House of Commons
Monday 27 April 2020
The House met at half-past Two o’clock
[Mr Speaker in the Chair]
The House entered into hybrid scrutiny proceedings (Order, 21 April).
[NB: [V] denotes a Member participating virtually.]
Oral Answers to Questions
The Secretary of State was asked—
We have taken significant and unprecedented action during this very difficult period to save lives and to protect the NHS. We know that further progress is needed if we are to continue to strike a balance between limiting the spread of covid-19 and protecting the public. We have restricted regimes in prisons and minimised inter-prison transfers to reduce the spread of the virus, and we are implementing units to protect the sick, to shield the vulnerable and to cohort new arrivals to reduce risk. There are positive signs that our carefully implemented approach is limiting the impact of this initial phase of the pandemic. The number of cases and deaths is much lower than originally predicted, but we will continue to do everything possible to ensure that that remains the case.
I thank my hon. Friend for that question. Indeed, we continue to focus effort on ensuring that we have an adequate supply of personal protective equipment in all its forms and reliable supply chains too. Our reporting shows that we have a sufficient level of supply to meet our current forecast demand position on most items, including aprons, eye protection, gloves, masks and hand sanitiser. We have stock of most of those items in the tens of thousands, with further deliveries scheduled to allow us to meet forecast demand. We are currently running low, however, on coveralls, where there is a shortfall in the low thousands. We have a large delivery on order, and it is expected this week or next.
I am grateful to the Secretary of State for that answer. The feedback that I am receiving from officers working in prisons in Suffolk and Norfolk is that social distancing guidelines are not being adhered to and that there is a limited amount of PPE, with a notable absence of face masks. Can he assure the House that he will work with prison officers and their representatives to address those understandable worries?
My hon. Friend can be assured that my officials work closely with the Prison Officers Association. The restricted regimes we have put in place mean that prisoners are spending more of their time in their cells, to support social distancing. When they are allowed out of their cells—for example, for exercise, association or showering—it is on a rota basis, in small, manageable groups supervised by officers, allowing for social distancing to be maintained. The message to stick to the guidance is being reinforced through gold command as part of the command and control structures that now operate right across our prison estate, and we are reinforcing that message through a range of activity—for example, via posters and prison radio.
While most prisons are taking every precaution to prevent the spread of covid-19, union sources report that some rogue governors are attempting to return to business-as-usual practices, such as unlocking large numbers of prisoners and restarting training courses. Does the Secretary of State condemn that reckless behaviour and agree that all governors should be following official guidance, without exception?
The hon. Lady is right to point out the danger of over-enthusiasm going ahead of the guidance. It is clear that the work that has been done by governors, staff and, indeed, the prisoners themselves in our institutions has helped to minimise the sort of explosive outbreak that we were quite rightly worried about. My advice—my instruction—to everybody involved in this is to stick to the guidelines. We are not in a position yet to change that regime. Please follow the guidelines that have been set out clearly by Her Majesty’s Prison and Probation Service.
Tomorrow the nation will mark International Workers’ Memorial Day with a minute’s silence, to pay tribute to workers—including prison officers —who have lost their lives while protecting us. Will the Secretary of State join me in recognising the dedication and sacrifice of our prison staff and thank them for performing a vital public service while putting their own health and safety at risk?
I am extremely grateful to the hon. Gentleman for reminding the House and the country of the sacrifice made by many dedicated public workers, including our incredible prison staff. I will be speaking again to the Prison Officers Association later this afternoon to extend my continued thanks to them and their members for their dedication. I pay tribute to those who are unwell and I remember those members of our prison and probation service who have sadly died because of covid-19.
I know that all members of the Select Committee will wish to associate themselves with the Secretary of State’s tribute to prison staff and their work.
Does my right hon. and learned Friend accept that although the rates of infection are mercifully much lower than expected and anticipated—we are glad of that—very great strain is none the less being placed particularly upon overcrowded, older and Victorian and local prisons, which are frequently carrying far more prisoners than they were intended for? Will he confirm that the Government will use all measures, including, where appropriate, targeted early release, to meet our legal responsibilities in domestic and European law to protect the welfare of prisoners in the state’s custody and that of staff employed to carry out their duties in safeguarding those prisoners?
I am grateful to my hon. Friend, the Chair of the Select Committee, for pointing out the vital importance of maintaining HMPPS’s current approach of making sure we do not end up with explosive outbreaks of covid-19 on the estate. He is right to point out the early release scheme. It is but a part of a co-ordinated strategy that has included the compartmentalisation of prisoners to prevent the seeding and feeding of the infection, and that, together with the increased capacity we are developing at pace, plus a reduction in the overall number of prisoners in the estate, has helped us reach a position where, while we are not out of the woods, we are coping and dealing well with the threat of covid-19.
I am very grateful, Mr Speaker. It is nice to be back.
I am grateful to the Secretary of State for giving me two detailed briefings since I took office. He announced on 4 April—coincidentally, the day the Labour party elected a new leader—that he wanted to introduce a release scheme for up to 4,000 prisoners. Can he update the House on how many prisoners have been released and how many prison officers and staff and prisoners have sadly lost their lives?
First, I welcome the right hon. Gentleman back to the Front Bench and congratulate him on his new position. I am grateful to him for his engagement with me, and I will indeed, on his invitation, update the House first on the confirmed cases. These figures are accurate as of 5 pm on Saturday. On the number of confirmed deaths, sadly five members of prison staff have died as a result of the virus, and we have 15 confirmed prisoner deaths. On the number of confirmed cases, there are 321 among prisoners and 293 among prison staff.
On early release, progress has, I admit, been careful and slow, but we have reached a position now where, also taking into account the release of pregnant women, a total of 33 prisoners have been released. The right hon. Gentleman will know that I did not embark upon this scheme lightly. It is the result of a very careful risk assessment to minimise the risk to the public, and of course it is coupled with the increase in prison capacity of about 3,000, which to my judgment and that of those who advise me is already making a big difference in creating the space we need to increase compartmentalisation and reduce the spread of the virus.
With just 33 released out of up to 4,000, the Secretary of State will recognise that, under the restrictive regime he talked about, prisoners cannot be kept in their cells for 23 hours a day, which puts prison staff at risk, never mind potentially seriously breaching important human rights. What is his exit strategy in terms of tracing, upping testing and moving back to a degree of order in our prisons, without which we could see rising tensions across the country?
The right hon. Gentleman will know that that is very much on my mind every day. I view the strategy as a long-term one. As conditions change in the community, the pressure will be on within the prison estate to do similar. I think that prisoners have so far understood and been brought with us in terms of the need to isolate. Our policy of compartmentalisation—which, do not forget, is not yet fully complete across the estate—will allow us the space and the room to accommodate the needs of prisoners even more widely. That policy, together with the progressive reduction in the overall number of people in the male estate in particular, will have the cumulative effect that the right hon. Gentleman wants to see, and that we all want to see, over the next several months.
Can my right hon. and learned Friend the Lord Chancellor assure me and the House that all prison officers and staff who have required a covid-19 test have been able to access one in a timely fashion? Are those prison officers and staff being prioritised for the home testing kits?
My hon. Friend knows that prison staff were made a priority by my colleague the Secretary of State for Health and Social Care, and I am grateful to him for that. That of course includes probation staff. In addition, HMPPS was invited to use some of the available NHS testing capacity for our prison and approved premises staff, and that is prior to the full roll-out plan. Over the past two weeks, we have referred more than 2,000 staff for testing, to which hundreds have already had direct access. We will continue to work with the DHSC to ensure that all our key workers have access to testing of all appropriate types as the weeks go ahead. Recalling the question by the right hon. Member for Tottenham (Mr Lammy), that will, I hope, extend to prisoners, too, when we have that capacity.
May I join others in welcoming the shadow Justice Secretary to his place?
The suspension of prison visits during the current crisis affects not just the welfare of prisoners but also their families and loved ones, who have of course been guilty of no criminality. The Scottish Government have committed to providing every prisoner in Scotland with a mobile phone that will be locked so as to enable outgoing calls to approved numbers only. Will the Ministry of Justice be able to match that commitment for every prisoner in England and Wales?
The hon. and learned Lady is absolutely correct to talk about the need for contact with families. I am pleased to say that as a result of investment that we have made, we have rolled out even more direct access to telephones across the prison estate in England and Wales. Wherever possible, we have—with controls, of course—issued telephones in-cell or very close to the cell that can be used safely by the prisoner. We have also provided £5 free PIN credit per week for every prisoner, whcih allows for approximately 60 minutes of free calls.
The Government announced recently that key workers would be tested for covid-19, and I am delighted to hear that the Secretary of State is making it a priority that prison officers will be tested. Can he confirm that this will be extended to members of the family who might also be symptomatic for covid-19, and will he make that a key priority for his Department?
I am grateful to my hon. Friend, and she is right to remind us that many prison officers are unable to go to work because they are in households where people might be symptomatic. Having said that, the current attendance figures for prison officers at work are outstanding, and fortunately we have only about 12% or 13% who are unable to come into work for covid-related reasons. That is once again a reason to thank them for their service. I note my hon. Friend’s point, and I would hope and expect to see more help given to households where we desperately need the public service worker to come in and help.
Public Protection from Serious Offenders
Protecting the public is the primary duty of any Government and we have acted swiftly to stop the most serious offenders being released halfway through their sentence. Our recent changes mean that anyone given a standard determinate sentence of seven years or more for the most serious sexual or violent offences must spend two thirds of that term in prison. We have passed legislation which means that terrorist offenders will no longer be released early without Parole Board approval and not before the two-thirds point of their sentence.
All too often, we hear that the time offenders spend in prison simply does not reflect the severity of the crimes they commit. What steps is my right hon. Friend taking to restore confidence in the criminal justice system among victims and the wider general public?
I have outlined one measure that we have taken. It came into force on 1 April, but that is just the first step, because we will also be bringing forward a sentencing White Paper, which will include further proposals to deal with serious violent and sexual offenders, and we will be introducing further terrorist legislation to ensure that the most serious and dangerous terrorist offenders spend longer in prison and face tougher licence conditions.
Thank you, Mr Speaker. Many of the serious offences are occurring within people’s families. We know that this is a Government who care about domestic violence because tomorrow the Domestic Abuse Bill comes in for its Second Reading, but since the lockdown, arrests for domestic violence have increased by 25%. We know that in the first two weeks of the lockdown, 14 women and two children have been murdered in their families. I know that when the coronavirus made its way towards our shores, the Secretary of State and his team and Department started making preparations for a strategy to keep people safe in their homes. Can he tell the House how successful he believes that strategy has been, and what he will be doing in the next few weeks to keep people safe that was not happening in the last few weeks?
I congratulate the hon. Gentleman and welcome him to his new position. I am sure he will be taking a keen interest in tomorrow’s debate on the Domestic Abuse Bill, which I shall be leading for the Government. He will be glad to know that, as a result of the recent announcements on the £5 billion covid-19 fund and the £750 million support for charities, we have already made available about £600,000 of funding to be used for the expansion and national roll-out of digital and helpline services. I take his point about the number of cases being pursued. I am glad to note that the police are pursuing these cases, and we are already talking directly with them to ensure that our courts system can deal with those cases expeditiously and that victims can be supported. This is a tough time for victims of domestic abuse, and we are there for them. “You are not alone” is the message that we have to send, time and again, to give them the support that they deserve.
Covid-19: Crown Prosecution Service
Covid-19 poses an unprecedented challenge to our criminal justice system, but I am pleased to say that we have successfully implemented contingency plans, including in the CPS and our criminal courts, to ensure that justice continues to be administered. Important hearings such as custody cases continue to happen. We have consolidated physical hearings into a smaller number of open courts and introduced additional measures to make them clean and safe. I am in regular contact with my right hon. and learned Friend the Attorney General and the national Criminal Justice Board, which has set up a strategic command to oversee our response to covid-19.
I thank my right hon. and learned Friend for his answer. Across both England and Wales and in Scotland, private companies such as GEOAmey work in close proximity to and with the CPS and the Crown Office and Procurator Fiscal Service to provide vital court services. What discussions have gone on and, indeed, what work has been done to ensure that employees working for those companies have the correct PPE, so that they can continue to do their work as safely as possible, which is vital to ensure that our justice system can continue to function?
I thank my hon. Friend. He of course knows that the GEOAmey contract in Scotland is managed entirely by the Scottish Government, but we recognise how vital it is for all frontline staff to be supplied with PPE. Arrangements are in place, for the management and movement of any prisoner who is suspected or confirmed as having covid-19, to make sure that PPE is available for those responsible. In England and Wales, HMPPS is supporting GEOAmey in its procurement of PPE, and PECS—prisoner escort and custody services—contractors are able to access the various HMPPS hubs around the country to collect additional equipment, as required.
Gwent police are hard at work, I know, in tackling criminality, including domestic violence, but with the lockdown added to the existing backlog in our court system, the people they arrest now might not be brought to court for many months and may go on to commit other crimes, so will the Secretary of State be specific about how we are going to speed up the justice system?
I thank the hon. Lady for that question. She will be glad to know that daily work is going on between my officials and Her Majesty’s Courts and Tribunals Service, the senior judiciary and the senior magistracy to make sure that we can progress more cases through both the magistrates and the Crown courts. Of immediate importance are magistrates court hearings: I want to see more of them come forward. We can do a lot of them virtually, and I know that the work being done by my hon. Friend the Minister for Crime and Policing, together with my Department, will help improve the speed of the delivery of these important cases.
Covid-19: Prison Staff and Prisoners
I would like to take this opportunity to thank all our prison and probation staff for the outstanding work that they are doing on a daily basis. They are some of our hidden heroes.
We are working very closely with Public Health England to ensure that our approach is based on the best scientific advice available. We are putting in place a number of measures to ensure that the regime in prisons satisfies requirements for social distancing, shielding and household isolation. We are also working with providers to ensure the supply of PPE for staff and ramping up staff testing.
I thank the Minister for her answer. In relation to the comments made earlier by the Secretary of State, will the Minister acknowledge that there can be a difference between what the Minister is told and how officers on the ground feel about access to PPE—not only quantity, but quality? Certainly, prison officers at Wandsworth are telling me that they are concerned about both those issues, together with having the facilities for putting on their uniform at the beginning of the day and taking it off at the end to keep themselves safe.
I appreciate it is very important to get a view from the ground as well as to understand what is said by officials. As the Secretary of State has already identified, we are confident in our supplies of PPE, except in relation to coveralls, of which we have a flight coming in from China this week. I do regularly speak to a large number of people in relation to a vast number of issues—from the unions to prison group directors and those who work in the sector—to try to ensure that we get an overall picture of what is happening on the ground.
There is grave concern about the potential transmission of covid-19 among both prisoners and prison staff. Organisations such as the Prison Governors Association, the Howard League and the Prison Reform Trust are all urging the Government to go further and faster in reducing the prison population. Will the Government consider urgently ending overcrowding by releasing prisoners who are on short-term sentences and suspending any new short sentences to slow the spread of covid-19?
As the Secretary of State has outlined, we have a many-pronged approach to ensuring that we reduce the headroom in the estate. We are, as the Secretary of State mentioned, following Public Health England advice, which is that we have to reduce the headroom, and we are on track to do that by a variety of means, including release, natural reduction in the population and additional accommodation on our prison estate. That is not all we are looking at, though. The hon. Member mentioned short sentences; we have done a considerable amount of work to ensure that people do not come into prisons unnecessarily. We are looking at people on remand and trying to ensure that those who are on remand and have served their sentence have their court hearing quickly. It is about ensuring that we have good mechanisms in respect of bail and good offers in relation to non-custodial orders. We have a variety of work strands and are looking at all such issues carefully.
