U.K.’s Labour party’s priorities for economic recovery in a post-Covid-19 world do not include a freeze on public workers’ pay.
The Labour party is making its voice known days ahead of an planned update by Rishi Sunak, Chancellor of the Exchequer, on Wednesday on the topic of spending in 2020. He will also provide an outline of what the government is forecast to spend in 2021. A member of the ruling Conservative party, Sunak is not expected to talk about a return to any austerity program. However, he is likely to state that curbing wages at just a one percent increase for the public sector is fair because it held up better than the private sector during the coronavirus pandemic.
U.K. Shadow Chancellor of the Exchequer Anneliese Dodds on Monday spoke about her party’s position on the plan to essentially freeze pay for those on the frontlines.
Noting that the U.K. has a jobs crisis, she urged that government should “treat our frontline workers decently.” Dodds reasoned that the curbing of pay will see frontline workers “cut back on spending on high street.” That, in turn, will have an impact on others, such as workers in the retail sector.
“Retail workers, so critical during this time of need, have often had to survive on a shoestring,” Dodds said, noting also the need to protect delivery workers and shop keepers’ pay.
While most of her comments were a political criticism of how the conservative party have not delivered on promises made over the last 10 years, she also pointed out the need of government to create opportunities and give people and small business owners optimism as they rebuild their businesses.
“Government has a responsibility to reward businesses that do the right thing,” she said, adding that they should use local supply chains to provide economic opportunities for those communities. Dodds also spoke about ensuring safe streets so people are willing to visit high streets. Dodds was speaking at a Reuters Newsmaker event on Monday. Her party’s concerns come at a time when fashion and luxury retailers are set to face other challengers in 2021 as the country deals with the impact of its European Union exit.
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Small business owners and other nonessential retailers have been hard hit during the pandemic due to mandated closures to help curb the virus outbreak. The U.K. entered its current lockdown on Nov. 5, which is slated to end on Dec. 2, when nonessential retailers would be allowed to reopen. Primark earlier this month had estimated that this second lockdown could result in a loss of 375 million pounds, or $484.9 million, in lost sales.
And while retailers can hope to reopen on Dec. 2, they also have to plan for the loss of tax-free shopping come Jan. 1.
The British government is making changes to value-added taxes (VAT) and duty-free shopping. The retail sector is afraid that they will lose revenue as shoppers head to other European countries to do their shopping. Critics say the implementation of the planned VAT changes could mean the loss of 70,000 jobs, not to mention the removal of of 5.6 billion pounds, or $7.25 billion, from the U.K. economy. And it isn’t just fashion retailers that could feel the sting—fewer tourists would also impact spending at U.K. hotels, restaurants and theaters.