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Sunak Told 1 Million Britons Are Missing Out on State Aid

David Goodman and Alex Morales

(Bloomberg) -- More than one million Britons are falling through the cracks in the government’s coronavirus job support programs and remain in desperate need of aid, according to U.K. lawmakers.

The cross-party Treasury Committee, which scrutinizes the work of Chancellor of the Exchequer Rishi Sunak, welcomed the scale and pace of his interventions but said the conditions attached meant many remain exposed to the economic hit inflicted by the pandemic.

“He shouldn’t be overlooking those that have been left behind and there are rather a lot of them,” Chairman Mel Stride said in a telephone interview on Monday. The complexity of setting up new systems and the need to combat fraud “doesn’t mean that with some creative thinking and hard work at the Treasury that those issues can’t be ironed out to a satisfactory degree,” he said.

Particularly vulnerable are people who have recently started a new job or business; self-employed workers with annual profits above 50,000 pounds ($63,000); and those who take a large part of their income through dividends, as well as freelancers, the committee warned.

“Rolling out financial support at pace and scale has inevitably resulted in some hard edges in policy design and some critical gaps in provision,” according to the report. “The government should enact recommendations to fulfill its promise of ‘doing whatever it takes’ to protect people and businesses from impact of coronavirus.”

Read More: How U.K.’s $168 Billion Virus Aid Package Is Being Rolled Out

Sunak has responded to the crisis with unprecedented support for workers. Across its two programs, the Treasury is funding the wages of more than 11 million jobs, with a price tag some say could exceed 100 billion pounds by the time it expires in October. The chancellor on Sunday answered “no” when asked in a BBC interview whether there was anything extra he could do now for those excluded groups.

“Through the range of different things that we’ve put in place almost everybody can access an enhanced degree of support,” Sunak said. “We’ve got to look forward now and think well how do we safely reopen our economy.”

Stride said Sunak has taken an “iterative” approach since the start of the crisis, improving on programs over the weeks. Now that the chancellor has extended the furlough program -- under which the government is paying the wages of millions of workers -- until the end of October, he has a chance to look at those excluded from the various initiatives, he said.

Job Cuts Mount

Despite the assistance to companies and workers, job cuts are mounting and economists say unemployment could double and possibly exceed 10%, leaving many questioning how rapid the recovery from recession will be.

With employers starting to bear some of the costs of the furlough program from the start of August, further cuts are expected this week due to a requirement for a 45-day consultation on large-scale redundancies. Building materials group Travis Perkins on Monday announced plans to shed around 2,500 jobs, or 9% of its workforce.

“You’re going to see unemployment increase as companies need to take those decisions,” Stride said. “It will cause some no doubt to decide that now’s the point where they need unfortunately to let people go.”

The crisis could also increase regional disparities, according to a separate report from the Institute for Fiscal Studies. It found coastal areas were notably vulnerable to both the health and economic impact of the pandemic, due to many having elderly populations, a reliance on tourism and pockets of deprivation.

Manufacturers meanwhile called for immediate economic stimulus after a survey found output at its lowest level in 30 years, orders slumping and firms cutting employment and investment.

Lobby group Make UK, which published the poll, said the industry is on track to contract by 10% this year without support such as a business rates holiday and new infrastructure projects.

(Adds comments from Sunak, committee chairman starting in third paragraph)

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