Digital, Culture, Media and Sport
The Secretary of State was asked—
I welcome the hon. Member for Cardiff Central (Jo Stevens) to her position as shadow Secretary of State; she will participate virtually later. I also pay tribute to my hon. Friend the Member for Lewes (Maria Caulfield), who is not present because she has temporarily returned to the nursing profession to help to combat covid-19—she would normally be our Bench Whip.
Accurate, trusted information is more important than ever in this public health crisis. The cross-Whitehall counter-disinformation unit is providing a comprehensive picture of disinformation and misinformation on coronavirus. I have engaged personally with social media platforms, which have made technical and policy changes to stem the spread of misinformation. For example, YouTube now removes content that denies the existence of covid-19 or contradicts NHS information, and WhatsApp has reduced the number of contacts to whom a message can be forwarded.
Sadly, public trust in the media is collapsing, as many elements are seemingly more interested in catching politicians out and creating a story than reporting the news. What further work can my right hon. Friend and his Department do with the media to provide useful and accurate information to the public about support for vulnerable people and struggling businesses as we continue to tackle this crisis?
I thank my hon. Friend for his question. At this time we need trusted information more than ever. We all know that the media do not always get it right, but I pay tribute to the work of the news industry in providing much-needed information. We see that work in our national and local newspapers and in our local commercial and BBC radio stations, which bring together communities and provide reliable news. It is for that reason that we have designated people who work in the production and distribution of news as key workers. We are also addressing the keyword blocking that undermines the advertising revenue on which the sector so relies, as well as ensuring that the Government directly communicate their messages through advertising.
Many social media platforms are being used to spread disinformation and vitriol, which is particularly dangerous to communities and individuals at this time. What assessment has the Secretary of State made of the industry’s initiatives to warn people about misinformation and its willingness to remove destabilising and abusive messages?
Most platforms have taken positive steps to curtail the spread of harmful and misleading narratives related to covid-19. However, when I spoke to the platforms earlier this month I made it clear that they need to explore how they can further limit the spread of misinformation. In my meeting, the platforms agreed to exactly the sort of initiatives that my right hon. Friend correctly mentions, and also to increase messaging to users about how to identify and respond to misinformation. Since then, Facebook has announced that it will show in its newsfeed the messages to anyone who has interacted with a post that has since been removed. That sort of work needs to continue at pace across all platforms.
Some of the most pernicious pieces of disinformation, such as on 5G, and—let us be frank—the lie about the Government’s fake NHS accounts, have been amplified by blue-tick verified users on Twitter. Will the Secretary of State join me in calling on Twitter to be much more robust and to remove verified status from even prominent users should they be found spreading fake news and disinformation?
My hon. Friend is, as always, absolutely right. At the roundtable I was clear that those platforms need to go further and faster to drown out disinformation and to help to spread vital public health messaging to stay at home. I have encouraged Twitter, and all platforms, to explore all the ways they can further limit the misinformation on them. That clearly means enforcing their own rules, which of course Twitter can do by removing verified status. I assure my hon. Friend that I shall watch his Select Committee discussion with the platforms with great interest.
Covid-19: Civil Society and Charities
Charities provide so much compassion and care to the most vulnerable in our country, and that role has never been more important than it is right now. In order to ensure that charities can continue their vital work in our national effort to fight the coronavirus, we announced a package of grants worth £750 million, alongside all the measures that my right hon. Friend the Chancellor has already announced to support charities. That recognises the unique role of the sector in helping us through this crisis and bouncing back on the other side.
I thank the Secretary of State for his very kind welcome. He will know that, after 10 years of the hollowing out of public services through austerity, it is many charities that are providing frontline public services to the most vulnerable people at the greatest risk during the national response to covid. Although I welcome the support that he has announced, he also knows, because the charities sector has told him, that it is nowhere near enough, representing just 20% of their usual income during a 12-week period. They, and we, want to hear an explicit commitment from him that further funding will be announced before it is too late and charities go to the wall. Vulnerable people are relying on them for support and the Government must not let them down. Can he guarantee that?
I thank the hon. Lady for her question. We will, of course, do everything that we can to support charities. It is worth noting that we have ensured, through the Department for Culture, Media and Sport in discussions with the Treasury, that charities can access all the existing schemes. For example, they can benefit from VAT deferral, they can use the remaining business rate relief—they already get 80% relief; they can now get 100%—and they can furlough staff.
In addition, the measures have been designed to help the frontline. However, it is not just the £750 million that the Government have provided. There is huge work across philanthropic institutions—for example, £100 million from Barclays—not to mention what great charitable fundraising efforts, such as those of Captain Tom, have provided for the nation.
I thank the Secretary of State for his previous answer. I have charities that serve my constituents, such as Garden House Hospice, Tilehouse Counselling in Hitchin, the Harpenden Trust and many others. I commend him on the work that he has done with the Treasury on the charities package that has been agreed, but in relation to these quite small charities, can he give some further information to me and the House, and indeed to them, on how they can more easily access the fund that has been agreed, because some of them are saying that the next few weeks and months are looking very difficult?
My hon. Friend is right to raise that issue. Charities such as Garden House and Tilehouse play a vital role in our country, and it is exactly those sorts of local charities on the frontline that we want to help. As part of the £360 million that is being distributed through Government Departments, up to £200 million will go to hospices. In addition, a further £310 million will be distributed by the National Lottery Community Fund. We are finalising the eligibility criteria, and I will write to him, and to all hon. Members, explaining the process and the criteria for those applications.
Of course, that sits alongside the great public national effort. In particular, I welcome the £33 million that has been raised so far by “The Big Night In”. That has been matched by Government fundraising, and sits alongside such things as the 2.6 London marathon challenge.
Covid-19: Technology Sector
We are facing an immense challenge in how we live and work, and more than ever we are reaping the benefits of our world-class digital infrastructure and leading tech industry. I am grateful to all the companies that have made generous offers of support; I am consistently impressed by their generous and innovative response. Thanks to the tech sector, NHS workers have been given smart devices to connect with patients; people’s data caps have been lifted; and millions of video-calling apps have become the living essentials that we all rely on to do our jobs and to stay in close touch with loved ones.
I thank the Secretary of State for his answer. The development of British apps such as the covid symptom tracker could hold the key to ensuring that life returns to normal. What support is he giving the British tech sector to develop similar apps that could aid our economic recovery?
The Government are working closely with industry on the tech solutions that will enable us to beat covid-19, and I am sure that tech companies will play a key role in our economic recovery. We have already announced a new £1.25 billion package for innovative firms to ensure that our world-class tech sector remains resilient through this challenging period. That includes Government match funding for £500 million in convertible loans for businesses that require equity investment but are currently unable to access existing loan schemes. In addition, we have made available £750 million of loans and grants for exactly those small and medium-sized businesses to which my hon. Friend refers, which focus on research and development.
I thank the Secretary of State for his answer: during this pandemic, access to digital devices and fast, reliable internet connection are more important than ever. We have gone online not only to shop, connect with friends and colleagues, order prescriptions and apply for support, but to access culture. The BBC’s “Culture in Quarantine” has brought joy to homes, and in a recent survey of 1,000 people in the north-east, 55.6% said that they were using tech to watch arts and culture that they had never considered prior to the pandemic. He knows that the creative industries fear for their future and that if they are to rebuild and flourish, the digital platform must grow, but, sadly, the cost of devices and poor connections mean that many cannot participate. What steps is he taking to ensure that cost does not discriminate against the digitally disadvantaged, and what plans does his Department have to widen access to the creative industries post-covid?
I thank the hon. Lady for her questions—she raises a number of points and I will try to address them. First, I very much welcome the BBC’s “Culture in Quarantine”. I have had discussions with Tony Hall, the director general of the BBC, and we are working together on that. Indeed, I have engaged with some of it myself. The National Theatre put on “One Man, Two Guvnors”, and I very much enjoyed watching that and seeing arts in a remote form. I very much pay tribute to all the arts organisations doing that kind of innovative work.
It is very important that everyone can access technology, particularly the vulnerable. So, for example, we have announced that we are supporting the DevicesDotNow campaign, led by FutureDotNow, which is seeking donations of equipment from industry to help connect vulnerable people to vital Government services. We are going further, and I am working closely with my right hon. Friend the Secretary of State for Education to connect disadvantaged families and young people who do not currently have devices.
Football clubs form an integral part of this country, and it is important that they are given as much support as possible during these difficult times. Ministers and officials in my Department are engaging with football governing authorities about how they can access Government schemes—many have done so. I welcome the Premier League’s announcement that it will advance funds of £125 million to the English football league and national league, to help clubs throughout the football pyramid. In addition, I have personally been in talks with the Premier League with a view to getting football up and running as soon as possible, in order to support the whole football community. Of course, any such moves will have to be consistent with public health guidance.
I am sure that many people will be delighted to hear what the Secretary of State had to say about football getting going again, particularly with Sheffield United’s ambitious European campaign in full flow. He is absolutely right about the impact on the professional game. Many lower league clubs and clubs across the football community have done incredibly important work in their communities over this time, stressing the extent to which they are community assets rather than simply businesses. Can the Secretary of State say anything about what can be done to protect those lower league and national league clubs, which face unprecedented problems at this moment in time?
I thank the hon. Gentleman for his question; he raises an important point. The first thing we can do is help get the premier league up and running again, because that will then help release resources through the rest of the system. We have already seen the £125 million support that has been made available, and in addition to that the Department for Digital, Culture, Media and Sport is working with Sport England. They have £195 million for sport and physical activity, including a £20 million emergency grant for clubs and community assets that are in trouble.
Covid-19: Vulnerable Online Gamblers
I have had calls with the Betting and Gaming Council and gambling businesses, including five of the largest online operators. On 20 April, I wrote to the gambling companies urging faster progress on new player protection measures, data protection provisions and safer gambling messaging, and I understand that the industry made an announcement on advertising today.
I will be having further calls this week and next and will continue to make it clear to the sector that it must obey player protection rules and be particularly responsible at this challenging time. I am monitoring the situation closely, as is the Gambling Commission. Any operator exploiting the current situation or vulnerable consumers will be held to account.
It is welcome news about the advertising, but a high number of people have withdrawn from the self-exclusion scheme—[Inaudible.] What actions are being taken to monitor this and how will people be protected who have previously identified that they have a gambling problem but who have recommenced gambling during this period?
I assure the hon. Lady that I, the Department, the Gambling Commission and the gambling industry take these concerns very seriously. She will be aware that we have extended the comprehensive online self-exclusion scheme, GAMSTOP, and taken additional measures, including that made on credit cards just this month. We are moving forward with both non-legislative and legislative programmes.
Last year, the Government announced that they had launched a consultation on the national lottery age limit, which allows 16-year-olds to buy scratch cards and gamble online. Did the Government consult on this and will they introduce national lottery regulations in line with those on all other UK gambling businesses, to protect young people from gambling-related harm?
Estimates indicate that as many as 200,000 people in Scotland are problem gamblers. Last week, a Survation poll showed an apparent fall in part-time gambling as a result of the coronavirus lock-in, perhaps masking more intense betting among problem gamblers. In the absence of sporting fixtures, many are turning to riskier products, such as online casino games—advertising for these has been ramped up by betting companies during lockdown, which of course is shameful. Will the Minister call on gambling companies to provide clear and prominent covid-19 addiction warnings on betting site pages and will he impose an ongoing suspension on gambling advertising beyond the end of the current lockdown period?
I thank the hon. Gentleman for those comments. Of course, we are all aware that problem gambling can have a devastating impact on those affected and their families. We take the issue very seriously indeed. Although I welcome the current movements from the industry—it has come up with plans—we have also asked it to offer shared data in a more meaningful manner, so that we can make educated choices. We have also announced a review of the Gambling Act 2005 and will in due course make more announcements about the scope of that review for potentially more comprehensive measures.
We are committed to supporting our world-leading horse-racing industry. The Government have put in place an unprecedented support package of business rates relief and support with employment costs, which is helping racing, like other businesses. The Horserace Betting Levy Board is making £20 million of cash flow available to race courses, alongside the £8 million that the Racing Foundation is providing to support participants. The Government are working closely with the industry and the levy board to understand and address the ongoing challenges.
I represent some of the UK’s leading racehorse trainers, in Lambourn. The British Horseracing Authority has been working hard on plans for behind-closed-doors race meetings, limited to 12 jockeys in a single race and no crowds. What commitments can my hon. Friend make to supporting such creative solutions, for an industry under intense pressure, once the lockdown restrictions are relaxed?
I thank my hon. Friend for her support of the horse-racing industry. All major sports need to look after their staff, competitors, stakeholders and fans, and that includes having an eye to when competition might resume.
At this stage, it is not possible to give a timescale for when current restrictions will be relaxed. Potential conditions in which sport might return include behind closed doors, with neutral venues and with limited staff and broadcast crew. Other considerations would include first responder capacity and the availability of regular testing. We are in regular contact with the sector on what might be possible in future, but this will be entirely dependent on public health guidelines.
Covid-19: Rugby League
I have spoken with the chief executive of the Rugby Football League, Ralph Rimmer, and have been fully briefed on the extreme challenges presented by the suspension of the rugby league season. We recognise that many RFL clubs are on very tight financial margins. The value of rugby league and other sport clubs extends well beyond their immediate balance sheets. They play a pivotal role in their local economies and communities—as you well know, Mr Speaker. Economic interventions such as the job retention scheme will ease some immediate pressures, but we will continue to do what we can to further support them and the wider sport sector at this extremely difficult time.
I thank the Minister for his positive response to my question, because as I am sure he is aware, if any city can claim to be the city of rugby league, it is the city of Hull. As he mentioned, our rugby league clubs do so much more than just offer sport. They offer support for troubled youngsters and help in the community; they are indeed a part of our city.
My hon. Friend the Member for Kingston upon Hull East (Karl Turner) has been leading a campaign to save rugby league. I welcome the Minister’s comments on the furloughing scheme, but I also welcome the fact that he acknowledges that this is not enough. What guarantees can he give our brilliant rugby league clubs that the Government are listening and will take action soon to secure their financial future?
I can give the hon. Lady an assurance that I have a great deal of sympathy for what she has said. I have heard representations from both sides of the House, including from her neighbour, the hon. Member for Kingston upon Hull East (Karl Turner). Many of the measures that the Government have implemented are useful and are helping, but I am aware that there are particularly acute pressures for rugby league. I and my Department will continue to work across Government, as well as with the RFL. I am also very aware of the time sensitivity of the issue that the hon. Lady has raised.
For many northern towns, rugby league is more than just a sport. It is part of our identity—our culture. Most of the clubs are old enough to have survived the two world wars, but they desperately need our help and support. The sport must survive this crisis. What will the Minister do to make sure that rugby league is still around for our communities to go back to after coronavirus?
Covid-19: Heritage and Tourism Sector
The Government are committed to our world-class heritage and tourism sectors. I and my officials are engaging across Government and are in regular weekly discussions with industry stakeholders. The Chancellor has set out an unprecedented support package for businesses and workers, including those in the heritage and tourism sectors, to help protect them in the current emergency. We have also announced a £1.3 million scheme to support destination management organisations, and both the National Lottery Heritage Fund and Historic England have announced sectoral support packages.
