No sense of urgency from Chancellor on coronavirus - John McDonnell responds to Treasury inaction

John McDonnell MP, Labour’s Shadow Chancellor, responding to Chancellor Rishi Sunak’s inaction on coronavirus, said:

“There is no sense of urgency from the Chancellor in his response to the potential economic impacts of coronavirus. We cannot wait another week until the budget to have a plan published. People, businesses and the markets need clarity now that the government has a comprehensive economic plan in place.”

“We awaited a detailed economic plan but the sum total of economic thinking in the Government’s coronavirus action plan is a restatement of existing HMRC policy.”

“The Chancellor has failed  to outline how he will respond to potential consequences for production, consumption, and GDP, or provide support for vulnerable workers.”

“The public will be disappointed that the Chancellor does not seem to appreciate the seriousness of the situation facing the economy, and he must urgently issue a plan from a Treasury perspective of the kind that Labour published on Monday.”

Ends

Notes to Editors:

·         The Government’s coronavirus action plan contained zero references to the Treasury or Chancellor, and contained only two sentences on how businesses facing cash flow issues could use HMRC’s existing Time to Pay system (see https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/869827/Coronavirus_action_plan_-_a_guide_to_what_you_can_expect_across_the_UK.pdf at p. 19). The action plan also advised businesses to “build their own resilience” (p. 20).

·         Labour’s five point action plan on the economic impacts of coronavirus was published on Monday afternoon and is reproduced in full below:

An Action Plan on Coronavirus: Recommendations for a Series of Actions that Should be Taken by the Chancellor

1.      Coordinating Assessments of Potential Impacts

• The Chancellor should urgently convene a meeting of major national business organisations and trade union representatives to review demand and supply shocks so far and likely further impacts
• The Chancellor should commission immediate briefings on potential economic impacts, working in concert with the Bank of England and the Office for Budget Responsibility – in particular focusing on consequences for production, consumption, and GDP, and reviewing stress testing data to consider the resilience of the financial system 

2.      Departmental Assessments and Resource Planning

• The Chancellor should convene officials in relevantly affected departments (especially the Department of Health and Social Care, BEIS, and the Home Office) to review department-specific impacts
• Working with these officials, the Chancellor ought to prepare a funding plan for increased resourcing for agencies and departments, using a variety of scenarios taking into account different possible levels of severity of outbreak

3.      Strategic Interventions in the Economy

• The Chancellor should reassure the public and markets that the Government stands ready to intervene, acknowledging the limited effectiveness of monetary policy and highlighting the possible need for further fiscal measures (including fiscal stimulus) to overcome liquidity challenges and assist in tackling short-term demand and supply problems
• The Chancellor should work with officials to prepare support plans for vulnerable groups likely to be particularly affected by any outbreak, including families of individuals who have contracted the virus, and households where self-isolation and sick leave are required

4.      Workforce Protections and Support

• In conjunction with the BEIS Secretary and Department, the Chancellor should draft and introduce legislation providing protections for workers, including paid sick leave guarantees for all workers from day one and sick pay for self-isolation
• The Chancellor should consult regularly with trade unions to receive up-to-date information on further measures that might be necessary

5.      International Coordination

• The Chancellor must set up regular meetings with the WHO, OECD, and other expert institutions to receive briefings on international impacts
• The Chancellor should set up regular channels of communication with other relevantly situated ministers of finance to ensure coordinated international action, under the auspices of major international institutions and bodies – including a group under United Nations oversight to coordinate the global economic response to coronavirus