Guarantee or subsidise wages, urges Starmer

Labour Party leadership candidate Keir Starmer
Stefan Rousseau/PA Archive/PA Images

Labour leadership candidate Keir Starmer has called for a national income guarantee scheme to limit the economic impact of the coronavirus.

He has urged the government to introduce a “bold, comprehensive package to protect the incomes of British workers”.

The government announced an emergency package of financial measures earlier this week, including loans and interest rate holidays for small businesses, but there has been criticism that this does not go far enough to protect jobs.

Under Starmer’s proposals, government-backed loans would include an agreement that those businesses will protect jobs as a condition of support; a ‘wage subsidy initiative’ so that businesses facing lay-offs due to the coronavirus can subsidise salaries; and statutory sick pay would be trebled to match the Living Wage (as recommended by the Living Wage Foundation), and extended to the self-employed.

He also called for ministers to “strengthen and expand the social security system at the earliest opportunity” as it is likely to face a deluge in new claims as more people face unemployment.

“Days into this crisis ministers are still several steps behind where they need to be in order to reassure people facing a loss of income,” he said. “Other countries across the world, such as Denmark, have shown what actions the government can take to protect people’s incomes.”

“The proposals I am setting out today would provide essential reassurance to people that their wages would be guaranteed during this crisis. Businesses would be incentivised to protect jobs, incomes would be protected and the social security system would be strengthened.

“These proposals are bold, but necessary. We are potentially days away from further social-distancing measures that will change British life. It is imperative that the government acts to support workers to buy food, pay the bills and cover the cost of living.”

The Danish government has said it will replace 75% of lost salaries.

This morning former business secretary Greg Clark called for the government to use the taxation system to subsidise workers’ pay if employers are able to keep staff on their books. Fellow Labour leadership contender Rebecca Long-Bailey has also called for the introduction of some form of universal basic income during the pandemic.

Think-tank the Resolution Foundation also today issued a number of recommendations as to how the government should protect workers impacted by the coronavirus.

They include:

  • Extending Statutory Sick Pay to those who earn under £118 a week and so are ineligible.
  • Introducing a Statutory Retention Pay scheme where people who are without work stay formally employed by their organisation and a significant amount of that salary is covered by the state. This could be around two-thirds of current salary or set at a flat rate.
  • Increasing Jobseeker’s Allowance (JSA), Employment Support Allowance (ESA), and the standard rate of Universal Credit (UC).

Chief executive Torsten Bell said: “The chancellor has said that he will do ‘whatever it takes’ to support the country through the coronavirus-induced economic shock. That commitment now needs to be extended to the millions of workers and their families whose livelihoods and living standards are affected by the shutdown.

“In order to avoid mass redundancies in affected sectors, new Statutory Retention Pay would allow firms to put workers on paid leave with the state paying them at least two thirds of their wages during the shutdown. This will ensure they can pick things up quickly when conditions improve.

“But the scale of the economic shock facing the country means that many families are going to rely on our social security safety net over the coming months – a safety net that has shrunk considerably over the past decade. To address this, the government should increase unemployment support by a third to £100 a week.

“This approach would show the government is committed to doing whatever it takes to support family budgets, and cushion the living standards hit from the wider economic shock.”

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