Liverpool’s visitor economy brought in £3.3 billion last year, supporting 6,300 businesses and 57,000 jobs, but by June almost £1 billion will have been lost in Liverpool alone because of the lockdown. Will he undertake to push the Chancellor to extend further the business support he announced to those with a rateable value over £51,000 and to extend help to the self-employed and micro-businesses in the sector, who are falling between the cracks of the available support schemes?
The hon. Lady is absolutely right about the enormous economic value of the tourism industry —not only in her area, but right across the country. I assure her that we are in regular conversations and dialogue with not only the industry but the Treasury, and those discussions will continue.
The Keighley and Worth Valley railway—Yorkshire’s No. 1 tourist attraction—has welcomed over 7 million visitors to Keighley in the last 50 years, all supporting our much-loved heritage railway and the local economy in Keighley. Like all heritage railways, it is run predominantly by passionate volunteers, with an economic model based on ensuring that ticket sales are plentiful. With social distancing restrictions unlikely to be relaxed for a significant time, will the Minister outline what additional support he will consider providing to the heritage railway sector?
The importance of the heritage rail sector was recognised last year, when the National Lottery Heritage Fund gave a grant of nearly £800,000 to bring the Keighley and Worth Valley railway back into service for the first time in 25 years. My hon. Friend may wish to apply to the £50 million emergency programme launched by the heritage fund to support the heritage sector through the covid-19 pandemic. He may also want to approach Historic England, which has announced an additional £2 million programme of grants for smaller specialist organisations and projects.
It is a pleasure to make my Dispatch Box debut, albeit virtually; I believe I am the first Member to make an inaugural appearance from the Front Bench online.
On Friday, G20 Tourism Ministers met. The UK tourism sector is greatly exposed to the lockdown and, with the summer season coming, the uncertainty is causing distress. The sector learnt that it would be among the last to exit lockdown merely as an aside from the Minister for the Cabinet Office on “The Andrew Marr Show”. In contrast, President Macron outlined a strategy for the French tourism trade including flexible furlough, a 100% state-backed loan—not 80%—and state backing for postponed rather than cancelled holidays. Our system of refund credit notes can be expanded and extended to protect our domestic tourism industry. Did the Minister discuss those measures at the G20 meeting? What consideration has he made on introducing them?
I congratulate the hon. Member on his first virtual appearance from the Opposition Front Bench. He raises many important issues. We had a constructive conversation with the G20 tourism Ministers, primarily around the recovery programme. We are continuing the dialogue, both domestically and internationally, on all those issues. Of course, the tourism, hospitality and leisure sector has benefited from additional measures including business rate relief, and we will continue the dialogue with all stakeholders to ensure that the sector is looked after.
Covid-19: Local and Regional News Organisations
The Government recognise the vital role that local and regional newspapers play in the provision of reliable, high-quality information during this time. We have already put in place an unprecedented financial package to provide support to all businesses and have taken a number of steps to provide specific support to news publishers. We are continuing to work closely with publishers to fully understand the specific challenges that they are facing with the supply chain and the fall in advertising revenues and options for addressing these.
The Government have agreed an advertising deal with the News Media Association, which has been presented to the wealthiest publishers, but have so far overlooked independents. Does the Secretary of State agree that independent publishers such as the Bedford Independent are providing a vital service to communities across the UK, and will he meet with the independent sector representative body, the Independent Community News Network, to agree an advertising deal for the local independent press?
I agree with the hon. Gentleman that the independent community news sector is very important and plays an essential role in continuing to provide public information alongside the NMA members in the regional and local press. The agreement that we have reached for advertising will cover 600 national, regional and local titles, which reach something like 49 million people, but I am in touch with the ICNN and we are looking to see what other measures could be put in place to support it and to see whether it could benefit from the Government’s own advertising package.
In Somerset, we are fortunate to have some excellent community radio stations, but, across the country, such stations are in need of financial support at this time. What more can the Government do to make sure that community radio stations are not forced to close because of coronavirus?
I thank my hon. Friend for his question. I very much agree with him that community radio plays an essential part in the media landscape, and I am very conscious of the pressures that many community radio stations are currently under. We are looking at ways in which we can support them, perhaps through the use of a community radio fund. That is something that I hope we can say more about very shortly. I am determined to give whatever help is possible to support community radio as well as commercial radio.
Thank you, Mr Speaker, for giving me the opportunity to update the House on our economic response to the coronavirus. Let me say at the outset that I am grateful to Members from all parts of this House, including the hon. Member for Oxford East (Anneliese Dodds), the new shadow Chancellor, for their contributions to this debate.
We should be in no doubt about the seriousness of the economic situation. The Office for Budget Responsibility has published a scenario showing that the coronavirus will have very significant impacts, both at home and in the global economy. More than 1.5 million new claims have been made to universal credit, over 4 million jobs have now been furloughed, and survey evidence suggests that a quarter of businesses have stopped trading. These are already tough times and there will be more to come.
Although our interventions have saved millions of jobs and businesses, we cannot save every job and every business. I understand and share people’s anxiety, but right now the most important thing that we can do to protect our economy is to protect the health of our people. As my right hon. Friend the Prime Minister said this morning, we are making progress. We are beginning to turn the tide but, if we lose control of the virus again, we risk seeing a second spike, which we all want to avoid. The goal of our economic strategy is to provide a bridge over what will be a sharp and significant crisis by keeping as many people as possible in their existing jobs, supporting viable businesses to stay afloat and protecting the incomes of the most vulnerable. In other words, it is to maintain the productive capacity of the British economy, so that, once we are able to refine the public health restrictions, we can as quickly as possible get people back to work, businesses reopening and the self-employed trading again.
The Office for Budget Responsibility has been clear that, if we had not taken the actions that we have, the situation would be much worse. The International Monetary Fund has said that our approach has been “aggressive” and “right”. Taken together, I believe our response has been one of the most comprehensive of any country anywhere in the world. Working closely with the Bank of England, business groups, trades unions, banks, charities and many others around the country, we have developed a plan to protect public services, people and businesses.
Let me address each of those areas in turn. Public services such as the NHS are on the frontline of the fight against coronavirus. I repeat today that whatever resources our NHS needs it will get. At the Budget in March, I announced a coronavirus emergency response fund, initially allocating £5 billion. We have now provided more than three times that initial amount, with the NHS and public services receiving £16 billion so far.
We are also providing extensive support for people’s jobs and incomes. Our most important and far-reaching policy is the coronavirus jobs retention scheme to keep people in employment. The scheme launched on schedule last week, and I am pleased to report that the first grants have just been paid. Around half a million employers have already applied for help to pay the wages of over 4 million furloughed jobs—jobs that might otherwise have been lost.
Her Majesty’s Revenue and Customs is also on track to deliver the self-employed income support scheme, as promised in early June, and we will publish detailed guidance this week. Alongside those new interventions, we have strengthened our existing safety net with increases to universal credit, the local housing allowance and statutory sick pay. We have reinforced our social fabric, too, with £750 million for the charity sector.
Of course, the best way to support people is to protect their jobs, and that means supporting the businesses that employ them. Our plan to help businesses means the following: almost half of all business properties in England will pay no business rates this year; almost 1 million business premises can now receive cash grants of up to £10,000 or £25,000; and more than 2 million businesses have been offered a VAT deferral, saving them an average of £30,000.
Another 2.7 million people will be able to defer their self-assessment payments; almost 60,000 people and businesses have put “time to pay” arrangements in place with HMRC; up to 2 million employers will be able to access the statutory sick pay rebate, up to £48,000 per firm; more than £14 billion of lending has been issued through the Bank of England’s financing facility, and more than 20,000 coronavirus business interruption loans have now been approved. Of course, all that is on top of our furlough scheme, with payments now arriving.
Taken together, our plans are protecting millions of people and businesses across our country, through a set of interventions in the economy on a scale that we have never attempted before, and they are working. However, I know that some small businesses are still struggling to gain access to credit. They are, in many ways, the businesses most exposed to the impact of the coronavirus, and often find it harder to access credit in the first place. If we want to benefit from their dynamism and entrepreneurial spirit as we recover our economy, they will need extra support to get through this crisis. Some businesses will not want to take on more debt, which is why our focus has been on cash grants, tax cuts and tax deferrals, but for others, loans will be part of the answer.
Today we are announcing a new micro-loans scheme, providing a simple, quick, easy solution for those in need of smaller loans. Businesses will be able to apply for new bounce-back loans, for 25% of their turnover, up to a maximum of £50,000, with the Government paying the interest for the first 12 months. I and the Economic Secretary to the Treasury have been in close talks with the banks, and I am pleased to say that those loans will be available from 9 am next Monday.
There will be no forward-looking test of business liability, and no complex eligibility criteria; there will be just a simple, quick, standard form for businesses to fill in. For most firms, loans should arrive within 24 hours of approval. I have decided that, for this specific scheme, the Government will support lending by guaranteeing to the lender 100% of the loan.
Let me address that point directly. I have heard calls for the Government to underwrite all our loan schemes with 100% guarantees, but I remain unconvinced by the case for doing that universally. We should not ask ordinary taxpayers of today and tomorrow to bear the entire risk of lending almost unlimited sums to businesses that in some cases may have very little prospect of paying those loans back, and not necessarily because of the impact of the coronavirus. I do not think it is appropriate to provide 100% guarantees on all of our schemes. Instead, these new bounce-back loans carefully target that extraordinary level of state support at those who need it most. The £50,000 cap balances the risk to the taxpayer with the need to support our smallest businesses.
Right now, the most important thing for the health of our economy is the health of our people. We are making progress in our fight against the virus, but we are not there yet. Our strategy is to protect people and businesses through this crisis, by backing our public services and NHS with increased funding, strengthening our safety net to support those most in need, and supporting people to stay in work and keep their businesses going. Our response is comprehensive, coherent and co-ordinated. It is, I believe, the right approach. I hope I can continue to rely on the support and advice of all right hon. and hon. Members as I commend this statement to the House.
I am grateful to the Chancellor for advance sight of his statement, and to all the Treasury civil servants, and those in HMRC and the Department for Work and Pensions, who have been working incredibly hard to get these schemes running. I fully appreciate that the Chancellor’s job has not been an easy one, but it is our job as a constructive Opposition to point to problems that we are hearing from the frontline, and to indicate solutions. It appears that at least some of those problems are more acute in our country than in many others.
The Purchasing Managers’ Index figures that came out last week indicated a sharp fall in business confidence. Sadly, that was not a surprise. It has been clear for some time that the economic slowdown we are currently experiencing is sharp and deep. It was, however, unsettling that those figures suggested that business confidence has taken a stronger hit in the UK than across the eurozone. I have heard from small business owners who put their life and soul into their firms, but have less than two weeks of cashflow left, and they are devastated. We all need to work together to get the different support schemes working for our country. We must fix this.
I am well aware that many of the conditions for shifting out of lockdown are not within the Chancellor’s grasp. However, his Government need to be open about blocks on progress and how they will remove them. That applies to the test, track and trace regime, which must be in place before key sectors can open again. It also applies to the creation of a national tripartite system to ensure that workers and employers have confidence that they can return to work safely when the right time comes.
The Chancellor is directly responsible for the economic package, and he knows that we supported him in creating the furlough scheme; indeed, we called for it. But the evidence is that some other key elements of the economic package are failing, so, in a constructive spirit, I want to ask the Chancellor whether he would countenance solutions in three areas—first, on CBILS. It is a relief to hear from the Chancellor that he has listened to calls from the Opposition, business and others that we need a full guarantee for at least some loans—he has stated those of up to £50,000—but we need to be clear that the UK has an enormous mountain to climb. Switzerland has a population of under 9 million, yet it approved four times as many loans in its first week as the UK has done in a month. We are running out of time, so how will the Chancellor ensure that the bounce-back loans get to the businesses that need them? How will they get out of the door, and what plans does he have to ensure that the banks will have the capacity to provide those loans?
Secondly, recent figures suggest that one in 10 in our workforce looks set to be unemployed as a result of this crisis, with all that that entails for people’s future prospects, incomes, and their and their families’ health. Again, I say to the Chancellor that we will work with him. We have indicated many of the gaps in existing schemes to protect incomes, and will continue to push for them to be filled. However, we must be clear: the reason that those gaps are such an income-crushing, insecurity-producing crisis for so many is that, in most cases, the only alternative to coverage by these schemes is universal credit, which pushes people right down to an average of 10% of the income of the rest of the workforce. The DWP has made some welcome changes, but failure to change the initial loan into a grant threatens to create even more of a debt crisis among households. Apparently the Government are sympathetic to changing the loan into a grant, but we are told that the computer system just will not allow it, so my second question is: will the Chancellor knock heads together and get the computers to say yes to switching UC loans into grants?
Finally, as the Chancellor knows, before this crisis we had an economy that simply did not work for so many. Around a quarter of all families lacked just £100 in savings, even before the crisis began. The UK is the most regionally unequal country in Europe, and we have just had the longest squeeze on living standards not just in a generation, but in eight generations. The recovery from this crisis must be faster and wider to ensure that as many people as possible have a job to come back to. We need a flexible furlough scheme. The Chancellor told me previously that it cannot currently be made more flexible, but other countries have done so. Will he work to amend the furlough scheme to allow workers to come back on a part-time basis, and will he do as so many other countries are doing, from Germany to New Zealand, and talk about how those hit hard by the crisis can be supported not just now, but in the future, with employment-boosting redeploying retraining schemes? The aftermath of the pit closures tells us that an approach where the Government shrug their shoulders will scar our economy for generations to come, so my last question is: will the Chancellor work together with me, trade unions, businesses and local authorities to develop a plan to offer the hope of work to those who have already become unemployed, and get our economy moving again?
May I welcome the shadow Chancellor to her place, and thank her for the constructive dialogue that I have had with her over the past two or so weeks? Let me address her questions directly and swiftly. First, I turn to her question about the loan guarantee programme and the banks’ operational capacity. Obviously, this is something that the Economic Secretary and I, working with the banks, have spent a lot of time on over the past few weeks. I am grateful to the banks for re-engineering their entire systems to offer this brand new bounce-back loan. I am assured that it will be available from next Monday morning. There will be a very simple application process, and the banks will not have to conduct more than the customary fraud and anti-money laundering checks, which of course would be reduced for their existing customers. If someone has an existing business account with a bank, the process should prove incredibly rapid, and they should have the cash in their bank account within a day or two. The banks are readying their systems for that launch date as we speak.
I hear a lot from many commentators that we should copy what was done in Switzerland. Now, Switzerland does have 100% guaranteed loans—I absolutely agree that it does—but it is worth bearing in mind that it does not provide very much else in the way of direct fiscal support for its businesses. Indeed, after extensive dialogue with the Swiss Government, it is very clear that, for them, the loan guarantee scheme is the primacy of their direct fiscal support to businesses. In this country, we have provided tens of billions of pounds in direct cash support—in tax cuts through reducing business rates, in cash grants of £10,000 or £25,000, and by paying people’s statutory sick pay bill. These very direct cash impacts, I believe, are more generous than asking companies to take on a loan, which is why I believe that the Switzerland comparison is not analogous. Secondly, the Switzerland furlough scheme requires employers to contribute a fifth of the payment to the scheme, whereas in this country, our furlough scheme removes that very considerable cash burden from businesses.
