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      in UK Politics

      Rishi Sunak's 'flawed' job support scheme puts three million jobs at risk, Labour warns

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      The jobs of almost three million people working for small businesses are at risk because of Rishi Sunak’s “flawed” job support scheme, Labour has warned.Shadow chancellor Annelise Dodds accused the chancellor of “pulling up the drawbridge” on workers who had put their faith in him and forcing employers to choose which staff to keep and which to fire.Thursday marks a critical deadline for jobs as it is one month until the furlough scheme ends and firms that wish to make 20 to 100 staff redundant must start 30-day consultations or face paying more in wages.The new scheme that replaces furlough incentivises employers in financial trouble to sack staff by making it more expensive to keep two people on reduced hours than to sack one and keep the other.Viable businesses that need support to cope with restrictions imposed on them by the government now face tough decisions.
      “They pinned their hopes on the Chancellor to deliver, but he’s pulling up the drawbridge at the worst possible time,” Ms Dodds said.
      Read more“This wasn’t by accident – it was by design. This sink or swim mentality is a throwback to the worst days of Thatcher, and just like in the 1980s people on the lowest incomes will pay the highest price.”
      Some 2.8 million people working for small and medium-sized firms were furloughed under the Job Retention Scheme, Labour estimates.
      While many of those will have since been brought back to work, new national restrictions imposed last week, as well as local lockdowns across much of the North of England mean that around 133,000 SMEs cannot operate at all or are trading at reduced capacity, according to the party’s figures.Restaurants, licensed clubs and event operators are among those worst affected.
      Over a million SMEs are also still experiencing a fall in turnover, with approximately 310,000 turning over less than half what they did over the same period last year.  Labour calculates that bringing back one bar manager full-time will cost £455.30 per week, but it would cost £610.89 for the same bar to bring back two workers for half their working week, a difference of £155.60  Ms Dodds called for an urgent meeting with her opposite number to discuss the scheme and better support for workers.Citizens Advice warned of a “bleak winter” after a sharp rise in the number of callers worried about losing their job when the furlough scheme ends.Read moreAndy Gillett, a telephone advice manager at Citizens Advice Blackpool, says: “Work worries are really ramping up. With the end of the furlough scheme in just a few short weeks, a lot of people feel like they’re in the waiting room for a redundancy.
      “There’s a sense of underlying anxiety, but at the same time people are trying to be practical, for example asking how they’d go about claiming benefits or what they can do about their bills if they suddenly lose their income.
      “The hardest thing is people saying that if they lose their job there won’t easily be another to go into – for many, that’s the reality of the labour market.”
      Dame Gillian Guy, Chief Executive of Citizens Advice, said:  “The furlough scheme has been an extraordinary intervention, but as it draws to a close we could face a bleak winter of redundancies.
      “The Chancellor has acknowledged that the new Job Support Scheme won’t protect every job. While people look for work it’s critical our benefits system provides a strong enough safety net.
      “Making the £20 uplift to Universal Credit permanent would provide some much-needed security as we weather this storm.” More

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      in World Politics

      Mauritania’s Fading Promise and Uncertain Future

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      Mauritania is rarely in the news. A member of the Arab League, it shares with its southern neighbor Senegal a large offshore gas field that promises to bring a potentially huge windfall to the impoverished northwest African nation. The Greater Tortue Ahmeyim field sits in the Atlantic Ocean off the coast of the two countries at a depth of 2,850 meters. According to BP, which is invested heavily in the field, it has an estimated 15 trillion cubic feet of gas and a 30-year life span.

      The company signed a partnership deal in late 2016 with Kosmos Energy to acquire what it described as “a significant working interest, including operatorship, of Kosmos’ exploration blocks in Mauritania and Senegal.” BP’s working interest in Mauritania amounts to 62%, with Kosmos holding 28% and the Mauritanian Society of Hydrocarbons and Mining Heritage the remaining 10%.

