the more obviously anti-competitive forces are Nike and Adidas, both now acting as suppliers and direct-to-consumer online retailers.
Footasylum, remember, was struggling badly when JD swooped, so would-be buyers in the current Covid climate may be thin on the ground. If the only volunteer turns out to be Ashley, the CMA can hold yet another inquiry. This saga, though, seems a lot of fuss about very little.
The shareholder rebellion over boardroom pay at Ocado was 30% – a minority, but a significant minority. Indeed, it was bigger than last year’s 25%.
The online grocer has no intention of changing its ways on pay, as the chairman, Lord Rose, made clear in his peevish response. Since Ocado is currently the hottest stock in the FTSE 100 index, there will probably be zero consequences.
But let’s hope the broader message in the vote has been understood elsewhere: uncapped incentive schemes, such as the Ocado variety that paid £88m to four directors, should now be off-limits at public companies.