Rishi Sunak no more bailouts

[Elpresidente29]

He said government cannot go on like this...

If they are going to stop furlough pay they are going to have to allow us to go back to work. It's as simple as that. We have to work to live.

Perhaps the most obvious statement ever made or repeated. Of course we can’t go on like this. No one wants to stay at home, to lose their job, or for the country to be bankrupt. Equally we don’t want 1000+ extra deaths every day for 12- 18 months.

We will come out of the lockdown better placed to manage the health risks. But people have to accept health risk and the need to protect the few by the many. For those who don’t want to do this, then I’m ok with them opting out as long as they don’t expect the public purse to pick up the cost. That applies to public and private sector jobs.

Not many people on furlough cous survive on UC rates. It's designed to cripple and punish the unemployed and only cover absolute basics. £950-£1000ish a month for a single parent with 1 child, that likely wouldn't cover a lot of people's car, council tax and phone payments a month, let lone rent, insurance, food etc etc.

Can't survive on a £1000 per month - you realise that is wages for some people?

I suspect those who normally aren’t effected much by recessions (pensioners, public sector workers) are going to get a very sharp wake up call this time. And soon.

How so?

I’m not particularly a fan of this government. But fighting over what should it shouldn’t have happened over furlough isn’t helpful.

In a unprecedented crisis they came up with something that prevented many businesses hitting the wall immediately. That was a positive. Sure they didn’t get all the details right. Would anyone have?

Now we have the following problems on our hands.

Demand in many industries has fallen through the floor.

Some of that is because industries have been forced to shut down and when reopened will have to operate in very different circumstances.

Some of it is because people won’t want to spend money right now.

Many industries are in deep shit for a looong time to come (see travel).

Many people losing their jobs will have been well paid and have significant outgoings they can’t easily decrease.

Tax receipts to the exchequer are tanking and will continue to.

The problem is global.

This is going to take some creative, bold, complex thinking to get out of.

What a thought-out and detailed opening post.

YABU

How so?

Tax receipts to the exchequer are tanking. Funding basic public services will be a big challenge.

I don't think it's 'moronic' to say the £10,000 grants were not needed by some businesses.

£10,000 is more than our small business makes in a year. We closed for three weeks and furloughed our one member of staff. Then we reopened last Thursday.

well people won’t have a choice ! Is they clearer ?

Clear that you're hard of thinking.

People that have been earning £3k a month suddenly on £900 a month... What do you think will happen? They'll just shop at Aldi? Take in ironing? Buy a Mumsnet chicken? Are you really that short sighted?

Let me be clear..
Mortgages would go unpaid.
Car payments would be skipped.
Gas and electric would be skipped.
So on and so on...
People would prioritise food and feeding their kids. The millions of furloughed population would be thrust into destitution overnight.

So putting everyone on UC rates leads to incredible economic catastrophe. Putting people on actual UC leads to long pause between payments and economic and social catastrophe. So putting everyone on UC rates is a stupid idea, probably the worst thing the Government could do.

He's absolutely right. There is no bottomless pit of money. The government did what it could in exceptional circumstances for 8 to 12 weeks. They cannot continue to fund people to sit at home forever.

It's not surprising, but it's not unique to the UK either. The entire global economy is struggling because of this.

If the government is going to force businesses to close, they need to be have a system in place to support the employees of those businesses. But that's going to cost a fortune. But it is what it is.

Bailouts might be painful in the short term but save more pain in the longer term.

For example, the government is rejecting calls to bail out universities, who are facing a catastrophic loss of income. They admit that some universities might go under. The likes of Oxbridge will be fine but in some towns, the university is a major source of local jobs and revenue. If it goes under, that means huge long-term costs, in benefits and other support to local people.

Tax receipts to the exchequer are tanking. Funding basic public services will be a big challenge.

Yeah but they're not exactly going to reduce the state pension and give public sector workers pay cuts, are they?

Can't survive on a £1000 per month - you realise that is wages for some people?

You really are beating this point aren't you?

I am on UC, I survive on £950 a month. My bills are tailored to that £950 a month.
Rent a social housing house, no phone, no car payment, no expensive phones, no TV license, no sky, no HP on sofas and kitchens etc etc etc.

Someone earning £3k a month will tailor their outgoings to their income. You can't expect people to suddenly drop 90% of their income a month and be fine.
Is that really so hard to grasp?
I can't guarantee some people are struggling losing just %15 of their income.

What's the AIBU question here?

If more than half are being bankrolled of course it cannot go on. There are the usual benefits for people with no savings etc (Universal Credit) that for many years people have said provide the means to buy widescreen tv's/phone's etc and all the things people have moaned about over the years.... it will be a wake up call to some that UC is not a rosy life BUT the furlough scheme cannot be sustained long term IMO the country has to start working again with safety measures/social distancing as much as possible.