      Guyana’s Bright Future Is Under Threat

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      BP says it is committed to sustainable development and promised a variety of programs to train Mauritanians, create jobs, contract local companies and build third-party spending with those companies. It has made further commitments to health and education projects, social development, capability building and livelihood and economic development.

      Basket of Worries

      But with the gas market depressed by a combination of COVID-19 and unusually warm winters in Europe, the bright hopes for Tortue Ahmeyim are already starting to fade. The initial goal of a staggered launch in three phases in 2020 to bring the field to full capacity by 2025 has been shelved. Phase one is now pushed back to the first half of 2023, with the Middle East Economic Survey (MEES) quoting Kosmos CEO Andy Inglis in May as saying that a final investment decision on phases two and three will not now be considered “until post-2023 when we’ve got Phase 1 onstream.” The goal of reaching full capacity is pushed back toward the end of the decade.

      Embed from Getty Images

      What may be more unsettling for the government of President Mohamed Ould Ghazouani was BP’s announcement in the summer that it will slash oil and gas output by 40% over the next decade. That was followed by the 14 September release of the company’s Energy Outlook 2020 that presented scenarios where peak oil demand had already passed or would pass by the middle of the decade. It is important to note that, presenting the Outlook, BP’s chief economist, Spencer Dale, underlined that “The role of the Energy Outlook is not to predict or forecast how the ‎energy system is likely to change over time. We can’t predict the future; all the scenarios ‎discussed in this year’s Outlook will be wrong.” That may be cold comfort to President Ould Ghazouani.

      The hard fact is that early ebullience about the potential of the Tortue Ahmeyim project by its consortium backers has now been replaced with an abundance of caution and with brakes strongly applied. So much so that James Cockayne, of MEES, opined: “The likelihood of these developments ever seeing the light of day, at least under BP’s stewardship, needs to be considered anew in the light of the latest far-reaching strategy shift from the UK major.” His gloomy conclusion was that “Mauritania’s hopes of gas riches appear to be hanging by a thread.”

      The president has another issue weighing heavy in his basket of worries, and that is the question of normalization with Israel. Commentators have anticipated that Mauritania would join the UAE and Bahrain in recognizing Israel, especially as Tel Aviv and Nouakchott had diplomatic relations from 1999 to 2009. In 2009, Mauritania froze relations in protest at Israeli attacks on Gaza.

      The UAE’s Mohammed bin Zayed, the Abu Dhabi crown prince and de facto ruler, has been the driving force in Arab normalization with Israel. With Ould Ghazouani in attendance in Abu Dhabi, in February bin Zayed announced $2 billion in aid. For a country with a GDP that the World Bank estimated in 2018 stood at just over $5 billion, that sort of largesse buys a lot of influence.

      Normalization Bandwagon

      But the president is well aware of the strong sentiment within the country for the Palestinian cause. Tewassoul, the opposition Islamist party, was instrumental in 2009 in bringing protesters onto the streets of the capital demanding an end to diplomatic links with the Israelis. The party also backed the candidacy of Sidi Mohamed Ould Boubacar in last year’s presidential election. Ould Boubacar took 18 % of the vote, while another candidate and leader of the anti-slavery movement, Biran Dah Abeid, scored a similar percentage. Ould Ghazouani won with 52%, with the opposition denouncing the election as rigged.

      Although Mauritania officially outlawed slavery in 1981, the practice continues, with approximately 90,000 out of a population of 4.6 million enslaved. That situation caused US President Donald Trump’s administration to revoke Mauritania’s preferred trade status under the African Growth and Opportunity Act. Justifying his decision, Trump cited the fact that “Mauritania has made insufficient progress toward combating forced labor, specifically, the scourge of hereditary slavery.”

