The COVID-19 Economic Response: is the Government moving beyond short-term thinking?

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post it notes saying 'sorry we are closed. COVID-19' © Photo from Anastasiia Chepinska on Unsplash

In October we highlighted the need for the Government’s COVID-19 response to move beyond erring on the side of “wait and see” – with iterative sets of announcements that seek to respond to the situation on the ground as it changes – to something more comprehensive for the longer term which is aimed at mitigating the worst impacts on the labour market.

Today marks a shift beyond short-term measures, with the Chancellor’s announcement that the Coronavirus Job Retention Scheme will be extended into March 2021, well past the expected 2nd December end date of the current lockdown restrictions in place across England. As before, the scheme will pay up to 80% of a worker’s wages, up to £2,500 a month. The Government will review the policy in January, and if economic conditions have sufficiently improved employers will be asked to partially contribute.

The Chancellor also confirmed in his speech to the Commons that grants under the Self-Employment Income Support Scheme will increase to 80% of previous earnings , up to a maximum of £7,500 over three months, lasting for three months until January. This is double the 40% that was planned a week ago, which was subsequently increased to 55% a few days later.

Increases of the upfront guarantee of funding for the devolved administrations from £14bn to £16bn, on top of their Spring Budget funding, was also announced. Today’s announcements come in addition to previously announced support including: cash grants of up to £3000 a month for businesses forced to close, £1.1 billion of funding to Local Authorities for further payments to businesses, and an extension of the mortgage payment holiday.

The move towards winding down general support towards a more locally targeted policy relied on the successful containment of the virus, underpinned by a more robust test, track and trace infrastructure than has ultimately been delivered to date. Therefore, it is positive to see the furlough scheme and support for the self-employed restored across the UK, allowing workers and businesses to move beyond firefighting with immediate challenges and re-start longer term planning.

However, it is unfortunate that these additional measures come shortly after announcements of over 7,200 redundancies from major employers including Sainsbury’s, John Lewis, Clarks, and Lloyds Banking Group. For workers already made redundant who haven’t been able to find a new job, the announcement’s today will be particularly tough to hear. Although they likely would have been eligible for support when the CJRS first came into place earlier this year, they won’t be this second time around.

Additionally, it is concerning that no changes were announced in terms of eligibility criteria, which suggests that the Government will continue to use the same criteria that has excluded 3 million people - including some freelancers, the recently self-employed, and Directors of limited companies - from accessing financial support.

Furthermore, there was no further clarity given on workers who may need to be furloughed because are clinically vulnerable. Therefore, what happens to workers in this situation will likely vary depending on the policies of individual employers.

Finally, there remain concerns regarding those on low pay, for whom even having 80% of their wages guaranteed will leave them facing a significant challenge to get by. This is particularly significant given that the level of support for the self-employed has been criticised for being overly generous to many people who do not need it.

So while today’s announcements do mark a welcome shift to a longer term support framework for workers and employers, there remain areas where the Government may yet need to go further in the months ahead. 


  • covid19
  • economy
  • furlough
  • unemployment


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