As I always say when I am at this Dispatch Box or answering questions elsewhere, it is important to look at the totality of all our economic interventions. When measured as a percentage of GDP, it is very clear to me that, as has been empirically shown by others, the sum total of our fiscal intervention to support businesses and people through this crisis is one of the most comprehensive and generous, in terms of scope and scale, anywhere in the world.
Turning to the next question—on universal credit and support for the most vulnerable—I firmly agree that during this crisis, we must of course look after the most vulnerable in our society, and from the Budget onwards, I have striven to do exactly that. We have invested extra funds in tax credits and in universal credit, improved eligibility for statutory sick pay, improved employment support allowance, improved how these schemes work for the self-employed, improved the local housing allowance and, indeed, created a brand new hardship fund for local authorities to help people with their council tax bills. All these investments have a sum total of over £7 billion of investment by this Government to strengthen the safety net to help the most vulnerable in our society through this difficult period.
Lastly, with regard to the future, I wholeheartedly believe that the best way out of this is to ensure that as many people as possible can return to the job that they had. That is the best way to protect people and to protect their livelihoods, their families and their household incomes, which is why all our support has been conducted with that aim in mind—how can we help to support businesses? How can we help them to keep their employees attached to that business? I believe that our furlough scheme stands at the centre of that. All the other interventions will help to support that aim so that as we emerge from this crisis, we can bounce back as quickly as possible to the life that we once knew.
The Government’s support package for jobs and wages is providing a vital lifeline for millions of families, but every day that the full lockdown continues, further damage is done to the economy, so can I ask the Government to publish a road map to release from the lockdown so that businesses can start to prepare for a phased modification and a safe exit from the current emergency measures?
I agree with my right hon. Friend that, of course, the economic damage that is happening at the moment is severe, which is why we have taken the unprecedented measures that we have to try to mitigate as much of that as we can. Of course, I share with her—and indeed, the Prime Minister shares with her, as he said this morning—a sense of urgency to want to restart our economy, not least so that we can get people back into work and start creating the tax revenues that we need to pay for our public services, but we are not there yet. That is why we must remain disciplined and united around our aims and meet the tests that we have set to emerge from this phase of the crisis, but the Prime Minister also said this morning that we are making considerable preparations, and have been for a while, for phase 2. In phase 2, as he said, we will be able to gradually “refine” our
“economic and social restrictions and one by one…fire up the engines of”
our “vast UK economy”. I can assure my right hon. Friend that that work is ongoing. I remain committed to it and, as the Prime Minister said, the Government will be saying much more about this in the coming days.
I thank the Chancellor for advance sight of his statement. The SNP welcomes the money that he has committed, but we acknowledge the gaps and the limitations, and we constructively ask for actions in a number of areas: assistance for those waiting for confirmation of a universal credit claim; the ending of the five-week wait and the two-child limit; additional support for carers who may be forced to stop work; support for those caught in the new starter furlough gap; support, which the Scottish Government have already put in place, for the newly self-employed; support for limited company directors, who particularly feel as though they have been left out; removing the “no recourse to public funds” conditions, which leave people without support in many cases; helping asylum seekers whose support networks may have fallen apart; and ensuring that pregnant women who were wrongly sent home on statutory sick pay and unpaid leave in March get access to the furlough scheme.
The Chancellor talks about supporting viable businesses to stay afloat, but that viability is very much in the hands of the banks, who are making decisions on tight criteria. What is he doing to ensure fairness in that assessment? The bounce-back loan scheme that he announces is good and deferring can be useful, but many small businesses feel that it will just mean storing up more debt for the future. It is understandable that they may not want to take on more debt. Will he look at more grants, CBILS overdrafts and revolving credit to help those businesses through the current difficulties?
Will the Chancellor also look at assistance for food wholesalers who are keeping care homes and small shops supplied, and who are suffering because of the downturn in hospitality? He made no mention in his statement of the many businesses that shut their doors on public health advice and now find that their insurers refuse to pay out on business interruption claims. Will the Government step in to cover disputed claims? Businesses just do not have the time or the money to go through the Financial Ombudsman Service or the courts.
I thank the hon. Lady for her constructive engagement with me and others as we go through this difficult time. With regard to helping the most vulnerable, we have put several measures in place that will help many of the people she mentioned—not least strengthening universal credit, as we have done by £1,000 over this year, and associated changes and tax cuts, as well as providing local authorities with discretionary funds to help those in their communities who, as they know better than any of us sitting here, are in most need of support. That will cover many of the groups that she talked about.
With regard to the banks and viability tests, the new bounce-back loan scheme will not ask for any forward-looking information from companies. There will be a very simple form for companies to fill in. It will be done on the basis of self-certification, and the banks will be doing customary fraud, money laundering and identity checks rather than any credit checks, given our 100% guarantee. That problem should, therefore, be solved.
I have also spent time talking to the banks, as has the Economic Secretary, tirelessly on a daily basis about the other forms of credit that they are extending to small businesses. The hon. Lady is right to point out that some businesses would prefer to have things such as overdrafts. In that vein, I am pleased to tell her that according to the last numbers I had, about 20,000 new overdrafts have been extended, together with about 60,000 capital repayment holidays. Of course, general SME lending happens outside CBILS or, indeed, our new bounce-back scheme. I can assure her that the Economic Secretary and I remain alive to that and will keep up all necessary pressure on banks to make sure that credit flows to where it needs to get to. Today, I am happy to put on record my thanks to them and their teams for helping us to work at pace to get the bounce-back loan scheme up and running for next Monday morning.
Lastly, the hon. Lady asked about insurance companies, and I think she is right to highlight this. I would point insurance companies and their policyholders to the very strong guidance set out in a letter by the FCA, which urged insurance companies to behave responsibly and flexibly in the interpretation of their policies. We have previously made it very clear: where there was a question about whether a policy should pay out, depending on whether we had closed the business as a result of Government action, that was cleared up. Of course, very few people have policies that would cover them for this, but where it is clear that they should have a reasonable expectation of coverage, it is right that the insurance companies pay out. We will keep a close eye on the situation.
I congratulate my right hon. Friend very sincerely on the bounce-back loans, which I think will make a huge difference to small businesses. I must also say how great it was to see the Prime Minister back on good form today.
Of course we need to keep the lockdown in place until it can be safely lifted, but will the Chancellor today give employers and entrepreneurs, who are the lifeblood of our economy, reassurance that when restrictions can be lifted, they will be given some notice and some clear guidelines so that they can restart their supply chains with confidence?
I thank my right hon. Friend for her comments; having held the positions that she has had in Government, she knows better than most the importance of business to our economy and to driving our economy. She is absolutely right that businesses will need time to prepare. As I have alluded to, work is already under way in government, through engaging with businesses, unions and others, to ensure that when we are in a position to get to phase 2 and refine the social and economic restrictions, work has already taken place to prepare everyone and give them suitable notice, so that they can kick-start the engines of our economy.
I welcome the micro-loans scheme, but may I press the Chancellor to do more for the self-employed—in particular the self-employed who are not in his scheme, many of whom have only modest incomes, such as cleaners, builders, taxi drivers and musicians? Such self-employed people often work through limited companies, relying on dividends for income, and are getting little or no help, with devastating consequences. I know that the Treasury is worried about fraud, but I wrote to the Chancellor on 8 April with a Liberal Democrat proposal to help those self-employed people and protect the taxpayer. Will he please now help self-employed people who are dependent on dividends, before it is too late?
The right hon. Gentleman mentioned groups that I engaged with specifically in the design of the self-employed scheme, and who I am fairly certain released reasonably positive comments on the day it was released, notably the Licensed Taxi Drivers Association and, I believe, one of the musicians’ federations. I spoke to them both personally as we developed the scheme, and I believe that they were very supportive at the time.
We have designed these schemes at pace to get support to as many people as we can in the time available, and the decisions that we have taken enable that. At this point, complicated changes to the schemes would just mean delay in getting support to millions of people who are either already in receipt of it or very shortly to receive it.
The package of help for the self-employed is welcome and helps the vast majority of workers. However, there are those—not the super-rich—who have been left out, either because they earn over the £50,000 cut-off, because they are new to self-employment or because they are company directors who are not earning the majority of their income by this route. In the spirit of doing whatever it takes, while appreciating that it could well involve some element of “pay now, claw back later”, can the Chancellor give those workers some hope that he does not view the self-employment support scheme as a done deal and that, as Scotland has shown in recent days, he is still open to new ideas?
As I hope I have demonstrated over the past six to eight weeks, I am always open to new ideas, whether at home or abroad. I have constantly sought to refine, to improve, to iterate and to respond to circumstances on the ground to make sure that our economic response is as comprehensive and effective as it can be. I can give my hon. Friend an assurance that I will continue to do just that.
Businesses in Warwick and Leamington, much like those across the country, have been burning through cash in recent weeks and have been desperate for a cash injection. I welcome the Chancellor’s announcement today, but does he accept the view of Neel Kashkari, who ran the US federal bail-out programme in 2008-09, that what is critical is getting the money out as quickly and as simply as possible—like the French, who have lent seven times more than the UK, or the Germans, who have lent three times more? Does he accept that we have been too slow and too deliberative?
Different countries have done things in very different ways. The hon. Gentleman talked about the US; the US has no equivalent of our furlough scheme, which is probably the most significant economic intervention that we have put in place—it was up and running four weeks after I announced it and is already, as we speak, getting money to businesses to pay wages. He talked about other European countries; there is a range. We have now issued more CBILS loans than the equivalent scheme in Germany.
As we look ahead to a gradual lifting of restrictions on business in the coming weeks, will my right hon. Friend look for common-sense opportunities, such as allowing open-air markets to trade in the same way as supermarkets? Will he also look at changes to the furlough scheme to help it accommodate a gradual return to work?
I thank my hon. Friend for his thoughtful comments. I know he has put a lot of personal time and energy into thinking about these things, and I welcome his engagement with me. He makes very interesting suggestions. As the Prime Minister said this morning, there will be gradual refinements to the social and economic restrictions, and my hon. Friend is right to highlight that that is exactly how the process will work, whether that is the restrictions or, indeed, how we remove some of the economic interventions that we have put in place.
The whole House will welcome the Chancellor’s announcement of his micro-loans scheme—the bounce-back loans—that he just made in his statement, but will he admit that the CBILS loans that he announced are still proving slow, overly complex and bureaucratic? Will he look again to see what he can do to simplify that scheme so that more of the £330 billion of potential loans that he set out in his first announcements can actually get to where they need to be to save huge swathes of our economy?
The hon. Member is absolutely right. I am striving to make the process as seamless and as quick as possible. We made some improvements a couple of weeks ago—removing guarantees and changing some things on the back end—which have already made a difference. More than 20,000 CBILS loans have now been issued and there are 40,000 applications that the banks are working through. The acceptance rate remains high at over 80%, but there are further tweaks that we have been putting in place over the past week. Information on that will be outlined later. It is largely technical, administrative and regulatory, but I believe those changes will continue to accelerate the pace of CBILS loans and, like the hon. Member, I think we all share that aspiration.
I congratulate my right hon. Friend on the wisdom and skill with which he is adopting policies that I am confident are not naturally his territory. Well done to the Government. Will he reassure me that he is conscious that we need to take early, safe opportunities to open up the economy if we are to get back to a path to sustainable prosperity? Can he reassure me that he knows how to unwind this major set of interventions, so that we can get back to sound economic principles?
As ever, my hon. Friend makes excellent and informed points on economic policy. I thank him for his support as well. He is absolutely right. I share with him, as does the Prime Minister, a sense of urgency about wanting to reopen our economy so that we can start driving growth, providing people with employment and paying for our public services. He is right to acknowledge that that must be done safely. Although we have made progress, we are not there yet, but I can reassure him that extensive work is under way to plan for phase 2 of the crisis so that we can get back to the economy that he and I both want to see.
In the past 10 years, there has been a very active debate about those relatively few companies that have so aggressively avoided paying tax in this country. Many of those same companies are now relying on the largesse and generosity of taxpayers to remain solvent in these difficult times. As the Chancellor and his Department start to plan for the recovery economy, will he take this opportunity to have conversations with those companies to make sure that when we do recover, they play a much fuller part in our economy going forward? Let us not aim for business as normal when we get back after this crisis; let us aim for business as better.
I thank the hon. Member for that comment, and I like his phrase at the end—we will see whether it shows up in a future speech. He is absolutely right that we are all in this together. We have gone through this as a collective endeavour as a country, whether as business, Government or individuals, and it is right that people act responsibly during this process. That is something I have urged all businesses to do, and I hope they continue to do that. He is correct: as we emerge from this, it is right to look at things in the round. As we went through this together, we must repair the economy all together.
I congratulate my right hon. Friend on the bounce-back loans, which I am confident will provide much relief to a lot of small businesses in my constituency. I also congratulate him on the strong support measures across the range, which have helped a lot of people in South Cambridgeshire. Will he confirm that he will keep the package of measures under review, not only to identify any other groups that we can help, but also to make sure that as we transition out of lockdown, we do so successfully? In particular, the job retention scheme, which, as he said, now employs 4 million people, has been very successful in protecting jobs. We need to make sure that when it does come to an end, it does so in a way that minimises redundancies.
My hon. Friend is well informed on these issues. I know he has put a lot of specific thought into this topic, and I welcome further engagement with him. He is right. We must think carefully about exiting these schemes to provide maximum support to the labour market and businesses, and to ensure that we do not inadvertently distort things and hamper our recovery by stopping people going to work and businesses re-employing them, which is the outcome we all want to see.
On Friday, the Government announced support for ferry services between Northern Ireland, Scotland and England. The Holyhead-Dublin route was ignored. A great deal of Holyhead-Dublin traffic is in fact between Northern Ireland and Great Britain, including the transport of time-sensitive goods such as food and medicine. It is also vital to the economy of north Wales. Is the Chancellor just standing back and waiting for Holyhead, the UK’s second-busiest roll-on roll-off ferry port, to fail before stepping in?
As we have demonstrated, we are prepared to support critical transportation services in this country, with huge economic intervention in rail, in buses and, as the hon. Gentleman acknowledged, in ferries. I know my right hon. Friend the Transport Secretary is well on top of that and he will bring to me any issues that he thinks need my consideration.
I thank the Chancellor and his teams for the speed with which they have managed to get so much money to help so many of my constituents. As he thinks about how he is going to balance the black hole that is his budget at the end of this, may I suggest that he consider not only ending the fair fuel stabiliser now that fuel prices have fallen by so much, but putting a windfall tax on hedge fund managers who are currently selling short the very businesses he is trying to support?
I thank my hon. Friend for her support. I cannot comment on future Budgets, but I certainly hear what she has to say. I echo what I said earlier to the hon. Member for Hove (Peter Kyle). We are all in this together. As we look to repair public finances and get our economy going after we exit this crisis, it is important that everybody, from every part of society, plays their part in that.
Thank you very much, Mr Speaker. I am here virtually, but at a distance.
I thank the Chancellor for all he has done, is doing and will do in the future. Some in the hospitality sector, in particular private bus companies, do not have premises and fall just outside the present small business support scheme. Will the Chancellor agree to extend the scheme? Similarly, the coronavirus bank loan scheme has had 36,000 applications, but only 16,000 have been approved. Will the Chancellor ramp up underwriting cover from 80% to 100%, as other countries have been doing?
What I would say to the hon. Member is that the new bounce-back loan scheme announced today does come with a 100% guarantee for loans of 25% of turnover up to £50,000. Given the structure of the Northern Irish economy that he knows so well, which is full of microbusinesses, I believe that that in particular will be a very significant intervention that will help the Northern Ireland economy.