      It may be that if he wins reelection, Trump will revisit that decision and offer to drop the revocation as a carrot to bring Mauritania onto the normalization bandwagon. That would, of course, do nothing to hasten the end of slavery. As Human Rights Watch (HRW) notes in its World Report 2020, the Mauritanian government is doing precious little itself: “According to the 2019 US State Department Trafficking in Persons Report, Mauritania investigated four cases, prosecuted one alleged trafficker, but did not convict any.” HRW also detailed numerous human rights abuses, the stifling of free speech and the harassment and arrest of opposition politicians and activists, including the anti-slavery movement leader and presidential candidate Biran Dah Abeid.

      There is no doubt that the promise of economic gain that Tortue Ahmeyim represents could go some way toward steering Mauritania onto a modernizing path. Though the 2019 presidential election was challenged by the opposition, it did represent the first peaceful transition in the country’s long history of military coups after gaining independence from France in 1960. That, coupled with the windfall the gas field could bring, is a step in the right direction. But if the Tortue Ahmeyim project falters, so too will Mauritania’s chances for a better future.

      *[This article was originally published by Arab Digest.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in UK Politics

      Sunak’s plaster is no cure. It can’t hide the bigger problems

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      Whenever I think of Mrs Thatcher I come back to that picture, the one of her wandering across an industrial wasteland. It must be the northerner in me, but I can’t forget how the iconic photo was accompanied by not much at all. The emptiness of the landscape was matched by her sheer absence of a shared understanding and compassion, call it empathy.She had many qualities but Thatcher failed to see beyond the demon she held responsible for the desolation: the trade unions. Defeat them, the prime minister reasoned, and all would be well: Britain would go on to prosper, its economy would flourish, hidden entrepreneurs would come to the fore and shine.Hammer them, she certainly did. And while in many respects her crusade was brave and correct – the country really was being shackled – once victory had been secured, it was accompanied by nothing. Unforgivably it was followed by neglect. More

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      in UK Politics

      No-deal Brexit will lead to £1.3 billion a year rise in food and drink tariffs

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      Supermarket shoppers will face up to £1.3 billion tariff per year on food and drink unless the government secures a free-trade deal with the EU.New analysis from the UK’s leading trade body, The British Retail Consortium (BRC), reveals shoppers will continue to face higher prices for their weekly shop.According to the trade body, these mammoth tariffs can be mitigated if a deal is agreed before Christmas. The report says retailers will have “nowhere to go other than to raise the price of food” while many non-food retailers will face similar “large tariff bills” for EU-sourced products.Watch moreAndrew Opie, director of food and sustainability at the BRC, said: “Unless we negotiate a zero-tariff deal with the EU, the public will face higher prices for their weekly shop.”He added: “This would prevent harm to shoppers, retailers and the wider economy.” The EU is the largest UK trading partner, where four-fifths of the UK’s food imports are sourced.Watch moreThe new tariff schedule will be implemented from 1 January next year if a deal cannot be agreed.The retail body analysed the UK’s new tariff schedule, finding that 85 per cent of foods imported from the EU will face tariffs of more than 5 per cent. Read moreIt is thought that poorer households will be hit hardest as they spend a higher proportion of income on essentials. David Potts, CEO of Morrisons, has warned the government to secure a tariff-free deal to mitigate this rise in the price of groceries.The schedule will see a 48 per cent tariff on minced beef, 16 per cent on cucumbers and 10 per cent on lettuce.Read moreEU goods such as wine from Italy, France and Spain will become £2 more expensive per bottle while cheese will see up to a pound price increase. There will be a 10 per cent tariff on cars made in Europe.The latest monthly retail price index for August revealed fresh food prices increased by 0.2 per cent, while inflation for ambient food rose to 2.8 per cent for the month.Watch moreMr Opie said: “UK consumers have benefited from great value, quality and choice of food thanks to our ability to trade tariff-free with the EU. There is no time to waste, the UK and EU must hammer out a final arrangement as soon as possible.”Watch moreHe added: “Coronavirus is already making life hard for consumers, particularly those on lower incomes, and a no-deal Brexit will have a massive impact on their ability to afford essential goods.”It reported that a “no-deal Brexit would represent a further major shock to the UK economy” with a “major set of changes” to the country’s economic relationship with the EU. More

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      in UK Politics

      Will Rishi Sunak’s new job support scheme be enough to avert mass unemployment?

