Thursday, 2 April 2020

Maybe it will take six tries...

It was entirely predictable that the Chancellor’s plans for dealing with the current crisis would rapidly unravel in the real world and, sadly, it is fairly predictable that his fifth try at a budget (due later today, I believe) will fail to get to grips with the issue – I suspect it will take at least a sixth go before he gets it right.  The problems with what he’s announced to date are not with the scale of his proposals so much as with the delivery mechanism and the consequent timescales.  Delivering cash to businesses and individuals who need it has been made contingent on three things, all of which have an impact on timescales.
The first is that it is largely being delivered through the banks, all of whom have their own lending criteria which need to be satisfied – the approach of threatening them with a big stick, as the Business Secretary appeared to be doing yesterday, doesn’t overcome their requirement to protect the viability of their own businesses.  The second is that it depends on businesses ‘doing the right thing’ and agreeing to keep staff on the payroll, even if there is no work for them to do.  Many are simply not playing ball, either because they don’t want to, or simply because they can’t.  And the third is that it depends on the submission of applications, which need to be evaluated and considered.  The net effect is that, whilst the scale of the cash which could be made available may be of the right order (although there are always questions of detail), the timescale of delivery depends on an assumption that businesses and individuals can somehow muddle along for three months before getting the cash.  That isn’t a problem, I’m pretty sure, in the social circles in which the Chancellor moves, but it isn’t the real world faced by most.
What is needed is an urgent delivery of cash to people and businesses now, not in a few months’ time.  The need to ensure that no cash goes to the ‘wrong’ beneficiaries is driving a process which means that the ‘right’ beneficiaries aren’t getting it either.  Better to run the risk of giving it to all and reclaiming any excess later than reduce people and businesses to ruin first and then try and recover later.  It isn’t, though, an easy thing to do – the government doesn’t have all the information that it needs to get cash to everyone, or even all businesses (although the second is easier than the first), but waiting until it can do the job ‘properly’ for everyone is equivalent to doing nothing for anyone.
I’ve long been attracted by the idea of a universal basic income (UBI), and the idea has been promoted by Plaid again this week as a potential solution in Wales.  There are some not insignificant issues of detail which would need resolution, but I don’t doubt that if such a system had been in place before the virus came along, we would be much better placed to protect people now than is currently the case.  That isn’t the same thing, however, as trying to introduce one in the middle of the current crisis. It seems to me that advocates of such a solution are underestimating the degree of change needed in order to implement UBI.  Merely identifying who should receive it and how they can be paid (collecting bank account details for 50 million people is no small ask even if there existed a list of names and addresses in a useable form – and around 10% have no bank account anyway) is a task which a civil service at full strength would struggle to undertake rapidly, let alone one depleted by sickness.
The question facing us now isn’t designing a perfect long-term solution (although we’ll need one in due course so we’re not caught unawares by the next pandemic) but getting cash to as many as possible as quickly as possible.  That means using existing systems and processes as far as possible, but getting rid of the requirement for applications, making the payments automatic, and recovering any over-payments later.  That would also help to free up resources in the short term to deal with the exceptions (such as the million applying for immediate universal credit) who are going to be increasingly desperate, by making emergency payments to them.  It depends, first and foremost, on the Chancellor abandoning his obsession with not giving money to anyone 'who doesn’t need it'.  I’m not convinced that he’s going to get there again today.

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