The government should set requirements for businesses to meet before handing out any support under the coronavirus package, a the TUC has told MPs.
At a Treasury committee hearing on the economic impact of coronavirus, held via a video conference today (March 30), Kate Bell, head of rights, international, social and economics at Trades Union Congress (TUC) said government support should be conditional on whether some requirements are met by businesses.
These requirements could include examining pay ratios, staff maintenance and employment models to see whether the business is in need of extra support.
Ms Bell said: “There may be businesses looking for support that still have pay ratios which have CEOs earning hundreds of times the pay of the average worker and we hope that’s something that the government will be considering.
“We talked about businesses setting out a job and fair wages plan perhaps as the condition for any form of government support and particularly I think people would want this to be the case if the government were taking an equity stake.”
The committee also discussed proposals for the government to recoup money loaned to businesses when the current crisis has passed so the economy is able to recover in the long term.
Rain Newton-Smith, chief economist at the Confederation of British Industry (CBI) said government loans should be converted into equity stakes so that the money can be collected at a later date.
Ms Newton-Smith said: “At the moment we are really at the forefront of this crisis but we are certainly hopeful that in a few months' time we will be emerging from this and the economy will be recovering.
“What is really important is that where the government have been providing guarantees or equity stakes, they then have a way of recouping some of the funds that they are putting in now to support businesses so that we can make sure we have a healthy economy in the long term and a good way of funding all our public services.”
Ms Newton-Smith also warned that a recession was likely to hit the UK but said the government was taking the right steps to ensure this is short-lived.
She added: “We are undoubtedly looking at a global recession. We will see a recession in the UK but hopefully this will be very short-lived.
“Our hope is that we tackle the health crisis and emerge from it. This is our number one priority. Our number two priority is to protect as many jobs and livelihoods and to make sure recovery is as strong as possible.
“I think the job retention scheme is an important part of this but it cannot solve all the issues. That’s why we need to make sure we have cash flow available in the banking system and measures being taken by the Bank of England and the Treasury are really important.”
But despite coronavirus being likely to lead to some permanent damage, what is most important is how the government and policy makers react to make sure the economy is supported, according to Ms Newton-Smith.
She added: “We need to think about what sort of economy we will want in the future and that’s why by making sure we design mechanisms now that support as many jobs as possible, but also provide value for money for the taxpayer, so that in the future we can fund critical public services. This is something we all need to bear in mind.”
amy.austin@ft.com
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