Equity and Fairness in a Pandemic.

THE 2020 BUDGET, delivered on 11 March, included measures to address the economic impact of the coronavirus lockdown. The budget envisaged that these impacts would be addressed by business rate cancellation and bridging loans for firms, along with some easing of the rules on Statutory Sick Pay (SSP). SSP is normally paid by the employer for up to twenty-eight weeks; the government would exceptionally cover the cost for the first two weeks. For the self-employed, for whom SSP is not available, rules on accessing Universal Credit and contributory Employment and Support Allowance were eased. Nothing else was said in the budget about Universal Credit, although it would supposedly provide the safety net for many. The inadequacy of these measures was soon apparent, forcing a frantic rethink at the Treasury. On 20 March, a ‘Plan for People’s Jobs and Incomes’ was announced by the Chancellor. The headline measure was the Job Retention Scheme (JRS), under which employees who could not work because of the lockdown could continue to be paid, with 80 per cent of their salaries up to £2,500 per month being funded by the government, via the employer. Universal Credit was also boosted by around £20 per week for the coming year, but its income and assets tests were not eased. Thus, a furloughed worker can receive £2,500 per month from the state, while a single person on Universal Credit receives around £400 (plus a contribution to rent, if renting), and a third, with too much saved to qualify for Universal Credit, gets nothing. Some of these inequities may be inevitable given the conditions of emergency, but this should not stop us from asking questions and learning lessons for building stronger institutions before the next crisis. This we singularly failed to do after the 2008 financial crisis. The response to that crisis was marked by vast differences in the protection against loss provided by the state to different classes of firms and people. Notoriously, the banks received substantial injections of capital and sheltered under abundant central bank liquidity, but nonetheless paid inflated salaries and bonuses, while holders of financial assets benefitted from central banks’ support for markets. Monetary profligacy was matched by fiscal austerity, which brought steady erosion in welfare benefits in real terms, outright cuts in tax credits, and a devastating reduction in central government funding for local authorities. While a palpable sense of inequity fuelled political alienation and a general sense of ‘them and us’, it has proved difficult to nail the nature and scale of social injustice in the response to the financial crisis. Doing the accounting has been difficult: guarantees were potentially costly, but were not necessarily called, and central banks collected substantial fees for some of the insurance they provided. But most important, as the Bank of England has loftily explained, it would have been worse for everyone if it had not taken its measures. Financial companies with the good fortune to be located in the monetary world of risk are thus located in a different value system to everyone else, where bailouts can be justified by their wider economic benefits despite endemic moral hazard. We see some of the same logic—that wider economic benefits justify badly distributed government beneficence—in this crisis, but these claims are easier to dissect this time around. The funds are coming from the same budget, instead of being hidden behind the veil of monetary policy, and they are going directly to their final beneficiaries in households, instead of swilling around the financial markets, covering the tracks of where the benefits accrue. The Political Quarterly, Vol. 91, No. 2, April–June 2020