
UK government to pay up to 80% of wages for employees not working - phildawes
https://www.bbc.co.uk/news/business-51982005
======
justsomedude11
I will happily pay 45% tax on my salary knowing the Gov has my back in
difficult times like these. I'm fortunate enough to still have a job, but I'm
happy I live in Europe.

~~~
calvinmorrison
I'd be shocked is most people on this page who are fully employed
devs/techs/etc in the US do not already donate roughly 45% to the government.
SS and Federal, plus state (3% for me, and almost 4% for local), now that's
just on income, not anything you spend. Again, here we go. 9% sales tax in my
municipality, plus individualized taxes on a variety of goods the government
deems bad. This includes markups on booze, tobacco, sugary drinks, then we
have car registrations, gas taxes, yearly renewal of misc fees like the
license for our dog, drivers license ID renewals, then property tax, taxes on
utilities like telecom, then we have run of the mill court things like
speeding which are 45 tickets that balloon into 200 dollar ones when you add
all the fees on top. Fees to file things you are required to file for. yes. I
bet if we took a full accounting of the taxes we all actually pay in a lump
sum, it's closer to 45%.

~~~
luckylion
> I'd be shocked is most people on this page who are fully employed
> devs/techs/etc in the US do not already donate roughly 45% to the
> government.

Yeah, but 45% would be federal income tax only in Europe. Social Security,
pensions, sales tax etc pp would be on top, and are generally also
considerably higher than in the US.

~~~
t0mas88
Sales tax is on top of course, but social security and state provided pension
is included in the 40% to 52% here (the percentage depends on total yearly
income)

We pay between 0 and 100 euro per month for health insurance, which covers
basically everything with a very low co-pay amount (like 150 euros per year
max)

Student loans are also much much lower. We pay 1600 euros per year tuition,
the rest is government paid.

So the 40% may sound very high, but if you look at what is included compared
to what the middle class in the US spends on student loans and healthcare I
think we're not much worse off over here.

~~~
luckylion
> Sales tax is on top of course, but social security and state provided
> pension is included in the 40% to 52% here (the percentage depends on total
> yearly income)

Likely depends on the country. It's not in Germany, and 45% is the highest tax
bracket which few people will reach, but 43% is very achievable and you'll
find plenty of knowledge workers in that bracket as it starts at ~55k €. Add
~20% sales tax, very high taxes on power and fuel etc.

The social net has a very high price, we need to stop prancing around the
facts. I still think it's largely worth it (although it does contain very
strong moral hazards), but I don't believe in hiding the truth so people don't
come to different conclusions.

~~~
t0mas88
Indeed very country dependent. Netherlands is 50% (used to be 52) starting
around € 55k. That sounds higher than Germany, but then in our case social
security and an allowance for elderly is included. So in the end I guess the
part of your income you pay is similar in most European countries it's just
structured differently. And indeed, it's a very big part.

The US has a low income tax, but then the middle class needs to pay for their
own health insurance (at $ 600 a month), disability insurance and pension etc.
which means they end up not far different from Europe.

The big difference is at the extremes of the scale, the very poor and the very
rich. In the US the poor don't have any health insurance, disability
insurance, or pension etc because they cannot afford it. And the very rich in
the US are way better off than they would be in Europe, because for them a low
income tax greatly outweighs the costs of insurance etc.

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osrec
It's bold move, but necessary to stop people going into work. The tubes here
in London were still packed a few days ago, because low wage earners still
need to travel in to earn and put food on the table.

~~~
yev
I can't see how it touches low wage earners. In reality most of chippies &
corner shops pay most with cash + minimal wage. For them - nothing changes.

It does work pretty good though for city workers - managers, devs, etc

~~~
BerislavLopac
How does a significant reduction in wages count as "works pretty good"???

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jpxw
This is the biggest government intervention in the UK economy since WW2, by
far. These are interesting times.

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Ididntdothis
This makes more sense for me than sending $1000 checks to people who still
have a job.

~~~
SilasX
Because it should penalize anyone who kept working or who was in an essential
occupation?

~~~
Ididntdothis
This is about helping people in need and not a gift from government.

~~~
SilasX
Whether you call it a gift or not doesn't change that it's functionally a
penalty on working.

~~~
tomxor
What penalty? it's the other way around, you take a 20% penalty if you stop
working, and note that it's not for people who voluntarily stop working.

~~~
user5994461
You can easily save 10 to 20% when unemployed because you don't have to pay
for daily transportation (tube/train/car), lunch outdoors every day and a few
other things. So the difference in disposable income is about null in most
cases.

~~~
tomxor
Even if that is the case, it's not your choice, as I said before - it does not
apply to those voluntarily unemployed. You are projecting arguments of basic
income onto an economic solution for a pandemic where people are suddenly
forced into unemployment or unpaid leave for a very specific reason...

Given a lack of choice how can paying wages make any difference to their
employment behavior. I'll repeat: this is not basic income.

