Financial aid needed for localised lockdowns, says Labour shadow chancellor

The local lockdowns that are key to the government’s strategy for tackling the next phase of the Covid-19 pandemic in England risk failure, unless they are backed with financial aid, says the shadow chancellor, Anneliese Dodds.

With parliament set to rise for the summer recess later this week, Dodds is urging Rishi Sunak to make a statement on how he will support firms ordered to shut down, and workers told to stay at home.

“If we are to see those localised spikes, we’re saying that there needs to be some kind of package there to support jobs and employment. Unless you have that, you’re going to be risking people’s ability to comply with the guidelines,” she said.

She highlighted the fact that the job retention scheme is now closed to new workers; and statutory sick pay, at £95.85 a week, is too low to cover people’s costs – with many workers not even eligible for that.

“Already we’re seeing, because of issues around sick pay – the scope of it, the level of it – it could be quite difficult for people if they’re required to self-isolate for an extended period, or if you have those localised lockdowns,” she said.

Boris Johnson announced new powers on Friday for rapid local lockdowns to be imposed in England, including the closure of specific sectors, and localised “stay at home“ orders.

Dodds warned: “if there is insufficient financial support there, that means they are not as effective as they could be. And that would obviously have a very significant impact on all of us.”

She suggested the job retention scheme could be reopened for affected sectors or regions; or local authorities could be allowed to use the discretionary funds allocated to them for fighting the virus, which as it stands, can only be spent in restricted ways.

In a wide-ranging interview, Dodds also:

• Said Labour would not support tax rises in the autumn, when Sunak should be focused on growth.

• Accused the Conservatives of taking an “ideological” approach to the crisis, drafting in the private sector while squeezing local authority budgets.

• Repeated Labour’s call for the job retention scheme to be extended, for the worst-hit sectors.

Dodds’ call for targeted financial help is the latest example of Labour’s cautious, methodical approach under Keir Starmer.

The lack of radical policy proposals has exasperated some critics on the left of the party. But Dodds said with the nation in the grip of the pandemic, the public want the opposition to be focusing on the crisis, and offering solutions.

“I think ultimately the UK has been in a really very very difficult situation. Excess deaths are extremely high compared with many other countries. We know that the economic impact has been also quite severe in the UK – the OECD said it was the worst in the industrialised countries.

“So I think quite a lot of people would feel if the Labour party was only criticising, and not suggesting solutions, to get us to a better place, they would question what on earth we were doing. We really do need to fix the problems that continue to exist with our response to the crisis, and that is what we have been trying to do.

Dodds sparked a flurry of comment earlier this month after appearing to flirt with the idea of a wealth tax, at an event in the run-up to Sunak’s summer statement – before insisting a couple of days later that now was not the time for increasing the tax burden.

That is a message she is keen to repeat and she goes further, suggesting Labour would not be willing to support any tax increases in Sunak’s autumn budget.

“I do think where the chancellor needs to be focused right now is on growth above all,” she said.

“We’ve had some suggestions that at the budget in the autumn he will be making some changes to national insurance, or income tax or VAT. I think that really wouldn’t be helpful at this stage.” On the issue of whether that meant the autumn would be too early for any tax rises, she said: “Yes, definitely. I think so.”

Asked why she was reluctant to put forward specific tax plans, she said that “first of all because we’re quite a long way away from a general election and we do have a policy development process that’s tailored to provide that manifesto. But specifically, I think it’s because we’ve got to have that focus on preventing additional unemployment and maintaining economic capacity. And that’s my absolute overriding concern right now.”

The Resolution Foundation thinktank has estimated the budget deficit could hit a record £350bn this year – and Sunak warned MPs last week that “tough choices” lay ahead.

The “10 pledges” Starmer made to Labour members during the leadership race included a promise to increase taxes on the top 5%. But party strategists are also extremely wary that specific tax policies could be seized on by the Tories.

During the 2019 general election campaign, the Conservatives repeatedly claimed Labour planned to levy a tax on gardens, for example, despite the party having no such policy. (Dodds’s predecessor, John McDonnell, had said he would examine the idea of a stamp duty land tax, levied on property.)

Dodds added: “Obviously I in the long term really want to see a much more progressive tax system; but in the short term to medium term, particularly while interest rates stay low, while we’ve got really really depressed demand, I do think the focus has got to be on increasing that economic activity, keeping people out of unemployment and trying to make sure they’ve got opportunities.”

The cautious style appears to suit the UK’s first female shadow chancellor and a former university lecturer. The latter is a job she said she loved, and had imagined she would stay in, until a friend persuaded her to stand as an MEP.

She was a contemporary of Sunak’s at Oxford University, graduating in the same subject – philosophy, politics and economics – though she didn’t think they “particularly remember each other”.

But while PPE is often the degree of choice for wannabe leaders, Dodds said she did not arrive at university with a political career plan.

With a father who ran an accountancy business, she said tax reform was a topic of conversation at home. “He was very committed to the tax system working properly – I heard a lot about that when I was growing up.”

Asked whether she brought a different perspective to the job of shadow chancellor as the first woman in the post – and potentially the first female chancellor – she said: “Quite often it will be people who might have worked in finance for example who would end up in those roles traditionally. But of course women can have diverse experiences. I used to chair a debt and welfare advice centre on the council estate where I live, and that certainly gave me a lot of experience of how the economy impacts on individual households.

“So I think people can have a diverse set of ways of experiencing the economy that are relevant. And we shouldn’t be privileging perhaps some types over other types”.