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      Whatever you do, don’t call it an extension. Having insisted for months that the furlough scheme would end in November come what may Rishi Sunak was never going to stand up in the House of Commons to announce a simple roll-over of the emergency jobs support established earlier this year.That’s not the way politics works.
      But is the distinction between the chancellor’s new “Jobs Support Scheme” announced on Thursday and the “Job Retention Scheme” really that large?Watch moreIn some ways the answer is no. Changes to the furlough scheme since August had already required employers to make a rising contribution to the wages of furloughed workers.Any objective observer asked to place this new scheme on a policy continuum between what the chancellor unveiled in July – a £1,000 bonus for each worker brought back – and furlough would put it much closer to furlough.To that extent Labour’s shadow chancellor, Anneliese Dodds, is justified in saying that the chancellor has U-turned.Yet there are material differences between this and furlough.The level of support from the state to the payrolls of eligible companies is significantly lower. Under the new programme, the government’s maximum contribution to a worker’s wages falls to 22 per cent, down from 60 per cent under furlough. And only employees who are working at least a third of their normal hours will be eligible.The important question is of course whether it succeeds in stemming a steep rise in unemployment over the winter.
      Even before the latest restrictions official forecasts were projecting a possibility of joblessness shooting up to 4 million by early next year as the furlough scheme ended. Will the new system help avert such a disaster for the jobs market? The answer is that it’s impossible to know for sure.The new wage subsidy might persuade managers, facing downsizing decisions, to wait until the economic outlook is clearer.  The extension and rolling over of the business loan support also announced by the chancellor will probably help on that front.But other employers might look at the size of the financial support on offer from November – and the considerably darkened economic outlook – and decide that holding onto workers who they can’t employ full time would simply be to delay the inevitable.
      The sad fact is that many employers will have already made their decisions, having started their redundancy consultation processes in recent weeks.
      It’s pretty hard to see how this scheme would make a material difference to employers’ decisions in the event of another national lockdown, which ministers have warned might be needed if the spread of the virus is not arrested by the new measures implemented this week. If the Treasury has a plan to protect jobs in those circumstances it’s keeping it very well hidden.
      But that might be overly pessimistic. There’s some evidence that new coronavirus infection cases in Spain and France, which have been a few weeks ahead of the UK on the curve of this second wave of the epidemic, are slowing.  Good news on a vaccine might arrive and brighten the economic outlook.  And the fact that the new short-time working scheme has the broad support of the trade unions and the business lobby groups – and seems to have been designed with their input, as was the original furlough scheme – is a hopeful sign. Such groups are almost certainly closer to the thinking of private sector decision makers than ministers and Whitehall civil servants.Yet the bottom line is that the outlook on the employment is as clouded and uncertain as that future of the pandemic.
      The proof of this wage subsidy pudding will be in the eating this winter. More

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      in UK Politics

      Job Support Scheme: What will new scheme announced by Rishi Sunak look like?

