Ending furlough may break the cross-party consensus in dealing with the coronavirus crisis

Labour’s response to Rishi Sunak’s statement on Thursday will be an important test of Keir Starmer’s policy, so far, of supporting the government’s response to the coronavirus crisis – or, at least, of supporting the policies while criticising their execution. 

Anneliese Dodds, the shadow chancellor, will have to decide whether to break with the bipartisan approach that has just about held, even though she and Starmer have both been highly critical of the detail. 

On Wednesday, the Labour leader said, “We support those measures,” when the prime minister announced early closing for pubs and restaurants. He went on to be rude about the government’s failure to listen to warnings, and its failure to act quickly enough to fix the testing system, but his essential criticism has been, all along, that the prime minister is trying to do the right thing; he is just not very good at it.  

The same goes for Sunak’s response to the economic catastrophe wrought by the virus. The chancellor did a fine job of co-opting Frances O’Grady, the general secretary of the TUC, to help design his furlough scheme, which meant that Labour’s support was guaranteed.  

The only criticism of the chancellor from Dodds has been that his huge state intervention isn’t well enough targeted. She has tried to avoid simply calling for more spending, instead aiming to persuade floating voters that Labour would be careful with taxpayers’ money by criticising £2.6bn of unnecessary spending on the jobs retention bonus. This is the scheme that gives employers a subsidy of £1,000 if they keep on a furloughed worker. Obviously, some of the money will go to employers who were planning to keep workers in their jobs anyway, but this is hardly wasted, and it would be impossible in any case to tell the jobs that were really at risk from those that were not.  

Criticism of this “cavalier” spending is a smokescreen for Labour’s demand for more public spending on job support for those in particularly hard-hit sectors. Starmer and Dodds have backed most elements of the chancellor’s huge intervention to try to protect jobs, while criticising at the edges and warning that the withdrawal of support in the future will create a series of cliff edges for businesses.

We may now be approaching the point at which party political differences will assert themselves. On the medical side of the coronavirus crisis, there is not much scope for ideology – although it is notable that Labour MPs and Labour voters tend to be in favour of more restrictive measures to limit social mixing than their Conservative equivalents.  

But on the economic consequences of the crisis, it seems only a matter of time before the deep difference of values will divide the parties again. Whether Labour is led by Jeremy Corbyn or Tony Blair, or someone in between such as Starmer, the party is always going to want more public spending than the Conservatives.  

At some point, Labour is going to argue for more generous public spending to keep unemployment down, and Starmer will accuse Johnson of being heartless and out of touch for tolerating whatever number of unemployed the Office for National Statistics has published by then.  

We are not there yet. Reports suggest that Sunak originally intended to make his statement on Wednesday, announcing new measures to follow the furlough scheme when it ends next month. It is possible that the chancellor decided at the last moment that he needed to be more generous – after the government legislated to close all pubs and restaurants at 10pm, which will put a lot of jobs at risk. It looks as if he will be canny enough to ensure that he has the support of the TUC and Labour for whatever “creative and imaginative schemes” the prime minister said he would come up with.  

The important question, though, is whether Starmer and Dodds will say it is not enough. Will they criticise at the edges, or will they say that the government ought to spend specified sums of additional public money on, for example, German-style subsidies for a shorter working week?  

Labour, now that it is under “a new leadership” as the slogan has it, is keen to convince us that it will not “splurge” public money (Dodds’s word, applied to the Conservatives). So if Sunak plays it right, the essentially bipartisan approach to corona-economics may continue for a while yet.