Outrage as families 'left out in the cold' by Rishi Sunak's £1bn COVID bailout

LONDON, ENGLAND - MARCH 03: Chancellor of the Exchequer, Rishi Sunak, puts on a face mask as he departs to deliver the annual Budget at 11 Downing Street on March 3, 2021 in London, England. The Chancellor, Rishi Sunak, presents his second budget to the House of Commons. He has pledged to protect jobs and livelihoods as the UK economy has faced crisis during the Coronavirus Pandemic. (Photo by Leon Neal/Getty Images)
Rishi Sunak's new £1bn 'support package' for ailing businesses has been slammed by economic think tanks and trade unions. (PA Images)

Rishi Sunak was subject to a fierce backlash on Tuesday after announcing £1bn in extra support for ailing businesses as the continuing surge in COVID-19 cases hit the economy.

The new package includes one-off grants for hospitality and leisure businesses of up to £6,000 per premises, as well as the Treasury covering the cost of statutory sick pay (SSP) for COVID-related absences for small and medium-sized business.

Read more: Independent businesses’ Christmas trade ‘decimated’ by government messaging

“We recognise that the spread of the Omicron variant means businesses in the hospitality and leisure sectors are facing huge uncertainty, at a crucial time," Sunak said. “Ultimately, the best thing we can do to support businesses is to get the virus under control, so I urge everyone to get boosted now.”

Soaring case numbers have hurt footfall in hospitality and leisure sectors hardest at what should have been their busiest time of the year, with mass cancellations and staff absences creating a nightmare before Christmas.

Chief Medical Officer for England Professor Chris Whitty (left) listens to Prime Minister Boris Johnson during a media briefing in Downing Street, London, on coronavirus (Covid-19). Picture date: Wednesday December 15, 2021.
Chief medical officer Chris Whitty and Boris Johnson have warned the public to exercise caution over the Christmas period. (PA Images)

While the government has not formally told people to cancel Christmas festivities, chief medical officer Chris Whitty told the public to "prioritise" their social interaction to those "most important" at a press conference last week.

And Boris Johnson's rhetoric has become more cautious, too, telling the public to "exercise caution as you go about your lives”. He has stopped short of introducing further COVID restrictions despite SAGE warning hospitalisations could reach 3,000 per day without new measures.

Read more: Omicron hits pre-Christmas shopping as fewer people visit UK high streets

The chancellor's new funding announcements have been slammed by some, who say the announcement does not go far enough for workers.

Alfie Stirling, director of research and chief economist at the New Economics Foundation, criticised Sunak's announcement for failing to deliver for workers – and their families – left at the sharp end of the pandemic.

"Even for business, today’s ‘support package’ is barely worth its name," he said. "But worse still, once again workers and families have been left out in the cold. It’s almost as if we have learned nothing from the past two years."

A quiet Christmas market in Covent Garden, London, as a rapid rise in Covid-19 cases has led to a surge in booking cancellations across the hospitality industry. Picture date: Thursday December 16, 2021.
A quiet Christmas market in Covent Garden as a rapid rise in COVID-19 cases has led to a surge in booking cancellations. (PA Images)

Stirling criticised the government's failure to return to furlough, and said the package now risks "impoverishing" families.

"There is no targeted furlough while other countries have kept theirs; UK statutory sick pay remains the weakest and least comprehensive among developed economies; and universal credit continues to be outstripped by the cost of living," he said.

Read more: 15 COVID hotspots as cases explode in London

"All three of these need to be addressed just as start. If not, people will be forced to choose between the health of their loved ones – and us all – and impoverishing their families."

The government's furlough scheme was a lifeline for many workers during the worst of the pandemic, and saw 80% of their salaries covered as large parts of the economy were shut down during lockdowns.

Chancellor of the Exchequer, Rishi Sunak during a press conference in 10 Downing Street, London, following the 2021 Budget in the House of Commons. Picture date: Wednesday March 3, 2021.
Sunak announced the furlough scheme at the beginning of the pandemic after large sections of the economy shutdown due to lockdown. It ended in October 2021. (PA Images)

Torsten Bell, chief executive of the Resolution Foundation, also criticised the new announcement.

"Targeted grant approach worked before because it helped cover non-labour costs of firms, while furlough covered labour costs AND protected workers incomes," he said on Twitter.

"Now there's nothing to help workers where hours are cut or jobs lost, or to incentive firms not to do those things."

He added: "Thoughts with many workers on zero or short hour contracts who rely on the fact that they normally work far more hours. They're getting completely stuffed this Christmas."

The Trades Union Congress (TUC), which represents 48 trade unions and has 4.4 million members, said the chancellor needed to "go back to the drawing board".

“Workers need help now to pay their bills," said TUC general secretary Frances O’Grady.

Read more: COVID: How do you book a booster jab?

“But the economic support measures announced today are not conditional on employers keeping workers on and covering their wages. And they do nothing to fix the gaping holes in our sick pay system."

Labour said the measures have come too late, and that Sunak should not have gone to California as businesses struggled with Omicron.

“Business support should have been announced when the Plan B changes were voted on last week but it has only happened after the chancellor was dragged back from California," the party said.

The announcements have been welcomed by some businesses, however.

Rain Newton-Smith, Confederation of British Industry (CBI) chief economist, said the new measures provided hospitality and leisure businesses with "breathing space", and that "the latest targeted package offers a fair variety of support to help keep businesses open".

An empty restaurant is seen in Soho. Restaurants have reported a huge drop in bookings due to fears over the growing number of COVID-19 cases as the Omicron variant spreads. (Photo by Vuk Valcic / SOPA Images/Sipa USA)
An empty restaurant in Soho in London. Restaurants have reported a huge drop in bookings due to fears over the growing number of COVID cases as the Omicron variant spreads. (PA Images)

However, she warned the government "must monitor the situation closely" to ensure "any new restrictions go in lock-step with further targeted cashflow support" to firms most in need.

Federation of Small Businesses (FSB) national chairman Mike Cherry echoed the CBI.

“These positive measures will help alleviate the intense pressures that small firms are currently under, and hopefully arrest a significant decline in confidence over this year," he said.

“We’ve always said that support needs to move in lockstep with restrictions, and this intervention will help give small businesses confidence that this is the approach government will be taking.”

When asked for comment, the Treasury pointed to today's announcements being about support for businesses most in need as well as the reintroduction of the SSP rebate scheme.

Watch: Sunak pledges additional £1bn in financial support for COVID-hit hospitality sector