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      The chancellor told the Commons that “there has been no harder choice then the decision to end the furlough scheme”, stating that the government “provided one of the most generous and comprehensive economic plans anywhere in the world”. While the furlough scheme is still ending in October, Mr Sunak announced that a new scheme is being introduced. But, he warned: “I cannot save every business, I cannot save every job – no chancellor could – but what we can and must do is deal with the real problems business and employees are facing now,” Mr Sunak stated.Here is everything you need to know about the new Job Support Scheme unveiled by the government.What is the new Job Support Scheme?Mr Sunak told the Commons that the new Job Support Scheme being launched by the government this autumn will help businesses keep employees on, rather than making them redundant.Read moreUnder the new scheme, the government will top up the wages of people working at least a third of their normal hours.They will be paid for that work as normal, with the state and employers then increasing those wages to cover two-thirds of the pay lost by working reduced hours.The level of grant will be calculated based on the employee’s usual salary, capped at £697.92 per month.The scheme will run for six months, from November 2020 to April 2021.Am I eligible to receive support?Anyone who is employed as of Wednesday 23 September is eligible to be covered by the scheme, said Mr Sunak.All small and medium-sized businesses are eligible to apply, but larger businesses will have to prove their profits have been hit by the pandemic.Businesses are eligible even if they did not previously use the furlough scheme.Will it stop people from being made redundant?Employers who retain furloughed staff on shorter hours can claim both the new Job Support Scheme and the existing Jobs Retention Bonus, which Mr Sunak says will “significantly increase the incentives to bring back previously furloughed employees”.Read moreThe Jobs Retention Bonus lets employers claim £1,000 for formerly furloughed staff who remain employed until at least February.Businesses will also not be able to issue redundancy notices to employees while taking part in the new scheme, and there will be restrictions on larger companies “in terms of capital distributions to shareholders while they are in receipt of money for their workers in this scheme”, Mr Sunak told the Commons.However, the chancellor has received criticism that the package came “too late”, as Labour’s shadow chancellor Anneliese Dodds pointed out many workers whose redundancy process, ahead of losing their jobs at the end of October, began last week.How does this differ from the furlough scheme?The new Job Support Scheme is not as generous as the furlough scheme, capped at £697.92 instead of the previous £2,500 the government was paying out to keep people employed.However, Mr Sunak told MPs that although his primary goal was to support jobs, this could not include maintaining posts with no viable future under the coronavirus restrictions announced earlier this week – including a 10pm curfew for pubs and restaurants in England. The scheme has been widely welcomed by business groups, but the British Chambers of Commerce warned the chancellor “must remain open to taking additional action to support parts of the economy facing unprecedented challenges over the months ahead”.What other types of support are there?The current self-employed grant will be renewed on similar terms to the new Job Support Scheme.Read moreThe grant is worth up to 20 per cent of average monthly profits for the period between November to January, up to a total of £1,875, with further sums available to cover the following three months.Self-assessment tax payments deferred from July, as well as those due in January, will not need to be paid until January 2022.Mr Sunak also announced an extension to the temporary reduction of VAT rates from 20 per cent to five per cent for the hospitality and tourism sectors for a further two months, with a new deadline of 31 March 2021.Businesses on “bounce-back loans” have had a “pay-as-you-grow” element added, which gives loanees 10 years instead of six years to repay it, a move that will slash monthly repayments by almost half, according to the chancellor.Those struggling to repay their bounce-back loans will be given the option of making interest-only payments and “anyone in real trouble” will be allowed to suspend repayments altogether for up to six months. More

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      in US Politics

      US airlines facing ‘Thelma and Louise’ moment as government aid set to expire

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      US airlines are facing what one leading analyst calls a “Thelma and Louise” moment as the industry approaches a government-funding deadline that could decide its future.On 30 September a government aid packages used to protect workers expires, the airlines have already announced huge layoffs but what comes next could be even worse.“I don’t think people get the Thelma and Louise analogy here. The car is up to speed, it’s headed toward the cliff and we know what happens next because you’ve seen the movie,” said industry analyst Robert Mann.Along with leisure and retail, the airline industry has been one of the most direly affected by the Covid-19 pandemic. Passenger numbers are down 70% and the loss of business and frequent flyer travelers has pushed revenue down by as as much as 85%.In March, airlines were offered two sources of money as part of the US government’s coronavirus stimulus package, the Cares Act. The act gave the industry $25bn in loans to cover general costs and $25bn to keep workers on payroll. The payroll cash is made up of grants that don’t need to be paid back but the loans come with strings attached.Airlines will have to give the US government some equity stake in return for the loans. Some airlines, including American, Hawaiian Airlines and Spirit Airlines have agreed to take the cash. Others including Delta, United and Southwest, have yet to decide whether they will tap the loans. More