The government’s jobs retention scheme, where the state covers 80 per cent of people’s wages for those who cannot work during the crisis, has saved hundreds of thousands, if not millions of jobs.
But Unite has long said that there must be additional, strategic support for the thousands of businesses which have fallen through the gaps of already existing schemes and must navigate a circuitous path toward eventual recovery amid the biggest economic shock in centuries.
Unite and other unions have piled on the pressure on the government and now it appears as though they have listened.
On Monday (May 25), the Treasury said that the government now has an economic rescue plan in the works, dubbed Project Birch.
The plan, revealed to the Financial Times, will aim to rescue strategically important businesses from the brink of failure. The tailored bailouts would support businesses in industries such as aviation, steel and aerospace among others that are facing a particularly tough time.
While initially, chancellor Rishi Sunak said in a private letter that the government would be willing to be a lender of last resort to the aviation sector, it is understood that the bailout offer now applies to all sectors of the economy.
“In exceptional circumstances, where a viable company has exhausted all options and its failure would disproportionately harm the economy, we may consider support on a ‘last resort’ basis,” the Treasury told the Financial Times.
“As the British public would expect, we are putting in place sensible contingency planning and any such support would be on terms that protect the taxpayer.”
Although details of Project Birch have yet to be hashed out, it is expected that the government will only explore taking equity stakes in struggling companies as a last resort, and would first look to extend loans with taxpayers as the primary creditors. Other possibilities include loans that can later convert to equity.
Large businesses falling through the gaps
News of the government’s coronavirus business rescue plan comes as several large businesses in the UK are now in talks with the government over state aid.
Richard Branson’s airline Virgin Atlantic is now seeking a £500m emergency loan, while both Logan Air and Tata Steel are understood to be seeking government support as well.
Car manufacturer Jaguar Land Rover is now reportedly seeking a potential £1bn government loan following a plunge in sales amid the coronavirus epidemic.
While JLR has availed itself of the jobs retention scheme, placing thousands of its workers on furlough, it does not qualify for the Covid Corporate Financing Facility intended for large businesses because its current credit worthiness does not meet the criteria for the scheme.
Commenting on the news that JLR is now in talks over a government loan, Unite national officer for the automotive industries Des Quinn highlighted that it was important for companies like JLR to have access to the level of support they need to make it through the crisis.
“JLR, like some other companies, falls between the gaps of the various schemes the government has introduced to support businesses, employment and the economy in the longer term,” he said. “It is right that the government should widen its support to these important businesses, such as JLR, during the course of the pandemic.”
‘We have to see the details’
Labour’s shadow chancellor Anneliese Dodds emphasised that any government bailout of big business should only be extended under the condition workers are put first.
The support from the Birch Project, she said, “must be focused on retaining and increasing employment”.
“It must also build value for our country- with companies receiving support prevented from engaging in share buy-backs and dividend payments. And it must be in line with our commitments on climate and the natural environment,” she added.
“Other countries have imposed forward-looking conditions on support, and the UK should learn from their positive example.”
Unite assistant general secretary Steve Turner likewise welcomed that a rescue plan was in the works, but said the devil would be in the details.
“It’s very welcome news that a rescue plan for UK PLC is finally taking shape,” he said. “We have to see the details, of course, but as a trade union we have been working hard with our industrial partners to persuade government of the need for long-term support for core industries and to build our way out of this crisis, saving jobs and skills.
“There is no more time to lose if we are to prevent a tsunami of job losses from sweeping through communities this summer,” he added.
“We still need to ensure that proposed changes to the job retention scheme do not undermine a plan to recover and rebuild and that workers continue to get their wages. But if these moves put a financial floor under major employers and their vast supply chains then we have the beginnings of a plan taking shape.
“What we also need, and urgently, is phase two of the Job Retention Scheme, a recovery phase to assist us rebuilding our economy, supporting flexible and short-time working while we pull the economy out of its deep freeze and attempt to stimulate demand,” Turner went on to say.
“These measures must come quickly and go hand-in-hand with an immediate and strategic programme to create new green jobs as part of a just transition to replace those that we know will not be coming back.
“Recovery from this huge health and economic shock cannot be piecemeal. It has to be a national systematic effort, with the government, employers and unions working in partnership to repair and reshape our economy.”