~~~
user5994461
This had nothing to do with basic income. We're talking unemployment for
people who get laid off from their jobs.

~~~
tomxor
Then you clearly didn't read the article, the headline is:

> The government will pay the wages of employees unable to work _due to the
> coronavirus pandemic_

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hanoz
Notably this now leaves a gaping self employed person shaped hole in the
otherwise impressively woven safety net.

~~~
Mvandenbergh
Yes but they have increased universal credit amounts substantially, that will
go some way to close the gap.

~~~
jlokier
> but they have increased universal credit amounts substantially, that will go
> some way to close the gap.

I don't think that is true.

They've increased UC by £20 a week. To our USA friends that is USD $23.30 a
week.

I don't think that counts as substantial. It is barely going to touch the gap.

Almost nobody who was working last month self-employed is likely to be able to
afford their rent and bills, or even _just_ their family food bill, on UC
going forward.

While on UC, in theory you can also get your rent paid. But only if you are
renting somewhere substantially below the median market rate for the area.

Since the area is assessed over quite a large region, that means virtually
everyone in a decent city has a rent level higher than is covered _anywhere_
in the city, and people are normally required to move to the edges or beyond
(or often into dodgy accomodation that would fail inspections).

But people cannot move now.

They can change their eating patterns, and refuse to pay bills (but watch out
because debt collactors still have their jobs, and credit files are still
recording).

And full tenants can stop paying rent, and avoid eviction. But watch out
because when protective measures stop, evictions will resume because people
will not be able to pay the backlog of debt. Especially if the landlord sees
it as an opportunity to refurbish and raise the rent (I've seen this happen,
find an excuse to get rid of the current tenant then add a 25% rent hike in
the ad for the next one).

Worse than that: If evicted (eventually) due to substantial non-payment of
rent, in normal times people struggle to find another landlord that will
accept them aftwards, because landlords may contact a previous landlord for a
reference.

But tenants can't move to a cheaper home suddenly, especially not all at once,
and with no money or drivers to move everything.

(And lodgers, who are tenants living in someone's home with the landlord, are
still not protected from eviction under current measures as far as I can tell.
They are covered by different rules than tenancies, have few rights, are
highly vulnerable if the landlord wants them gone. Notice can be as little as
1 week. There are a lot of lodgers in the UK.)

If there was rent deferral of some kind that would help. (Ideally where the
government pays the rent so the landlord does not know the state of the
tenants finances.) But the government has, currently, said no to direct help
for renters. They have tweaked the housing allowance, but only by a small
amount so it still doesn't cover the rent for the majority of people in
suddenly changed circumstances.

And even with all benefits added up, it's still much less than the 80% that
most salaried people are getting.

Self-employed are looking awfully screwed at the moment.

And people who got made redundant just recently are also getting a rough deal,
unless they are lucky to have an employer who undoes the redundancy somehow.

Those people are unlikely to be able to get a personal loan to cover their
shortfalls either. Many with already bad credit rating will get "computer says
no", but those with good credit have a problem too: After passing the rating,
they will be asked for proof of income, because it's the law in the UK since a
few years ago that lenders must get that proof. Which people suddenly without
jobs cannot provide.

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arnaudsm
First remote work, now UBI: Covid-19 is planting the seeds that both are
possible and can be beneficial to society in the future.

~~~
tibbydudeza
Microsoft Teams is okay but hopefully there will be better tools for this
market.

~~~
ClumsyPilot
In the year 2020 a chat application takes 15 seconds to load old messages on
an 8 core machine with a gigabit connection...

------
crucio
I do wonder if it would be easier and cheaper to bite the bullet and move to a
universal basic income. This situation cold be going on for years.

~~~
Ididntdothis
You need a UBI on a level that allows people to live. That’s a lot of money.
Better to extend unemployment benefits for a limited time.

~~~
pjc50
This is 80% of pre-existing wages!

And, even though it's an employer subsidy, this is more beneficial in the long
run _if_ the economy recovers, because employers don't have to go through the
fire/hire destruction and deadweight loss.

~~~
Ididntdothis
I will retire immediately if I can get a 80% UBI.

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pjc50
And people keep saying that basic income is impossible.

This is an _astonishing_ U-turn, and a very welcome one. I just hope the
social distancing isn't too late.

~~~
hacker_9
You understand this only helps in the short term right? Yeah we'll live, we'll
also be poorer than ever at the end of this, and someone's gonna have to pay
back this debt.