I congratulate my right hon. Friend on the scale, breadth and speed of the various packages, and thank him for them. Does he agree that what is important at the moment is getting cash and liquidity to businesses and individuals, hence why the micro-loans scheme is so important? Does he also agree that over time a lot of companies are taking on additional debt, so we may have to think about debt equity recapitalisation?
My hon. Friend is absolutely right. I know she has spent a lot of time with businesses in her constituency to understand what is on their minds. Cash and liquidity is king, which is why the VAT deferral in particular that we put in place and which took effect some time ago—worth over £30 billion or 1.5% of GDP—is so vital in providing that breathing room. The new bounce-back loans will be available to businesses hopefully within a day or two of applying, which will also speed up cash. The furlough scheme is now up and running, and people are getting that cash in their bank accounts as we speak.
Many workers on low basic pay rely on commission to make up their wages, but if they are furloughed, they get 80% of their basic pay only, which causes real hardship. In response to my question in the Select Committee, the Secretary of State for Business, Energy and Industrial Strategy said that he is considering that matter. Will the Chancellor write jointly with him to confirm a solution that will give those workers access to 80% of their typical earnings?
At this point, it is very difficult to make changes to the operation of these schemes; that would just delay further payment. For those workers who have fluctuating wages—for example, those on zero-hours contracts—we have provided employers and employees with the ability to take either the most recent time period and look at that over a year before, if they were seasonal, or to take an average of their earnings over a period, to ensure that they are not inadvertently penalised by a shorter period of lower earnings. I think that that does provide flexibility and generosity to those who do not have fixed amounts of work.
I thank the Chancellor for all he is doing to protect jobs and income at this really difficult time, and especially the introduction of the job retention scheme. However, he will be aware that many companies do not initiate a payroll run until the end of the month. This means that new starters in early March were paid for work they did in March but were then laid off because they are unable to access the furlough scheme. Will he review that and consider other evidence of employment?
When we announced the job retention scheme, I said that it would apply to those who were known to HMRC on 28 February. That was how the scheme was designed and set up. Over the last few weeks, we have moved that date to 19 March, which brings an extra few hundred thousand people into it and means that overall, just shy of 30 million people in employment are able to benefit from the furlough scheme. It is an extraordinary achievement for the team in HMRC to have conceived that in this short space of time.
Pubs and restaurants have been hit particularly badly by covid-19. Those with a rateable value of more than £51,000 do not qualify for the retail, hospitality and leisure grant fund. Six of the big pubcos are still charging their tenants rent, and now pubs are being told that they will be some of the last to reopen once restrictions start to lift. Will the Government commit to extend the retail, hospitality and leisure grant fund to properties with a rateable value of up to £150,000, instruct the big pubcos to stop charging their pubs rent, and commit to extend the furlough scheme for as long as pubs and restaurants have to remain closed or for as long as their income is affected by social distancing measures?
The hon. Member is absolutely right that companies in the retail, leisure and hospitality sector are the hardest hit during this crisis. Of course, they can avail themselves of all the various interventions we have put in place more generally, but they also have one specific benefit: for most of these businesses, rent is a significant part of their cost structure, which is why we have given them a complete business rates holiday for this entire year.
The economic package that my right hon. Friend has put in place is historic in its scope and ambition and has been an absolute lifeline to so many people and businesses in Hertford and Stortford. The bounce-back loans will help still more. Some—mainly larger—businesses are entitled to taxpayers’ support but do not need it, so they have not taken it. Does he agree that we should applaud the lead they have taken and encourage others that do not need it to do the same in the national interest?
I thank my hon. Friend for her kind comments. I agree with her that they should be applauded. As I said earlier, as we go through this crisis, everyone has their own role to play, and they should play that role responsibly. Whether it is individuals, Government or businesses, I am glad to see everybody taking that advice to heart. She is right that the businesses that have done that deserve our praise. More generally, we are trying to support workers remaining attached to their jobs, and I will try to do that in as broad and comprehensive a way as I can, but she is right that those businesses deserve our praise.
Like others, I am sceptical that we will see a V-shaped recession with a sharp recovery. Some sectors and some regions will struggle more than others. Does the Chancellor accept the need for some form of future economic stimulus to restart the economy? Surely it is not simply a case of restarting the engines of the economy; the economy may need a bit of a push.
The most important economic policy at the moment is to maintain the productive capacity of the UK economy during a period of shutdown. Our interventions are designed to preserve as many businesses, jobs and connections as possible. That is the best way to ensure that the recovery can be as strong as we would all like it to be. For the moment, that is where we will focus our attention.
I am grateful to the Treasury for the work it has done to keep the economy going. However, I have a tourism business and a leisure business that have been turned down by their banks, even though they are both viable, and they will need more than the £50,000 from the bounce-back scheme announced by the Chancellor today. These are excellent businesses that we must not lose. Will he continue to look further at such cases and consider grants for where there are very difficult situations?
Without knowing the particular details of those businesses, I can say that many businesses in the retail, leisure and hospitality trade will be eligible for cash grants of £25,000. Also, all businesses can use the furlough scheme, which is significant, and there will be business rates holidays for those businesses. Furthermore, the statutory sick pay rebate scheme I announced earlier will be up and running next month, which will allow businesses to apply for a rebate on their statutory sick pay bill for up to 14 days per employee. That could benefit businesses by up to £48,000 as well. I hope that all those packages put together provide some relief to my hon. Friend’s business and many others.
The Chancellor rightly stepped in to do the right thing by many of our businesses as covid-19 hit our economy, but is he aware that there is a small group of people who took on pub tenancies between the last eligible date he set in the grant rules and the lockdown? I have three in my constituency. It is a sizeable financial commitment, and even more so when they then cannot trade for the foreseeable future. Will he look again at the rules and assist this small number of people now in limbo with no access to help?
I am happy to look at the specific situation the hon. Gentleman raises, although I would caution that it is difficult to make changes to these schemes. As many Members have said, the important thing is now getting cash out to people, and the only way to do that is to let these systems run as designed, but I am happy to look at the issue he raised.
I congratulate the Chancellor and his team at the Treasury on everything they are doing to support the country through this very challenging time. On Scotland and the Barnett consequentials, how much extra funding has flowed to Scotland as a consequence of his announcement, particularly the business support? How much extra money has come to Scotland as a consequence of that?
My hon. Friend is right. When I say that we are all in this together, I mean every part of our Union. The Government are steadfast in their support and are determined to get through this crisis by supporting and working very closely with all members of our Union. I can tell him that from the Budget onwards £4 billion in Barnett consequentials has been provided to Scotland, £3.5 billion of which relates specifically to the range of announcements in response to the coronavirus. Those numbers are in addition to the UK-wide measures that support business, such as the jobs retention scheme.
I hope you are all doing well overseas in London.
Last week, a member of the Bank of England Monetary Policy Committee said that monetary financing for financial fiscal spend with central bank money rather than Government bonds is something that central banks are always doing. Direct funding of Governments by their own central banks is therefore a fact. Can we remember the words of the late American economist J. K. Galbraith, who said that the process by which money is created is so simple, the mind is repelled? Will the Chancellor take this opportunity not to repeat the socially divisive policy of austerity? Coming out of this crisis, the last thing any of us needs is another round of austerity.
Rather than commenting on monetary policy, which it is obviously not my place to do, I can tell the hon. Gentleman that we are determined, as I have said, to preserve as much of the productive capacity of the UK economy as we can throughout this crisis. Such interventions will ensure that we can bounce back as strongly as possible and recover as much of our potential output as possible. Hopefully, that will put us in a strong position to carry on delivering on the agenda that we set out at the Budget: spreading opportunity to every part of the country and levelling up through investments in education, infrastructure and ideas.
As has already been highlighted, the tourism and hospitality sector will be hardest hit through this lockdown. As we are unlikely to come out of lockdown soon, the sector will need further support. Will the Chancellor reassure the sector that he will consider further support for tourism and hospitality? Will he reflect in particular on the seasonal nature of the sector? If we cannot reopen fully ahead of the peak summer season, many businesses will in effect lose a whole year’s worth of revenue.
For as long as I have known my hon. Friend he has been an incredible advocate for the small tourism businesses in his constituency, which are a big driver of his local economy. I assure him that I will continue to keep a very close eye on the situation. As we think about exiting from the economic and social restrictions, I will look at the right interventions for every sector.
New research conducted by the Centre For Towns has found that one in three ex-industrial towns is among the most economically at risk from covid-19. Worsbrough in my constituency is the 10th most at-risk town. What plans does the Treasury have to help areas like mine in Barnsley to cope with this crisis and then recover from it?
The significant economic interventions that we have put in place will help every part of the country, whether north or south, rural or urban—that is what they are designed to do. Businesses in the hon. Lady’s constituency will benefit from all the schemes. More broadly, the Budget set out an ambitious programme of investment in our regions to ensure that opportunity is felt wherever in this country someone happens to live. We remain incredibly committed to that agenda.
At least one forecast has predicted that coastal communities will be hit the hardest by any economic downturn following the covid-19 crisis. Here in Aberconwy, our queen of resorts, Llandudno, has been singled out as one of those communities that may well be hardest hit in the UK. The situation is further exaggerated by the fact that we are still approaching the peak of the crisis in north Wales. What measures has my right hon. Friend put in place to ensure that he will reach that balance between stimulating our economy, particularly the hospitality trade, and making sure that that stimulus does not come too soon with the result that we get hit by a second wave here in north Wales?
This is why it is so vital that we get the timing absolutely right. We are not there yet, as the Prime Minister said. We have made good progress but we are all concerned about the risk of a second peak, which is why we must meet the five tests that the First Secretary of State set out a little while ago so that we can restore our economy gradually but with confidence.
I agree with the Chancellor that covid-19 is causing significant local and global economic problems, and I am sure he would agree with me that trade will be a vital ingredient in recovery. Is it not the case that—he should take this on board very seriously—notwithstanding the need to ensure security of supply for things such as medicine and medical equipment, he and the Government should resist any move or any siren voices that would push the UK towards general protectionism in trade?
The Prime Minister has been completely clear in his commitment to free trade; it is an important part of what we believe. It is also right, especially during this time, that we can ensure the security of supply that the hon. Gentleman mentioned. That is what the Government are doing, but it requires working with our international partners as well as focusing on domestic sourcing. We can continue to do both things, especially to ensure that our workers get all the equipment and supplies that they need at this time.
I very much welcome the statement, particularly the news about the bounce-back loans, which will be very helpful for small businesses in my constituency. Selling milk and meat into the non-domestic market has largely stopped, as have farm diversification schemes that were necessary to cross-subsidise land-based businesses. What more can the Chancellor do, beyond that which he has announced today, to assist agricultural businesses—land-based businesses—across the country?
Representing a rural constituency myself, I understand very well the comments that my right hon. Friend has made. I am in constant dialogue with the Secretary of State for Environment, Food and Rural Affairs on these issues. We are making sure that all the economic interventions that we have put in place can benefit not just the agriculture sector but as many sectors as possible.
Fairs and shows are on the back burner for the summer. That means that the livelihoods of show families in my constituency are on the line. They purchased rides and equipment through asset finance companies and they need to cover the repayment costs, which have not stopped amid this pandemic. What assurances can the Chancellor give me that the coronavirus business interruption loan scheme is offering the funding needed to support travelling funfairs?
If I understood the hon. Lady’s question correctly, I can assure her that the coronavirus business interruption loans apply to meeting asset-related costs already, so it is perfectly possible to use that scheme for a finance arrangement like that. But if that was not her specific question, I would be happy to answer in writing.
May I first declare my business interests, and, from a business perspective, thank the Chancellor for the excellent work that he is doing—a view shared widely across the business community? On the business interruption loans, I welcome the removal in the new micro-loans scheme of the forward viability test, which is one of the complexities that slow down the current scheme. Will he commit to looking at removing that from the main scheme as well, which would help to get money out of the door much more quickly?
My hon. Friend has been not, I would say, a thorn in my side but a doughty champion of those who would like to have access to these loans. He has made this point forcefully and repeatedly to the Economic Secretary and to me. I am pleased to tell my hon. Friend that we have been working with the banks over the past week or so and we have been able to make, on his recommendation, several changes to the scheme, including from the regulatory side through the Prudential Regulation Authority and the Financial Conduct Authority, to give banks the comfort they need, as well as reassurances from the Government. A statement will be issued shortly by UK Finance confirming that banks will not require from businesses the provision of forward-looking financial information or business plans. I hope that that gives him the reassurance he needs. It will give comfort to many businesses. I congratulate him on making this point so forcefully and effectively over the past week or two.
I think we all understand that, as the Chancellor said, these schemes were designed at pace, but I have to tell him that here in the northern isles our economy is predominantly based on small businesses, where every day it becomes more apparent that there are too many people falling through the gaps, especially the self-employed, people working from home, and those relying on directors’ dividends for their income. If it is just too difficult to design a scheme to help all these people, will the Treasury now look seriously at the idea of a universal basic income? Yes, it might risk handing cash to people who do not actually need it now, but that can be clawed back through the tax system, and it will give help to people who are feeling desperate for it now.
As I have said previously, I do not agree with a universal basic income. I do believe, though, that our schemes will benefit many, many millions of people, particularly the self-employed scheme, which will benefit over 3.5 million people who need it, and, indeed, the new bounce-back loan I announced today, which will also be available to those in self-employment with business accounts.
More than two hours having elapsed since the commencement of hybrid scrutiny proceedings, the Speaker brought them to a conclusion (Order, 21 April).
Order. That concludes scrutiny proceedings for today. I will now suspend the House for 30 minutes to allow Members to safely leave the Chamber and to allow broadcasting colleagues to make the necessary technical changes prior to the start of substantive proceedings.
On resuming, the House entered into hybrid substantive proceedings (Order, 22 April).
[NB: [V] denotes a Member contributing virtually.]
Welcome to the first substantive proceedings of the House of Commons in hybrid format. As Speaker, I announced last Wednesday that parliamentary privilege applies to all participants in proceedings and the rules and courtesies apply as far as practicable in the same way to all Members, whether participating virtually or here in the Chamber. I remind hon. Members that interventions are not possible and hon. Members present in the Chamber must not give way to other Members in the same position, as that is inconsistent with the principle of equality. I advise all hon. Members speaking virtually to use their own timing device to assist them in dealing with speaking limits.
Business of the House (27 April)
The following arrangements shall apply to today’s business:
Business Timings Remote Division designation Finance Bill: Second Reading Up to two hours; suspension; up to two hours None Finance Bill: Programme No debate (Standing Order No. 83A(7)) None
Remote Division designation
Finance Bill: Second Reading
Up to two hours; suspension; up to two hours
Finance Bill: Programme
No debate (Standing Order No. 83A(7))
(2) At the conclusion of the debate on the second reading of the Finance Bill the Speaker shall put the Question, That the Bill be now read a second time.—(Leo Docherty.)
The Speaker declared the Question to be agreed to (Order B(4), 22 April).
I beg to move, That the Bill be now read a Second time.
I congratulate the new shadow Chancellor and her shadow Treasury team on their appointments. Six weeks ago, on 11 March, this House assembled to hear my right hon. Friend the Chancellor deliver his Budget speech. How long ago that seems now when every day feels like a decade. A Budget statement is a central part of our democracy; indeed, it is at the very heart of a parliamentary tradition of accountability for taxation that goes back to the 13th century. It is deeply sobering to reflect that that 11 March moment might be the last great parliamentary occasion we have in this Chamber for some time to come.
