After coronavirus the government and business should agree to bring in a more caring capitalism

The latest measures will help but we have to start thinking about the long term, writes Andrew Grice

Boris Johnson needs to work out a way to not leave some communities behind after coronavirus passes (AP)

According to Albert Einstein: “In the midst of every crisis, lies great opportunity.” With scientists suddenly back in fashion, Boris Johnson must grasp one.

After finally announcing generous 80 per cent wage subsidises of up to £2,500 per worker, aimed at avoiding large-scale job cuts, the government must ensure the coronavirus crisis results in a new deal between it and business to entrench a caring capitalism.

The idea has been floated before, whenever the Conservatives see Labour striking a chord with voters about the unfairness of the system, or those “left behind” by globalisation. David Cameron saw “good business” as part of his “progressive conservatism” but events, and austerity measures after the 2008 financial crisis, consumed his government.

Theresa May filched some of Ed Miliband’s once-derided plans, such as curbs on energy prices, after he attacked firms who were “predators” rather than “producers”. But she got cold feet about her sensible proposals to put workers on company boards and force firms to hold annual votes on executive pay.

Brexit has strained the Tories’ traditionally close relationship with business, which was understandably worried about the barriers to trade it would erect. Johnson epitomised the split by saying “f*** business”.

The government’s response to coronavirus revealed the Tories’ traditional instincts: despite Johnson’s boast he was helping people first, he helped employers before employees. With hindsight, it would have been better to have announced the huge wage subsidies at the same time as loans and grants for firms. It would also have been more effective: the prospect of an eventual loan has not stopped some companies laying off or sacking workers because they can’t pay their wages.

As Gordon Brown pointed out, it is crucial to keep people in work so the economy recovers after the crisis. He fears a double wave of redundancies.

True, the unprecedented state intervention in the private sector through wage top-ups and other help for business announced by Rishi Sunak, the chancellor, was at the upper end of expectations. It is a sea change for a Tory government, which in the past five days has brought in socialist polices Jeremy Corbyn would not have dreamt of implementing in 10 years.

It might be a case of third time lucky for Sunak. His first two “bazookas” were not as powerful as he billed them. His “£30bn fiscal stimulus” in the Budget to combat coronavirus was, on closer inspection, £12bn for measures relating directly to the disease and £18bn for public services.

Then his £350bn package for business included £330bn of loan guarantees and only £20bn of direct support in grants and tax cuts. Plainly, it was not enough, as a string of Tory MPs from the left to the right of the party pointed out in the Commons on Thursday. There is a growing recognition across the political spectrum that to restore confidence, the government must become the insurer of last resort for the whole economy. The wage subsidies were a big step towards that.

Ministers regard coronavirus as worse than the 2008 crisis because then the government knew what had to be done; this time, it is flying blind, and must learn on the hoof how to combat an unprecedented threat.

The relationship between government and business should be reset, not just for the duration of this crisis, but permanently. Firms cannot pocket government-backed loans, grants, tax rebates and wage subsidises without paying something back to society. It requires them not only to avoid redundancies now, but a long-term commitment to skills training for UK workers; accepting a duty to their employees as well as their shareholders; relying less on ruses such as agency workers to avoid granting full employment rights; narrowing the obscene pay gap between top and bottom and binding commitments to reduce carbon emissions.

The crisis has shown that workers in the gig economy, part-timers, and those on zero hours contracts need more rights, such as a much higher rate of statutory sick pay than the current £94.25 a week. Ministers should give the trade unions a permanent seat at the table, not just in a crisis, rather than further erode their rights.

A rebalancing is not only being demanded on the left. Nick Timothy, May’s most influential adviser, admits that “civic capitalism is now in dangerous decline” in a book, Remaking One Nation, published next week by Polity. As Timothy wrote this week: “A bailout is a reminder that – despite economic and policy orthodoxy – companies are not simply owned by shareholders. Their employees, customers and local communities also have a stake in the firm’s future.”

Understandably, swamped ministers have little appetite for a philosophical debate about the future of capitalism. Yet naked self-interest should tell them otherwise: the new working class Tory voters in the north and midlands might be right of centre on crime and immigration, but many are left of centre and interventionist on the economy. Their support for the Tories might be short-lived if their towns are even further “left behind” after the outbreak.

When this crisis is over – and it will be – we cannot see a return to business as usual.