~~~
matthewmacleod
Yes, of course everybody understands that. Most also understand that the
reason for being “poorer than ever at the end of this” will be because of the
event itself and not the response to it, will understand that we will
collectively have to “pay back this debt” and that either of these facts
affect the suitability or otherwise of guaranteed income policies.

~~~
user5994461
>>> the reason for being “poorer than ever at the end of this” will be because
of the event itself and not the response to it

I'd beg to differ on that. If the economy was left to crash, the cost of
housing and rent could go down, which is the main expense for most households.

What the cash injections are doing is holding these high at all costs,
transferring money to those who already have assets. The non owner classes
will be poorer than ever, facing ever unaffordable housing with extra taxes to
cover the bailout debt.

Instead of this. The government could decide that leases for the tax year
2020-2021 are getting their prices slashed 10% and there would be different
consequences on the economy.

It's all largely driven by human decisions. The virus has no say in that.

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ksec
Could someone correct me if I am wrong.

UK is going to print lots of GBP to fund this, and in doing so, it will
devalue its currency, since EU will possibly be doing much of the same, the
Euro and GBP will devalue against US ( and everyone else ), assuming US on a
relative terms did not print as much ?

Or is this assumption wrong?

~~~
HatchedLake721
Why print? Borrow

~~~
calcifer
Indeed. Borrowing has never been cheaper.

------
Jupe
So, with all these people not working... when do our supplies start to run
out? I mean, the stores _are_ getting replenished now; but what happens when
the supply chain dries up for a period of time?

Will we be able to boot-strap the supply chain to keep the economies of the
world rolling?

~~~
pjc50
(UK) Shelves are already very empty. Oddly this time the fresh stuff is still
there and the non-perishable has gone. "Luxuries" are widely available,
necessities aren't.

There's a lot of seasonal stuff in cold storage - the apples you buy are from
last year.

~~~
globular-toast
Why is it odd? Idiots can fill their lofts and garages with loo roll but
there's only so much fresh produce that people can stockpile. Although I have
no doubt that the same idiots are trying and most of it will go to waste.

------
am_lu
Anyone listened properly to the speech? First they were talking about "grants"
then started mentioning interest and how nice they are not to charge it for a
year, then started talking about LOANS, presumably to be paid back.

~~~
timthorn
There are several support elements available to businesses. There has
previously been the announcement of interest free loans, and grants to small
businesses.

Today they announced that the government will pay 80% of furloughed workers'
salaries, up to £2500 per month. That does not need to be repaid. They also
announced today that the interest free period on the loans will be extended to
12 months, up from 6, which is separate to the salary intervention.

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user5994461
The cap is £2500 per month before or after taxes?

~~~
globular-toast
They said it was slightly above the median so must be before tax.

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tibbydudeza
It is all funny fake made up money anyway ... there is enough resources for
everybody.

~~~
jpxw
Unfortunately this isn’t true. A massive amount of debt is going to be racked
up in this time. The economic impacts are not immediate, but they will come.

~~~
Ididntdothis
I wonder if the global debt levels will start the next wars. At some point one
of the bigger countries will not be able or willing to serve its debt and who
knows what will happen then?

~~~
gspr
Is it feasible to go to war with a country to collect on debts, though? If
they're already having trouble paying, and the creditor is successful in its
war, the debtor's economy will be so deep in shambles that repayment will be
next to impossible.

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jahaja
It seems like there's two things where money is never an issue; war and the
preservation of the status quo. This should be remembered when progressive
reforms are rejected.

~~~
PragmaticPulp
> It seems like there's two things where money is never an issue; war and the
> preservation of the status quo.

Right. The government's policy should act counter-cyclically to counteract
major issues like this. It's better to reserve our spending for when we need
it than to spend indiscriminately when we don't.

You want government monetary and fiscal policy to act as a counterbalance to
natural instability, not as an amplification.

> This should be remembered when progressive reforms are rejected.

I agree, but for different reasons. It's important that we avoid overextending
ourselves during the good times, because we need to keep our options open when
we find ourselves in times like these.

~~~
jahaja
> It's better to reserve our spending for when we need it than to spend
> indiscriminately when we don't.

To save money in a large pile is not a proactive thing to do. It's reactive.
The proactive thing is to have a far reaching social safety net and a stable
social institutions.

------
AntonStratiev
Has anyone calculated the value of life that we are saving here?

The Imperial College report had 510,000 dying in the UK under a no-action
scenario. Average age lets say 79 as the virus progresses.

510,000 * (82.5-79) * GBP 30,000 (QALY for the NHS) = 53.5 billion pounds
based on the funding methodology used for the NHS.

Instead the Uk seems to be willing to throw its entire GDP at this problem, 3
trillion pounds. This seems... completely unjustified.

How can we justify this sort of effort for Coronavirus, but not Climate
Change, Obesity, Air Pollution, which will kill many more than COVID-19? Is it
just because Coronavirus does it spectacularly in 3 months and all of those
other things take decades?

~~~
majc2
> This seems... completely unjustified.

Um, no. Firstly, not everything is about rational economics. No sane and
functioning democracy is going to allow 500k people to die if it can stop it.

~~~
AntonStratiev
500,000 people with an average age of 79, the vast majority of whom are in
poor health with existing conditions. This is what the data from Italy shows.

Coronavirus is just the last nail in the coffin - it brings forward the deaths
that would have occurred over the next 1-2 years into the present. The panic
is irrational.

~~~
desas
Humans are irrational creatures. They're not robots. This is a feature not a
bug.

