Coronavirus: Government ready to offer ‘bespoke’ bailouts to major companies hit by virus, says chancellor

The government is preparing to change legislation to enable it to use taxpayers’ money to prop up major companies under threat due to coronavirus, chancellor Rishi Sunak has said.

Speaking to the House of Commons Treasury Committee, the chancellor said he was ready to deliver “bespoke” bailouts to individual companies hit by the unprecedented restrictions on activity, but refused to say whether airlines and airports could be among those to benefit.

Mr Sunak came under attack from Labour MPs who told him the government was “way behind” countries like Sweden and Norway in support for the low-paid, renters and workers whose jobs are at risk in the crisis.

He indicated that a package of further measures for individuals and families was on its way.

And he did not rule out the option of a “reverse national insurance” scheme under which employers would effectively be paid by the state to keep people in work, telling the committee only: “We are looking at all potential measures to meet the objectives we have set, which are to provide cashflow support to businesses and fundamentally to preserve employment and productive capacity.”

The chancellor rejected suggestions that his £350bn package of support for business, announced on Tuesday, was less significant than an earlier intervention by France’s Emmanuel Macron, who has promised that no French business will go bankrupt because of the virus.

But he made clear that further measures will be announced, telling the cross-party committee that he had asked cabinet ministers to speak with businesses, unions and local authorities to find out where more support is needed, and insisting: “No-one is resting on their laurels.”

Mr Sunak said he was looking to amend clauses in the Industrial Development Act which impose a cap on the size of loans and grants he can offer to individual companies which require bailing out.

“They have an existing set of headroom in those schemes already, but I wanted to make sure that should I need more or should I want to do something different - particularly when it comes to a bespoke larger company intervention, should that become necessary - that I have the tools at my disposal,” he told the committee.

Mr Sunak refused to name companies or sectors which he believes might need propping up, though he stressed that he believes banks will not be on the list as the resilience of the sector is currently “very strong”.

He said: “We stand ready to do what it takes. There are some very large companies in particular sectors that might need bespoke support.

“There may well be an argument for the taxpayer, through the state, to step in and provide some short-term liquidity or other financing support to a private business.”

Ms Sunak said he was very aware that the taxpayer should be “compensated properly” in the longer run for any support offered to private companies, insisting that he would not create a “heads they win, tails we lose” situation in businesses’ favour.

Labour committee member Liz Kendall told the chancellor that his package so far had been skewed against ordinary workers, who were being denied the protections offered in other European countries like Norway, which was offering 80 per cent of income to the self-employed, and Sweden, which was giving 90 per cent to those who are laid off.

“You haven't even said that you will even consider raising Universal Credit,” Ms Kendall told the chancellor. “And however much we try and preserve employment, more people are going to be unemployed.”

She asked him: “Are you considering helping people with their outgoings, like paying their council tax or their utility bills? isn't the truth that we have not done enough and we are way behind what other countries are doing? And my question to you is Why?”

She dismissed the £500 million “hardship fund” offered to local authorities as “less than the amount that was cut from council tax benefit when it was devolved”, and said the UK response was “way behind” France.

“Macron did all of this at the same time, and this government is way behind,” said Ms Kendall.

But Mr Sunak responded: “Factually, I think the numbers would not support that. What he announced was a loan guarantee scheme of €300 billion. We’ve got a loan guarantee scheme of £330 billion, which is more.

“He’s also only giving €1,000 grants to small businesses, not £10,000, not £25,000. So I think it's worth looking at it in in the totality … The totality of what we're doing relative to almost any other large economy thus far is very significant.”