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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