The Chancellor of the Exchequer was asked—
Covid-19: Fiscal Support
We have provided unprecedented support worth more than £190 billion to protect public health, businesses and jobs, and the Government remain committed to supporting the economy throughout this crisis. In July, we published our plan for jobs, which announced further support for the economy, with initiatives such as eat out to help out, the £2 billion kickstart scheme and the £9 billion job retention bonus, all of which aim to support, create and protect jobs.
I hear what the Chancellor says, but emergency food parcels for children are up by 107% this year and the Trussell Trust now expects to distribute 300,000 more than expected in the fourth quarter. Given that there is a hard Tory Brexit on the horizon and the end to the furlough scheme will certainly push more people into poverty, will the Chancellor do the right thing, adhere to his moral duty and make the £20-a-week increase in universal credit permanent?
Throughout this crisis we have endeavoured to make sure that the most vulnerable in our society get the help that they deserve, which is why results published in July showed that our interventions have meant that those on the lowest incomes have received the most support, through the temporary increase in universal credit, the hardship fund delivered through local councils and, indeed, increases in the local housing allowance to help people with their rental payments.
The events and conferences industry was the first to be affected by lockdown and will be the last to see demand return. Many freelancers, such as my constituent Karen Colvin, have not benefited from support in the same way as other workers. Does the Chancellor have anything new to offer to people such as her?
Many self-employed people have received the second of the self-employment income support grants—almost 3 million people have now received support through that scheme—but the hon. and learned Lady is right that the best way to provide support for people in that industry is slowly and safely to reopen those bits of our economy. My colleague the Secretary of State for Digital, Culture, Media and Sport is engaged with the industry to start piloting the return of business conferences and events. The situation remains under review.
My right hon. Friend has done a tremendous amount to support jobs in our country, but does he agree that many thousands, perhaps even hundreds of thousands, of jobs are going to be viable after covid is dealt with but will not make it unless they are provided with further targeted support after the end of October?
As ever, I am grateful for the advice from my right hon. Friend. He is right: businesses do need support, which is why many of the interventions that we have put in place—for example, the business rates holidays and, indeed, our support for the economy and jobs through initiatives such as our stamp duty cut to catalyse the housing market—last through to next year. I hope he will be reassured that throughout this crisis I have not hesitated to act in creative and effective ways to support jobs and employment, and I will continue to do so.
Many employees, self-employed people and freelancers in sectors such as hospitality, aviation, tourism, show business and the arts cannot go back to normal because of the public health measures brought in by the Chancellor’s Government, so will he examine the calls by the Treasury Committee to consider a targeted extension of support for those sectors? If not, why?
The hon. Lady mentions hospitality and tourism, which is an industry disproportionately represented in Scotland. That is why the Government took steps in the summer to support the industry, with a temporary VAT reduction from 20% to 5% and, indeed, the eat out to help out initiative, both of which were targeted at helping to protect the 2 million jobs and 200,000 businesses engaged in the industry.
That is woefully inadequate, as we head into the winter, for many of those industries that have already suffered with a low income. The Chancellor said that he would do “whatever it takes” and that
“if the situation changed”,
“would not hesitate to take further action.”
Those excluded from support schemes, the 700,000 made redundant since March and those losing their jobs because of the premature ending of the furlough scheme want to know whether the Chancellor will be true to that commitment or his words are worth nothing.
The hon. Lady claims that it was woefully inadequate; the VAT reduction was the single biggest ask from the UK hospitality industry. Not only was that delivered, but it was delivered with an extra initiative, eat out to help out, which proved to provide an enormous fillip to the reopening of that part of the economy. It is also worth bearing in mind that all the businesses engaged in that industry are not paying any business rates at all until March next year.
Coronavirus Job Retention Scheme
As of 16 August, 9.6 million jobs have been protected by the coronavirus job retention scheme, helping 1.2 million businesses with a total value of £35.4 billion.