Truly, we know better now. We live in a disenchanted world, a world of self-isolation, of social distancing, of shielding, of lockdown. In the Treasury and across Government as a whole we have worked around the clock since then to respond to the extraordinary challenges posed by the coronavirus to people’s lives and livelihoods. The same has been true in this Palace of Westminster. I know that I speak for all my colleagues in saying that I have the greatest respect for the work that you, Mr Speaker, and so many others, including parliamentarians across this House, have done to prevent covid-19 from becoming a threat to our democracy itself. I pay special tribute to all the Clerks and staff of this House of Commons and of the Palace of Westminster for working so quickly and creatively to adapt to this new reality and for their skill in drawing on the flexibility and resilience of our uncodified constitution to create a virtual Parliament.
When this Chamber was bombed and destroyed on the night of Saturday 10 May 1941, with the fires raging, the roof fallen in and the Lobbies and corridors gutted, it was decided that the Commons should sit immediately in Church House. Extraordinary measures were undertaken at great speed to transfer proceedings to the new location. The Commons rarely sat on Mondays, so it duly reconvened in the normal way on Tuesday 13 May, but it did so in Church House. There were oral questions to the Secretary of State for War, including on officers’ outfits and the collection of swill and vegetable waste from military units, followed by a full Order Paper of business and, at the end, a short statement from the Prime Minister in which he reported that the old Chamber was damaged beyond immediate repair and that preparations were already under way for a move to a further location, if that should be necessary. Thus the biggest and the worst raid of the blitz resulted in the loss of not one single day—indeed, not one single minute—of sitting time for Parliament. It is a moment of which this country can be intensely proud.
Why so much determination and so much speed? It was so that, as Churchill said:
“hon. Members may be reassured that the work of our Parliamentary institutions will not be interrupted by enemy action”.—[Official Report, 13 May 1941; Vol. 371, c. 1086.]
It was so that British democracy should not be thought to have been destroyed amid the burning ruins of the Commons Chamber, and so that the great thread of public scrutiny and parliamentary accountability that gives legitimacy and authority to our Government should not be broken. So it is again today, Mr Speaker. For that, we are, and we will always be, profoundly grateful. I hope that we shall soon return to the close combat of political business, whether that be the intimate interrogation of the Chamber, the camaraderie of the Lobbies or the noise and clamour of a full House packed to the rafters with MPs, press and public looking on, all fully intent on our national political business; the House of Commons as the cockpit of the nation.
Here again, history can be our guide. When the Chamber was rebuilt, special care was taken to make it, as it had been, too small for the number of Members. That was at the specific insistence of Churchill. In his words, the essence of good House of Commons speaking is the “conversational style”. This requires a
“fairly small space, and there should be on great occasions a sense of crowd and urgency…a sense that great matters are being decided, there and then, by the House”.
Not for Churchill the vast, empty hall of Deputies, the amphitheatre, or what he called “Harangues from a rostrum”. Without that collective sense of crowd and urgency and the ever-shifting energy of the House in action, we lose something vital.
Mr Speaker, I ask you this: can we not also gain from this great virtual experiment? Through new forms of questioning and calmer, more dispassionate cross-examination of Government, may we not find glimmers of new possibility amid the present gloom? I believe that we can. The significance of today’s debate lies not just in this Finance Bill, important though it is; it marks a new legislative beginning for Parliament. As we go forward together, I hope that we in this House can restore not merely our old ways, but what was best in them, and use this moment to add, to develop, to reform and to make them better still.
When my right hon. Friend the Chancellor addressed the House on 11 March, he announced a Budget focused on delivering the Government’s manifesto commitments from the general election last year. He not only did that; he also set out and carefully explained the reasons for a very ambitious and wide-ranging set of measures designed to tackle the coronavirus head-on, to buttress our frontline services and to support people, families and businesses affected by the pandemic.
Since then the Government have gone much further still. Indeed, we have announced what we believe to be the most comprehensive and far-reaching economic response to covid-19 in the developed world, and Ministers and public servants across Government have worked to deliver it. Among its many different packages, that response includes a job retention scheme, which guarantees 80% of the wages of furloughed workers, and which has been conceived, developed and launched by Her Majesty’s Revenue and Customs in just a few weeks.
Alongside the job retention scheme is a similarly generous scheme aimed at supporting the self-employed for 80% of taxable trading profits up to £50,000. This covers some 95% of those who are mainly self-employed, including cleaners, taxi drivers, plumbers, musicians, journalists, electricians, childminders and many others. Businesses can also benefit from more than £300 billion-worth of Government-backed loans, numerous tax cuts and grants, with a business rates holiday for the worst-affected sectors of the economy. There has also been a further package of measures aimed at the charitable sector.
These are unprecedented measures for unprecedented times. The impact of the coronavirus falls not only on businesses, but directly on the wellbeing of some of the most vulnerable people in our society, whom the Government are determined to protect. For that reason, the Government have raised by £1,000 the universal credit standard allowance and working tax credit basic element for a year. Almost a billion pounds has been allocated so that the local housing allowance can cover at least 30% of market rent, and the Government have offered vouchers or meals at home for children who would otherwise be eligible for free school meals.
This Bill goes beyond the immediate response to covid-19 by delivering the Government’s manifesto commitment to make the tax system fairer and more proportionate. For example, care leavers who start apprenticeships will pay no income tax on bursary payments that they receive. I am delighted to say to recipients of payments under the Windrush compensation scheme and the troubles permanent disablement payment scheme that those payments will be exempt from income, inheritance and capital gains tax, and inheritance tax will not be collected on Kindertransport fund payments.
Taxes are rarely popular or straightforward, but they are necessary to support our public services. Now, more than ever, the Government have a duty to ensure that the rules are applied correctly. Last month, my right hon. Friend the Chief Secretary to the Treasury announced that, in the light of covid-19, the Government will delay the introduction of reforms to the off-payroll working rules in order to give businesses more time to adapt. However, he was clear that the Government remain fully committed to introducing these reforms to ensure that people working like employees but through their own limited companies pay broadly the same tax as individuals who are employed directly. That has not changed, and the Government will introduce an amendment to the Bill in due course to legislate for a new commencement date of 6 April 2021. The Government will use the additional time to commission further external research into the long-term effects of the reforms in the public sector, with the intention that that research will be available before the reforms come into effect in the private sector in April 2021.
Meanwhile, this Bill implements the recommendations of Sir Amyas Morse’s independent review of the loan charge. It will mean that the loan charge no longer applies to loans entered into before 9 December 2010, which is the point at which Sir Amyas found that the law put beyond doubt the fact that disguised remuneration schemes were a form of tax avoidance. The Bill also brings forward legislation to repay taxpayers who voluntarily settled for years that are no longer in scope, while those still able to pay will be able to spread their loan balance over three tax years to suit their finances.
The Budget also included changes to help businesses to prosper for years to come. This Bill will implement the Government’s manifesto commitment to increase the research and development expenditure credit rates from 12% to 13% in order to help drive growth and productivity across the UK, and to continue to support this country’s proud history of innovation. It also raises the structures and buildings allowance rate from 2% to 3%, which should help to stimulate long-term capital investment in the United Kingdom by strengthening the business case for investment in shops, factories and agricultural buildings. Those changes apply nationwide, underlining the fact that, even in these times of uncertainty, the Government are seeking to level up investment and opportunity right across the whole United Kingdom.
The Government have made successive cuts to the rate of corporation tax since 2010 and we now have the lowest headline rate in the G20. That has helped to create a corporate tax system that supports British businesses, boosts economic growth and strengthens the UK’s pull for inward investment.
However, the extra benefits of lowering corporation tax rates still further must be balanced against other objectives, such as funding the NHS and the public services on which we all rely. That is why the Chancellor announced that the Government will not cut the corporation tax rate further this year, but instead will maintain it at 19%, in line with their manifesto commitment.
Likewise, while the Government are committed to encouraging entrepreneurial activity, the evidence indicates that entrepreneurs’ relief in its current form is neither effective in stimulating new business growth nor good value for money. By reducing the lifetime limit from £10 million to £1 million, we are returning the relief to its original purpose while continuing to promote and reward enterprise.
Finally, following an extensive period of consultation, the Bill will implement the digital services tax. Digital businesses providing search engines, social media platforms and online marketplaces derive significant value from their UK users, but current international corporate tax rules mean that that value is not reflected in the level of UK tax they pay. Setting a tax on revenues from those digital services at a rate of 2% will make the system fairer and should raise up to £2 billion over the next five years, but the Government’s ultimate goal is to secure a long-term global solution. We are working with international partners through the Organisation for Economic Co-operation and Development to agree a way forward.
Covid-19 is the most pressing challenge for the country—and, indeed, the world—at the moment, but it is by no means the only one. Notwithstanding our intense focus on tackling the pandemic, the Government have not lost sight of longer-term public concerns, notably the need for the UK to move to a greener and more sustainable economy in the years ahead. Now that we have left the European Union and as we prepare to leave the EU emissions trading system, this Bill introduces legislation for both a charging power to create a UK emissions trading system, and a carbon emissions tax.
This twin-track approach is designed to ensure that, whatever the circumstances, the UK will have an effective carbon pricing regime in place. In the Budget, the Chancellor also revealed key elements of the plastic packaging tax, which should significantly increase the use of recycled materials in packaging. This Bill allows preparatory spending ahead of its introduction.
The Bill will also encourage the uptake of zero-emission vehicles by removing them from the vehicle excise duty expensive car supplement, which will mean that employers and employees pay no tax on zero-emission company cars in 2020-21. The United Kingdom has led the world in introducing legally binding carbon emissions reduction targets; these measures underline once again how serious the Government are about meeting those targets.
My right hon. Friend the Prime Minister has made it quite clear that we will do what it takes to support our public services and key workers as they respond to this pandemic, and to safeguard jobs and businesses so that our economy can bounce back as quickly as possible. Yet we must also look to the future. The advent of a virtual Parliament is a chance to chart new territory, and this Bill is a first step on that journey.
The Bill also redeems the manifesto promises of the last election. It points the way to a fairer tax system and a greener and more sustainable future. With the support of Members from across the House, and as we look beyond lockdown, it gives us all an opportunity to cement the United Kingdom’s place as one of the most innovative, exciting and enterprising nations in the world. For all those reasons, I commend this Bill to the House.
Thank you, Mr Speaker. May I echo the Financial Secretary’s comments about the hard work that you and the parliamentary authorities have gone to, to ensure that these proceedings could go ahead? Of course, as the Opposition we are well aware of the need for Government to have a legal basis to continue levying taxes, and we approach this Bill very much in that spirit.
Many of the clauses in this Finance Bill were written many months ago, with a large number of them involving relatively minor fixes to existing tax legislation—not exactly the vegetable waste and pig swill that the Financial Secretary referred to in his colourful and wide-ranging perorations, but none the less in large part delivering technical aspects of already announced policies. In fact, overall, this Bill presents a picture of continuing the business as usual of the last 10 years.
However, it is unthinkable that we will go many months before additional fiscal measures will need to be brought in by this Government. There will be an urgent need to stimulate the economy as and when we move out of the lockdown, and when boosting consumption will not threaten to damage disease containment. Other measures may well be needed to help alleviate some of the numerous supply-side problems caused by the current dislocation.
Finally, of course, we will need to deal with the considerable burden created by the costs necessarily incurred in fighting coronavirus. Subsequent Finance Bills will need to be very different from this one, and I want to use the time I have available to spell out why. We will need new approaches to taxation generally, the social contract with business, funding public services, the climate crisis and tax reliefs. I will deal with each area briefly in turn.
First, we of course need a different and fairer approach to tax. The Bill largely continues the previous framework, with its reductions in the tax paid by the very best-off people, while support for the worst-off has been reduced. The Financial Secretary will, I am sure, be aware of the Institute for Fiscal Studies analysis of the distributional consequences of successive Budgets since 2010. As of 2019, for example, due to changes in tax and social security, the poorest 10% of households have seen losses of 11% of their income, on average, as a direct result of reforms. Among those with children, the losses amount to 20%: that is £1 out of every £5 being removed from low-income families with kids. Large numbers of frontline careworkers fall into that category. We know from recent research by the Resolution Foundation that half of careworkers are not paid the real living wage, and tens of thousands appear to be paid even below the national minimum wage. They deserve better. In contrast, the best off 10% of people have seen losses of only 2% in their incomes due to tax and social security changes since 2010.
As all in this House will remember, George Osborne maintained that, in his recovery, 80% of the reduction in debt should come from cuts to spending and only 20% from tax changes, yet the latter went alongside cuts in income tax, inheritance tax and capital gains tax for the very best-off people.
There is already a lively debate about how we should deal with the costs incurred by the coronavirus. The academic consensus is that decisions taken to load the cost of debt on to spending cuts in the 2010s made our recovery slower than it would have been otherwise, so it was the slowest not only in a generation but in eight generations, and slower than in many other countries. I am not saying that to castigate the Government; I am saying it because we will need to adopt a radically different approach to future Finance Bills from that seen over the last 10 years.
We are currently feeling the impact of that decade’s fiscal approach very keenly, especially when it comes to UK households’ resilience. A quarter of UK families entered this crisis with less than £100 in savings—making it impossible for them, for example, to buy a new cooker or get their car fixed—and almost 2 million households did not even have a cooker in their home in the first place. As and when we return to what will be a very different normality, we must have building up financial resilience at the core of future Finance Bills. That will mean instituting a more progressive tax system, with those with the broadest shoulders contributing to services that benefit us all.
Secondly, we will need a new social contract with business. As discussed at length during the statement, huge numbers of businesses are currently struggling like never before. We have already discussed the Government’s economic package today, and I must emphasise again that there is a very strong expectation from the public that public support must translate into protecting jobs, not the extraction of value into already deep private pockets.
We have called for the Government to consider the examples of other nations, such as France and Denmark, as well as that of the Labour Government in Wales, when approaching the bail-out of different large firms. Jobs must be retained, workforces must be supported, and we should expect and require good corporate behaviour going forward. That means a ban on public funds being passed into tax havens or doled out immediately in dividends, no share buy-backs on bailed-out companies, and a commitment to improvements in environmental performance in future.
We also need a renewed focus on dealing with the enablers of tax avoidance and evasion. I regret that we still do not see that when it comes to those who facilitated disguised remuneration loan arrangements, while those who received such arrangements continue to be affected by the loan charge.
The Bill rightly rows back on the Government’s previous ill-advised commitment to cut corporation tax further to 17%, by maintaining it at 19%. The OBR estimated that a cut to the latter rate would reduce receipts by £5.4 billion a year in three years. Recent reductions in corporation tax have not boosted investment in the UK. It was clear that such a reduction simply could not be afforded in current circumstances, and we therefore welcome that element of the Bill. When we talk to businesses, as I am sure Government Members do regularly, rates of corporation tax are not the headline reason given for locating in the UK. Other factors are far more important, such as workforce development and training, logistical factors such as transport, and—critically—business rates, which are a key issue for many companies in our nation.