Sadly some industries just cannot return yet maybe redeploy staff... the fruit still needs picking/vegetables harvesting etc... yes I've seen the arguments for why it is beneath some/hard work etc....Seems madness to import labour when we have people here that need to work that cannot. Obviously not single mums/disabled/elderly/vulnerable etc.... just the fitter healthier ones who cannot work in bars/restaurants etc anymore

Yeah but they're not exactly going to reduce the state pension and give public sector workers pay cuts, are they?

I’d say they’ll have to consider both of those, yes. Depending on the length and severity of the crisis.

The thing is that it doesn’t really matter who is and isn’t deserving, it’s a massive cash injection into the economy. For some this means that they’ll just about survive , for others it means they’ll still have the confidence to blow money on a new TV/car/whatever this year, which will in turn keep people in work and the economy going.

This is from the BBC article linked earlier. The UK's benefits bill prior to any of this, circa 2019 was 100 billion.

^Paying benefits to people of working age is a big part of what the government does. In fact, it spends more on these benefits than it does on education or national defence and policing.
They account for roughly £1 in every £8 the government spends, or about £100bn a year. This is on top of the £120bn that is spent on benefits for pensioners. A look at the size of the bill and who gets these benefits reveals big changes over time. Most people will receive benefits
There are about 1.8 million households of working age who get at least 80% of their income from benefits. But there are two reasons why the system is far wider than this. First, many more households get smaller income top-ups from it.
About half of all working-age households currently receive some benefits. Even excluding child benefit - which all but the highest-income families are eligible for - the figure is about one in three^

Lots of people are still working in mw jobs to pay taxes so some people can sit at home getting 80% of their wage ? That’s wrong on so many levels

If you’re furloughed then the people still working ARE paying you . If people were earning more than 2.5k x2 a month and spent it all then they’re the stupid ones ?

This bears no relation to reality. Tax credit/universal credit/housing benefit is around £60 billion.

42% of adults pay no tax.

The top 1% pay 30% of all income tax.

On NMW even working full time total tax (employee/employer NI, income tax) is only £2330).

On no possible planet do taxes levied on the lowest paid even fund the benefits paid to them, let alone pay furlough payments.

A low-paid family can receive £20,000+/year in benefits which has NOT been stopped, and the taxes they pay won't even begin to approach this.

Note also that (unless we live in la-la land), that the furlough is capped at £2,000/month, whereas the net contributors to the UK's tax bill are earning MUCH more than that.

Essentially higher rate tax payers are almost certainly net tax payers, and while single people on NMW pay tax and do not necessarily receive benefits, they do NOT cover the public spending (£9,500 per person per year), let alone, ludicrously, cover furlough payments totalling tens of billions of pounds.

The fact is NOBODY is paying the furlough. It's borrowed money that will be re-paid by current university students, children, etc. who have NO RISK WHATSOEVER from coronavirus. In other words they (not the NMW, the higher earners) will foot the bill of tens of billions of pounds to save some thousands of ageing (mostly) men.

Of course it isn't sustainable. It was intended for small and struggling businesses to be able to pay their staff so they didn't collapse. Unfortunately the 'rules' were fairly open, and many businesses who didn't actually have to close, and those who can well afford to pay their staff have opted in.

He's absolutely right. There is no bottomless pit of money. The government did what it could in exceptional circumstances for 8 to 12 weeks. They cannot continue to fund people to sit at home forever.

The only alternatives are to open up childcare providers and schools, let everyone back to work and tell those most at risk to isolate or to go into some sort of tyrannical state with the police/army enforcing lockdown rules.

The simple fact is lockdown is only working because furlough allows so many people to observe it. You make it a choice between feeding your family/losing your home or observing the lockdown, lockdown loses every single time.

I suspect those who normally aren’t effected much by recessions (pensioners, public sector workers) are going to get a very sharp wake up call this time. And soon.

I doubt they will be cutting the state pension amount, and there may be some redundancies in the public sector, which is nothing new. So what do you envisage happening?

You really are beating this point aren't you? I suspect many psoers will

I am on UC, I survive on £950 a month. My bills are tailored to that £950 a month. As you said, this would happen to thousands (hundreds of thousands?) of people overnight. They would have no time at all to shed unecessary spending, to re arrange credit agreements, etc. They would be plunged into enormous debt instantly.

And the companies they all owed that money too... they would also be devastated by the suden and irretrievable economic loss. And their creditors.. and their creditors...

And on it would rumble.

@LaurieMarlow surely public sector paycuts = less tax!

It's borrowed money that will be re-paid by current university students, children, etc. who have NO RISK WHATSOEVER from coronavirus. In other words they (not the NMW, the higher earners) will foot the bill of tens of billions of pounds

This is what worries me. I fear for our children's futures