Sunak faces pressure to support workers' pay

The government faced mounting pressure on Thursday to pay people unable to work because of the coronavirus crisis.

Senior figures from across the political spectrum said direct intervention by the state to keep workers in jobs and give them a living wage was urgently needed. At the moment workers who are ill are eligible for just £94.25 a week in statutory sick pay and those who are laid off have to apply for help through the slow universal credit system.

Gordon Brown, the former prime minister, said Chancellor Rishi Sunak should make support for businesses depend on companies keeping workers on. He also said the government should offer wage support to workers in need to emulate countries such as Norway which is paying 75% of wages up to almost £30,000 a year.

Conservative peer Simon Wolfson, who is the boss of Next, called on the government to subsidise the wages of retail workers unable to work because of store closures. He urged "clarity and speed" so that companies and workers know where they stand.

In the House of Commons, Labour and Tory MPs criticised the government for failing to act quickly. On Wednesday Prime Minister Boris Johnson said he was considering using a universal basic income to stop workers being plunged into poverty as the economy heads for a deep recession.

Former business secretary Greg Clark said the government should pay people's wages for the next few weeks through the tax system if their companies continued to employ them.

"Separate arrangements would need to be made for the self-employed, but at a stroke this would save people's jobs, save businesses and put an immediate end to the risk of contagion and help save the economy," Clark said. He said Sunak's package of £350bn in loans and grants to businesses was not enough.

Sunak has said he will work out a plan with unions and employers. Len McCluskey, who heads the large Unite union, said he wanted an urgent meeting with Sunak and that action was needed immediately.

"A comprehensive package of incomes support must be forthcoming by the end of this week or millions will fall into poverty," McCluskey said. "This will ruin our economy and take us into a recession economists say will be unlike anything seen before."

The Office for Budget Responsibility has urged Sunak to "spray" money to support the economy and to worry about the public finances later. The OBR said holding back risked long-term damage to the country's finances if thousands of businesses fold.

Ivan Petrella, associate professor of economics at Warwick Business School said: “So far, the government has put forward a fiscal package of a similar size to other European countries to support businesses, but it falls short of direct support to jobs. This is most likely the area where the government will have to intervene in the coming weeks if it aims at prevent a wave of lay-offs.”