There is, of course, an imbalance in the taxation of those businesses based in fiscal property compared with internet-based businesses—the division between bricks and clicks. The Bill details the digital services tax—a new 2% tax on the revenues of search engines, social media platforms and online marketplaces that derive value from UK users. We welcome that tax to the extent that it recognises the comparative under-taxation of many digitally provided services, but we are concerned about the restricted scope of the measure. It means, for example, that Amazon will continue to pay a lower rate of tax in relation to revenue than many high street bookstores and other retailers. In addition, it fails to fill the gulf in unpaid corporation tax from many of the largest technology firms. TaxWatch UK has suggested that the UK is losing £1.3 billion in corporation tax from just five of those firms, and the digital services tax would make up less than half of that.
The current crisis suggests that digitally based businesses will amount to an even larger part of our economy in the years to come, so we need to get this right. Above all, our Government need to be more explicit about their discussions with international partners about the move to a formula-based corporation tax system. Given the ability of those firms to shift profits between countries, we must work with other countries to apportion taxing rights better.
The OECD’s anti-base erosion and profit shifting project was a good start, but it failed sufficiently to inform countries in the global south. I hope Ministers will be more forthcoming in future about what they are doing to seek that international consensus, not least given current hostility from the US towards multilateral approaches in a number of areas. This topic is controversial, and we need to hear more than just that our nation is engaged in those discussions.
I hope Ministers will be more forthcoming in their approach when it comes to local government finance, which is crucial in providing public services—from social care, to helping the homeless, to providing areas for leisure and play. Local authorities will be crucial in helping to rebuild the economy after this period, through their work on economic development.
My third point concerns the need for the Government to commit to a proper, deep and wide review of local government finance that takes account of the full impact of the crisis in terms of extra expenditure and forgone income, and which considers business rates and council tax in the round. We still only have a commitment to yet another restricted review of business rates. Surely we can be more ambitious in that area, as the need for a deeper review is now very strong. The goal must be to provide certainty and stability about the provision of local public services.
An additional area where action is needed is tackling the climate crisis. Survey evidence, albeit tentative at this stage, suggests a renewed appetite from the public to grasp the challenges posed by the need to decarbonise. The Bill makes small moves in the right direction. It incrementally increases vehicle excise duty, using emissions as a benchmark—the Chief Secretary to the Treasury mentioned that—and it introduces the world- wide harmonised light-duty vehicles test procedure, a UN-established vehicle testing procedure, in an attempt to prevent the gaming of emissions standards by vehicle manufacturers. We encourage the Government to adopt a steady replacement of all testing procedures within that framework. More broadly, we need a far stronger shift in taxation to disincentivise carbon production. The previous Finance Bill continued implicitly to support fossil fuels in a number of areas, and this one only sets the scene for some elements of the promised new plastics tax and the new emissions controls that will be necessary. Given that we have declared a national climate emergency in this very House, we need far stronger action in subsequent Finance Bills.
Finally, we fail to see in the Bill any substantive change in the Government’s approach to tax reliefs. This is essential. Public funding will be under pressure, so we must choose very carefully what we subsidise through these reliefs.
The incidence of tax reliefs has increased over recent years, yet there is little thorough oversight of their impact. Labour has called repeatedly for a thorough review of tax reliefs, but this Bill does not deliver one. As public finances come under substantial pressure, that position is no longer sustainable.
The National Audit Office’s recent report on tax expenditure showed that the Government are not reporting costs of over two thirds of reliefs; that must change. Alterations are made in this legislation to entrepreneurs, relief—that was right to state—but the Institute for Fiscal Studies has suggested that the £1 million limit is still too generous. Furthermore, it does not achieve its principal aim of boosting investment, with the IFS stating:
“If one of the aims of reduced capital gains tax rates on business assets is to incentivise individuals to invest more in their businesses, this evidence suggests they are not working.”
We must ensure that corporate tax reliefs are focused on employment retention and promotion, and the provision of public goods. That is as essential for entrepreneurs, relief as for the hundreds of others that continue to receive little public scrutiny.
There are many measures in the Bill that are sensible, that tidy up anomalies and that make life easier for taxpayers and HMRC, and we welcome them. But, as I have said, in many ways this feels like a Finance Bill for a different age. Subsequent Budgets and Bills will need to recognise the need for a much more resilient household financial situation and much more resilient public services, and will need to move away from the demand-sapping, confidence-stripping approach that has characterised the response to the last crisis. We stand ready to work with the Government where we can to achieve that new approach.
We now have to introduce a formal time limit of five minutes. Members in the Chamber will be able to observe the clock, but I strongly advise Members who are participating virtually to have a timing device nearby that they can see, because, due to necessity, the five-minute time limit will be very thoroughly enforced.
The economic backdrop to this Finance Bill is among the most challenging that this country has ever faced. The Office for Budget Responsibility, for example, in the scenario that it put forward, suggested a 35% contraction in the economy followed by a rapid bounce back—the so-called V-shaped recovery. Whether that is realistic or not remains to be seen, but it is the case that the Government have some significant control over two areas of policy that will determine whether we come back with a V-shaped recovery or not: the timing and nature of our exit from the lockdown.
On timing, as the House will be aware, the Government have put forward five tests, one of the most important of which is the fifth test, which is that we should extract ourselves from lockdown but in a manner that does not cause a second flare-up of the virus, which happened with the flu pandemic of 1918. This is critical; if the Government get it wrong and we do have that second surge in the virus, it will be a catastrophe for our economy and we will have not a V-shaped recovery, but at best a double-dip recession of some magnitude. It is therefore very important that the Government be allowed the time and space to take those decisions, and that we are patient with them.
Secondly, on the nature of our withdrawal, it is important that we have transparency. As the Chair of the Treasury Committee, I urge the Government to engage with businesses on the broader elements of the plan, so that they can both input and adjust accordingly. The element of which the Government have control, of course, is the support they are providing to the economy, at considerable scale and pace. The Chancellor is to be congratulated on that, but with scale and pace come hard edges to policy and challenges in delivery. Examples of both that the Government should focus on are, first, making sure that, for the self-employed who work through their own companies, dividends that result from self-employment can count when it comes to assessing the furlough amount that they can qualify for. Secondly, on delivery, we heard from the Chancellor earlier about bounce-back loans. I welcome those a great deal, but we also need to ensure that the banks are on notice that we expect them to deliver on the coronavirus business interruption loans and the other loans concerned. Through the Treasury Committee, I have had conversations with the British Business Bank and also written to the banks on its lending panel to urge them to come forward transparently and provide us with data on how much money is going out of the door relative to the number of applications on a daily basis. I call on the Financial Secretary to the Treasury and the Government to row in behind us and ensure that transparency, because what gets measured tends to get done.
Let me turn to two specific points in the Finance Bill. The first is the changes that the Financial Secretary to the Treasury has just outlined in respect of entrepreneurs relief. He is right to make those changes; it is a relief that is not fit for purpose. However, there are £24 billion-worth of reliefs every year relating to businesses, and at a time when we need economic growth encouraged at every single turn, it is imperative that the Treasury examines all £24 billion-worth of those reliefs and makes sure that they are all fit for purpose.
Secondly, I was particularly pleased to see such a large number of clauses relating to the digital services tax. It is not right that search engines, online marketplaces and social media platforms should not be paying a fair level of tax in our country. It is not a case of evading tax; it is a case of the taxation system not being adequate for the 21st century. We cannot assess national taxation rights on property, on where people are, on where the management are or on where the intellectual property resides; we must do it on where value is created. These measures are a big step in the right direction. I urge the Financial Secretary to stick to his guns. He will face great pressure from the United States in particular, but in the absence of an international approach to this matter, it is vital that we take action.
I think my five minutes are now up, and I am very aware of your exhortation, Madam Deputy Speaker, so I will conclude, except to say that I will be supporting the Second Reading of this Bill.
I welcome the shadow Chancellor to her role. She is the first woman ever to do the job. I wish her all the best and look forward to working with her.
Time is tight, so my remarks will not cover all my thoughts on this 186-page Finance Bill. It seems to me that each Finance Bill tries to fix the errors of those that preceded it, and this is no different. It would be useful to have the opportunity to take public evidence on the Finance Bill, because if ever there was a time to ensure that the measures and reliefs proposed by the UK Government are appropriate, it is now. If we are to believe that austerity is over, this Finance Bill must be followed by a recovery package that grows our economy in an inclusive way and protects the most vulnerable.
The UK Government continue to short-change Scotland. We are seeing the limitations of the Barnett formula writ large. The UK promised £242 million for regional deals in the Budget, but we have not yet made up for the £400 million shortfall relative to the money that the Scottish Government are putting in. Scotland is still waiting for Scotland’s £5.8 billion of the DUP’s Brexit bungs and the £175 million of VAT owed to Police Scotland and the Scottish Fire and Rescue Service.
Clause 12 gives Ministers the power by regulation to exempt certain social security benefits from income tax, which is fair enough, but far more extensive measures are required to address the flaws in the social security system. The welfare cap set out in the Budget is surely now set to be breached, and instead of setting a new cap, as he is required to do, the Chancellor may want to consider whether it is a useful tool in the first place.
People who have never had to rely on benefits to put food on the table and meet their rent are suddenly finding out just how pitiful the UK social security system is. A letter from 50 campaigners led by the Child Poverty Action Group and the Bishop of Durham has highlighted the fact that tens of thousands of the 1.5 million households that have applied for universal credit will lose out due to the size of their family. I have been saying, ever since the two-child limit was proposed in 2015, that no one can predict their circumstances. The letter states:
“Even in normal times, no parent can be sure that their financial security will withstand unpredictable events such as illness, bereavement or redundancy. Certainly no parent could have had foresight of Covid-19, and so planned their family size accordingly.”
I urge the Chancellor and the Financial Secretary to the Treasury to bring forward measures to remove the two-child limit and end the unfairness being meted out to families in need.
This UK Government have failed to go far enough for workers. The cut to employers’ national insurance goes only a third of the way that we demanded towards the £2,500 in the Tories’ own manifesto commitment. Younger workers will continue to suffer state-sanctioned age discrimination, and this is really a missed opportunity to introduce a real living wage for all. The Chancellor previously claimed that he would do whatever it takes to help people affected by the coronavirus crisis, and the UK Government must follow through on that commitment and strengthen welfare provision so that people get the help they need now. They must scrap the five-week wait, turn the loans already given into emergency grants and ensure that all new claimants are given automatic grants to prevent millions being plunged into debt and poverty. If the UK Government had listened to our calls to introduce a universal basic income at the start of this crisis, the huge difficulties people are now facing could have been avoided.
I also support the calls from the Low Incomes Tax Reform Group, Age UK and the TUC for action on the net pay pensions issue. Due to a flaw in the tax system, around 1.7 million lower-income workers, mostly women, are being unfairly charged 25% more for their pensions as a result of the way in which their employer pension scheme operates. I ask the Government to look at this.
Firms are already finding it difficult to access cash, not least because of the limitations of the UK Government’s coronavirus business interruption loan scheme. Part 4 of the Finance Bill lays out plans to grant HRMC preferential status in insolvency procedures from December this year, and measures to make directors personally liable for a company’s tax liabilities where HMRC considers avoidance is taking place or where there is evidence of phoenixism or tax abuse via insolvency. I very much want to see companies and their directors take their responsibilities seriously and to avoid phoenixism wherever possible, but I am not alone in questioning whether this is the correct approach. R3, the Association of Business Recovery Professionals, wrote to the Chancellor last September:
“While extra money for HMRC in insolvency procedures may appear positive, it means less will be going back to trade creditors, pension schemes, and consumers. This will hurt the economy in the long run. Poor returns from insolvency procedures can jeopardise the health of other businesses, can make creditors more likely to vote down rescue proposals, and can trigger further insolvency. The government’s policy increases the chances of this happening.”
Coronavirus has brought this issue into sharp focus. UK Finance estimates that this policy could hit lending by at least £1 billion per annum. Furthermore, if HMRC gobbles up the largest amount first, there will be very little left for unsecured creditors such as small and medium-sized enterprises. Examples include the contractors and clients of a building company, food suppliers and parents who have paid upfront for a nursery that has gone bust. Why should creditors—real people in the real economy—lose out on much-needed pay-outs because of the vague notion of giving value to the taxpayer? The City of London Law Society also highlighted, in a letter in September last year, that this proposal erodes protections and would put the UK at a competitive disadvantage, so I urge the Chancellor and the Financial Secretary to the Treasury to give further thought to this measure. What would help to prevent phoenixing would be to tackle this matter at Companies House, giving it the full powers under anti-money-laundering legislation to carry out due diligence, rather than simply nodding companies through. This would protect consumers and other businesses that end up losing out.
The Scottish National party welcomes the Bill’s attempts to counteract tax avoidance laid out in clause 64 on anti-avoidance. The UK Government must urgently introduce a robust and transparent system of company registration in order to combat money launderers’ attempts to register entities for illicit and avoidance purposes. The UK Government must act to tackle the ongoing improper use of Scottish limited partnerships through a proper reform of Companies House. In reference to clause 72 of the Finance Bill, relating to properties and trusts, will the Chancellor also update the House on what has happened to the Registration of Overseas Entities Bill, which seems to have disappeared?
The SNP will support a fit-for-purpose digital services tax. We agree that it is unfair that huge multinational online firms pay less in tax than small high street businesses, but the devil will be in the detail, as the shadow Chancellor laid out. Firms may seek to get around measures, which is where good evidence comes in. The UK Government must be a step ahead of, rather than several steps behind, those companies that seek to evade paying their fair share. It is regrettable that the UK has failed to implement the measure alongside international partners, despite countries such as France, Spain and Italy seeking to introduce similar measures.
The Finance Bill is another example of the Tories yet again failing to support the oil and gas sector when it needs support to transition to a greener future. The oil and gas sector has generated £334 billion in net tax revenues to the Government since 1970-71, but the Tories have failed again to support it in its time of need. Promising a sector deal within the term of this UK Parliament is just not good enough; the sector needs fiscal support, and it needs it right now. OGUK chief executive Deirdre Michie has said:
“OGUK will be pressing the case for a COVID-19 resilience package to governments in the coming days which will focus on protecting the supply chain, jobs and our ability to continue to reposition ourselves for the future.”
I urge Government Front Benchers to listen carefully to that plea.
I also encourage UK Government Ministers to do all they can to finally deliver justice for the former Roadchef workers who have been waiting for decades for their employee benefit money. My hon. Friend the Member for Airdrie and Shotts (Neil Gray) has offered one solution via early-day motion 268; the other solution would be for HMRC to act reasonably in recognising that the employee benefit trust was non-taxed at its establishment and negotiating positively with the trust to allow payments to happen quickly.
Our economy does not need Ministers to be given trade war powers. To protect jobs, we believe that the Brexit transition should be extended by two years. Clause 94, “International trade disputes”, will amend the Taxation (Cross-border Trade) Act 2018 as follows:
“In section 15(1)(b)…(import duty: international disputes etc), for ‘is authorised under international law’ substitute ‘considers that (having regard to the matters set out in section 28 and any other relevant matters) it is appropriate’”.
What that amendment means, in short, is giving the UK Government the right to abrogate from international agreements and engage in trade wars at the whims of a Brexiteer Government, which is really not what we need right now. The Government need to decipher whether that is really what they mean by the clause.
The UK Government should ask the EU today for the maximum two-year extension to the transition period. An extended transition will keep the UK as close as possible to the EU and provide an opportunity to rethink the future relationship. The Scottish economy just cannot afford the double hit of covid-19 and the growing likelihood of no deal, or at the very best a hard Brexit deal, in eight months’ time.
