Moving Trump-style to massively enhanced universal credit payments, with top-ups linked to retraining, frees up employed workers and gives them some measure of financial support through a harsh economic winter.
Hence it follows that the Chancellor won’t need his £1,000 furlough bonus any more. The Office for Budget Responsibility has already pencilled in an extra £13bn in benefit payouts over the next five years, most of which is accounted for by the extra UC cash.
That could be topped up with the £9.4bn estimated cost of the job retention bonus, and more besides, for a year.
On the other hand, employers could be incentivised to take on staff through cuts to their national insurance contributions and other tax breaks. Many of those laid off might use the financial breathing space to start businesses of their own; and there’s nothing to stop our wedding DJ starting up again next year if the pandemic eases.
If a vaccine was close, some kind of sector-by-sector furlough would be more attractive, even with the attendant risks of Government micromanaging individual parts of the economy.
But if one is unavailable until mid-2021, as most experts suggest, Sunak needs a new strategy.
A resurgent virus, and the fresh economic pain it will bring, gives him the political cover to extend the furlough if he chooses. But doing “the right thing” for the future of the economy should perhaps push the Chancellor down a harder road. I don’t envy him the choice.