The SNP seeks to work constructively with all parties on the Finance Bill. We know that voting will be a challenge and that proceedings will be very different this year. The UK Government have a majority, but they do not have a monopoly on wisdom. They should listen carefully to ideas from every part of this House and from people across the country.
The chief medical officer has said that we will have to learn to live with covid-19 for perhaps the next 18 months. I have received scores of emails from constituents who are fearful of losing their business, their employees and ultimately their homes because of the current crisis, so living with covid-19 also has to mean working with covid-19.
This is not a lives versus the economy argument, as some have disgracefully suggested. Most hon. Members know that the economy is lives and that the two march hand in hand. As each day passes, fractures in supply chains and the onward routes to market grow deeper and will therefore take longer to repair. If producers do not have the raw materials to produce, they do not produce. That is a real problem, so it is no good suggesting or thinking that in two or three weeks, in two or three months or in six months we will be back to work and everything will be fine. It will not; supply lines will take time to gear up again, and I hope that the Finance Bill will take that into account. Without cement and without plaster, it is very difficult to build homes.
I hope that the Bill will address the following concerns. Will it look again at the business interruption loan scheme? It is just not sensible for banks to ask desperate businesses, “Can you give us a cash forecast for the next nine months?” Of course they cannot; nobody can. The Government cannot give a cash forecast for the next nine months, let alone a business.
Can we look again at extending the £25,000 grant scheme to all businesses that have rates assessed at £51,000 or less? There are many good businesses not directly involved in leisure, tourism or hospitality, for example, who are nevertheless feeling the pain of this crisis and fear for their futures and that of their colleagues.
Can we also look at dividends? In my constituency, PB Plumbing has been in business for 30 years. It is a great little family business that supports the pub trade in the constituency and surrounding constituencies. The founder/owner of that business pays himself with dividends, mostly—he is not a greedy man. This is the way that he structured his business but he is really not now eligible for any form of support, and I think that that needs to be addressed.
We heard this afternoon—the hon. Member for Oxford East (Anneliese Dodds) mentioned this during the statement earlier—that there needs to be some flexibility in furloughing. It would be really useful for many businesses to be able to have a member of staff in for one or two days a week, just to keep things ticking over and going during busy periods. I know the Government say that this is a very difficult thing to achieve, but lots of things are very difficult to achieve and this Government are the Government to achieve them. I say this very generously: the Government are getting things right. They just have to get things even more right, if that is possible.
We have a fantastic Treasury Minister here today, and we need a dedicated Treasury Minister responsible for filling in the gaps. I sometimes think that the media have better access to Ministers not only than I do, but, more worryingly, than my constituents do, so let us have a consultation with all colleagues. How can these schemes be made better? There are these Downing Street statements every evening, where the media get to ask questions. I think there are some fabulous people in the media. There are a few moderate ones, but there are some very good ones. However, let us allow small businesses—they are the engine of our economy—to ask questions.
In my remaining minute, I will focus on one constituency business, called Kupros Dairy. It makes fabulous, award-winning cheeses, which it was selling to 200 great restaurants in London and a few specialist food shops. All of these restaurants are no longer open, so its market has entirely disappeared. Supermarkets will not take specialist cheeses in the main, because they cannot stock them from Land’s End to John O’Groats—by the way, the supermarkets have done a simply fabulous job in rising to this challenge. Could the Minister get in touch with Dave Lewis of Tesco and others and ask them to have a dedicated aisle, or part of an aisle, for local produce? That would save Kupros Dairy and allow it to start making cheese again, stay in business and employ people and pay mortgages.
We are humbled daily by the efforts of the NHS workers and all the other key workers in our country. They are making unimaginable sacrifices to treat the sick and care for the vulnerable, and to provide supplies of medicine and food. We owe them everything and it is right that we should continue the pressure to ensure that PPE, testing and equipment are provided, as we continue to enforce the lockdown.
This is a national struggle but it is being fought hardest at the local level in communities. My constituents in Bethnal Green and Bow are resilient people. Some still recall surviving the blitz, and today, there are many who survive a daily struggle of poor housing, low wages, a lack of opportunities and antisocial behaviour, but no matter how resilient and tough they are, they need the Government on their side. They need targeted interventions to help them in these difficult times. They need protection against the vagaries of a global economy, to protect their jobs, incomes and businesses.
The economic projections are chilling. The latest International Monetary Fund analysis suggests that the global recession is going to be far worse than the 2007 global crash. The World Trade Organisation says that global trade could collapse by 31% this year, just as post-Brexit Britain is desperate to strike deals.
A terrible economic storm is coming, and we are just not ready. The UK is ill prepared after a decade of under-investment, imbalances between the nations and regions and the deep scars of inequality and poverty caused by a decade of austerity characterised by stagnant wages and cuts to our public services.
Young people are once again likely to be the lost generation unless our Government take immediate steps to ensure that they have the training and support—virtually, while we are in distancing mode—and other provisions they need to get into the labour market. We need to use the hundreds of thousands of people who volunteered to help the NHS to support young people by mentoring and backing them, as we find a way through this crisis.
This Finance Bill does little to strengthen our economy or make us more resilient. Even before the covid crisis, it was inadequate. It does not deal with the challenges of climate change and the climate emergency, and it does not go far enough to reverse the challenges posed by the deep-seated inequalities in health, education and other spheres over the last decade.
The Office for Budget Responsibility predicts that there will be a 35% reduction in GDP in the second quarter of the year and that unemployment will rise by more than 2 million. Already, the deficit hawks are circling over the Treasury Bench, calling for huge cuts in public spending. Another decade of austerity as the answer to Government debt is absolutely not acceptable. Surely we have learned from the financial crisis in recent weeks that we have to ensure that our public services are resilient and strong in order to face the threats of global pandemics and economic downturns.
We need to ensure that we protect those on the frontline, who have often been the low-paid and have not been treated well—the teachers, nurses, carers, delivery workers and shop workers. They do not run the country, but they make the country run, as we have seen in recent weeks. We need a modern-day Marshall plan, rebuilding and reconstructing our NHS, social care, police, schools and other vital public services, rather than leaving them vulnerable and fragile as we face crises like the current pandemic.
We need to ensure that local authorities on the frontline get the support they need. Tower Hamlets Council in my constituency is having to spend around £25 million and is losing £35 million of income—that is a significant amount of money. I call on the Minister to ensure that local authorities get support. The job retention scheme is welcome, but hundreds of thousands of people in hospitality and other sectors are still being excluded, and they need help urgently.
Finally, I want to highlight the impact in the global south. In countries like Bangladesh, the failure of companies such as Asda, New Look, Edinburgh Woollen Mill, Peacock and Urban Outfitters to pay up for contracted work is leaving millions of people vulnerable to unemployment and starvation. It is important to ensure that our companies are responsible and that people’s lives are protected. We have a duty to work together domestically and internationally.
We have already heard how the coronavirus crisis has fundamentally changed our economy and is in the process of changing our society too. We have also heard how the Bill makes changes to important items such as entrepreneurs’ relief. As someone who co-founded and ran two software start-ups before being elected to Parliament, I am a huge advocate of encouraging wealth creators, particularly the ones who are at the technological leading edge and may be creating the fourth industrial revolution jobs in Britain in companies and industries that have hardly been invented yet.
But we have to be fair in the process, and the coronavirus lockdown has revealed an uncomfortable truth. It has turned Britain into a two-nation society, where better-paid, white-collar professionals work from home, while often less well-off key workers keep travelling to work, often on crowded public transport, in riskier jobs where they have to wear PPE. Of course, the lockdown is temporary, but it has shone a spotlight on a more long-term structural problem. Those less well-off key workers are paying a much higher overall tax rate—the marginal effective tax rate, or METR—than the safer, better-off white-collar professionals, because tax rates on investment income are lower than on wages and salaries, and because benefits withdrawal rates only apply to low-income households. The combined effect often means that low-income key workers pay an effective marginal tax rate of up to 75%, while better-off people pay dramatically lower rates. The haves are being subsidised by the have-nots. If we are all in this together, and if we are to go down in history as acting in the Conservative party’s best and finest traditions, how can we ignore that? How can we not act? It cannot be right.
The changes to entrepreneurs’ relief are a small but extremely welcome step in the right direction, but I hope the Chancellor will use the clarity and the challenge of the coronavirus process to make it the first step in a much longer journey. We need to encourage wealth creators, but they should not pay lower tax rates than the people who clean their offices or drive the trucks that deliver their goods. If we believe—as I and many others do very strongly—that rates of tax much above 40% will undermine an incentive to work for high earners, why is the same thing not also true for someone on the national living wage? The last time Britain taxed earned income and investment income equally was under a Conservative Government, when Nigel Lawson was Chancellor.
If we can go back to taxing all income the same, whether from benefits, work or wealth, it will be transformational. It will show that we are serious about helping the people who voted Conservative in their tens and hundreds of thousands, some for the first time ever, in the general election last year. It will create clear and stronger work incentives for everybody, not just the rich. It will make our economy work better by allowing investment to flow to wherever it can be used best without distortions in the tax system, and it will make taxes simpler and harder to dodge. It will reduce in-work poverty, because less well-off families will keep more of any extra money they earn, and, as we come out of the coronavirus crisis, it will prove beyond a shadow of a doubt that Conservatives really mean it when we say we are all in this together.
Changing entrepreneurs’ relief is a good sensible Conservative idea, but it is only a start. The Chancellor has taken the first step. I hope we will all go with him on a much longer and more important journey.
Thank you, Madam Deputy Speaker. You missed the historical perspective given by the Minister, but I will, if I may, focus on the economics and the politics—the politics being about decision making.
Before I came into Parliament, I was a national officer in the electricians’ and plumbers’ union. I used to have to explain to people that the reason a problem got on to the general secretary’s desk was because it was insoluble. Otherwise, someone else would have made the decision and claimed the credit. In government, it is the same. The reason decisions are at No. 10 is that there are no easy answers. It is dealing with ambiguity and it is dealing with possibilities and probabilities, but nevertheless decisions still have to be made. There will be some that go wrong. It is the Eisenhower doctrine—all plans break down on first contact with the enemy. He also added, as people forget, that it is nevertheless still necessary to plan. That is where the military mindset of making decisions rapidly and moving rapidly towards implementation comes in. Frankly, the Treasury, while it is talking to other Departments and giving them money, has to insist on a change in practices. The old dither, delay and process-driven mechanisms are no longer acceptable. They have to either change their ways or move out of the way.
The other message I would like to get across is that we have to get our country moving again by opening up our economy and, at the same time, ensuring the safety of workers and customers alike. I am sure the Minister will join me in welcoming the positive message from the Trades Union Congress and the negotiations that are taking place right across the country between unions and companies about how they can safely restart work. It must be the frontline that Government support goes to. Denmark and Poland have, very helpfully, led the way in seeming to be declining subsidies to companies based in tax havens or paying dividends or lavish bonuses or using share buy-back schemes. We should be following that and supporting real engineers, rather than financial engineers. The same goes for public procurement. If we look, for example, at the production and distribution of PPE equipment, I have to say that I am slightly concerned that the Government seem to have, as always, gone straight to the big consulting companies, rather than real industrial and commercial companies that actually have that experience and know how to join it up.
This crisis has also revealed a neglect of our manufacturing base by Whitehall. We must hope that the lessons have been fully learned, and our national recovery must be focused on rebuilding industry. That requires Government to act as not only legislator and administrator, but customer. We may well be facing a deficiency of demand that will mean that the restarting of the economy is in fits and starts, and Government needs to look at what role it can play. It can order buses, cars, vans and trucks to get the auto industry going; it can have a programme of council housing and of road repairs, in order to get construction and building materials moving; and it can give orders to British firms for health service equipment, protective clothing, chemicals and a reconstruction of our vaccine production capacity. There are many more things it can do, but time does not permit me to mention them all. Equally, time does not permit me to raise the issue of the difficult situation supply teachers have got themselves into with umbrella companies, which puts them in a grey zone. I have been warning about this for a number of years, since as far back as five years ago, but I will write to the Minister about it.
In conclusion, I wish to echo the words of the new Leader of the Opposition—colleagues will understand what great pleasure it gives me to be able to say that after five years. He told the Prime Minister:
“This is a national crisis and therefore needs a national response. Will you therefore commit to publishing an exit strategy as soon as possible?”
The country desperately needs that strategy, a way forward and, most importantly, hope. We do not want to be told that everyone is focusing on the coronavirus epidemic; during the second world war they were in an existential world war and we had a command economy, yet they were still able to produce the Beveridge report and a host of other measures planning for the future. That report identified five giants—want, squalor, idleness, ignorance and disease. We are focusing on disease, but those other giants are still killing people, here and around the world, which is why we need an urgent strategy from the Government and why we need Britain back to work safely.
It is a real pleasure to be able to connect to you and to the House of Commons today, Madam Deputy Speaker, and to take part in the Second Reading debate on the Finance Bill. I wish to begin by echoing comments made by the Chair of the Treasury Committee in relation, first, to those who receive a significant part of their income through dividends. I believe that there must be the possibility for the furlough scheme to accommodate a calculation of income that is based on those dividend receipts—that is used for many other income calculations. The second point is that we need to ensure that the banks are playing their part. I receive a lot of emails from the banks telling me what a great job they are doing, but I receive even more emails from constituents about the bureaucracy and difficulty that the banks are putting in their way in respect of securing not just the loan guarantees, but wider loans.
I wish to raise two specific points, one of which is access to cash. I raised that in my contribution to the Budget debate on 16 March, which seems like a lifetime ago. The second relates to the Roadchef employee benefits scheme, which the hon. Member for Glasgow Central (Alison Thewliss) mentioned and which is particularly relevant in my constituency. We are seeing during this crisis that access to cash is even more important than it would be in so-called “normal” times. People need cash, often to get others to buy their weekly shop or to get them to do other tasks, or simply to have the reassurance of having cash at home in order to meet unforeseen circumstances. That is why this remains such an important issue.
As I highlighted when I spoke previously, the average cash transaction is £10 or £20. When someone is paying £3 to get £10, that creates a huge distortion in the ability to have cash. It impacts on the most vulnerable in our communities, and that is why I welcomed the fact that the Chancellor has said that he will legislate to ensure access to cash, but that has to be on a fair basis. It has to be on the basis that there are not disproportionate charges and that cash is accessible across the whole of the United Kingdom, particularly in rural areas.
I represent one of the largest rural constituencies in the UK, so I welcome the fact that LINK has made some announcements on how it might approach the issue. I also welcome the fact that NoteMachine, the second largest provider of cash machines—it does so on a charge basis—has indicated that it would go back to free charging if the significant change of a return to the previous interchange rate was put in place. I therefore urge the Chancellor and Treasury Ministers to actively consider making that change, which would make a real and significant difference to people’s ability to access cash machines and to do so on a free basis. The crisis has shown more than ever the need for people to be able to access cash.
I will move on to the issue of the Roadchef employee benefits trust. I will not give a detailed outline of the issue, because it has a long history. I know that the Financial Secretary was able to meet the chairman of the trustees and the hon. Member for Airdrie and Shotts (Neil Gray), who has done so much to pursue the issue. I have a service station in my constituency that you may have used yourself, Madam Deputy Speaker. It is now called Annandale Water, but it was previously under the branding of Roadchef. Roadchef set up the first tax-exempt, all-employee share ownership scheme of its kind, but unfortunately the former chief executive of Roadchef plundered that trust, causing all sorts of difficulties, not least that it was not registered in—