Thousands of jobs in my constituency of North West Durham have been protected by the Government over this period, but my constituents are aware that such levels of taxpayer support cannot go on indefinitely, and also want to see new jobs being created. Will my right hon. Friend enlighten me as to how many jobs we are looking at getting through the kickstart scheme, which is now coming forward to help to get new jobs into the economy?
The £2 billion kickstart scheme has the potential to support more than 250,000 young people and, as my hon. Friend is well aware, it is part of a comprehensive package of £30 billion of support that my right hon. Friend the Chancellor set out as part of his plan for jobs in the summer economic update.
Despite countless warnings from these Benches, the Government are pulling away the job retention scheme just at the moment when infection rates are rising again right across our country. Businesses have said it, unions have said it, and even Tory Back Benchers are saying it: the one-size-fits-all withdrawal of wage support risks a jobs crisis this autumn. Will the Minister not listen and change course before it is too late?
The hon. Lady is simply wrong. What she ignores is the fact that my right hon. Friend has put in place a furlough bonus as support that goes beyond October to retain that link for employees to come back. That is part of a wider package of measures that goes alongside the furlough and stands comparison with the most generous in the world.
The Chief Secretary knows full well that the jobs retention bonus risks giving all the money to companies that simply do not need it. We would happily support the Government in developing a targeted, flexible wage support scheme for hard-hit sectors central to our country’s future. We have been saying that day in, day out for months now—the Government just have not been listening. Rather than stubbornly sticking to a decision made back in July, can the Chief Secretary not accept that the situation has changed and that the Government must also change course?
There seems to be some confusion because, just last week in a debate in this House, the shadow Chancellor actually recognised that the Chancellor had indeed listened with regard to the design of the furlough. In fact, Labour claimed credit for the role, which I salute, of the trade unions and others. So we have listened, but the reality is that the furlough pays a higher rate of people’s wages than the scheme in Spain. It supports a wider range of businesses than the one in New Zealand, and runs for twice as long as the one in Denmark. That shows my right hon. Friend’s flexibility and willingness to listen.
The Government have put in place a £190 billion plan to protect people’s jobs, incomes and businesses, one of the largest and most comprehensive economic responses in the world, and that includes the £30 billion made available under the plan for jobs.
The eat out to help out scheme has been a phenomenal success in my constituency of the Cities of London and Westminster. More than 890,000 meals have been discounted—several eaten by myself, I hasten to add. Will my right hon. Friend comment on the amazing package of help that the Government have given to the retail and hospitality sectors? Moving forward, what policies can we hope to expect to support these vital sectors, which are responsible for hundreds of thousands of jobs in my constituency?
My hon. Friend is right to recognise the effectiveness of that scheme in supporting demand. It was dismissed as a gimmick when my right hon. Friend the Chancellor launched it, but it has been warmly received by the hospitality industry. As she knows from her constituency and that of others, it is part of that wider package of support, including the cutting of the rate of VAT, which again has been a huge boost to that industry.
I thank the Treasury team for the support that they have provided so far. My experience during the summer was that there was a great deal of support from local businesses for the variety of schemes, particularly those in the hospitality and tourism sectors, which are very important in my constituency. Turning to the future though, we must make sure that we provide the job opportunities that we are going to need. In Gloucestershire, we had a lift-off event last Friday, organised by my hon. Friend the Member for Gloucester (Richard Graham) and supported by all six Gloucestershire MPs, where we focused on skills and training and brought together a range of employers. That is the kind of thing that I would like my right hon. Friends in the Treasury to think about supporting. It is the future we need to focus on, not the past.
I pay tribute to my right hon. Friend for that event. I saw the read-out, and how positive it had been. He is right to focus on that forward piece, using the package of measures that my right hon. Friend set out. That includes, for example, the payment to employers for each new apprenticeship—up to £2,000 for those over 25—and the £2 billion kickstart scheme, but also other schemes such as the tripling in the number of traineeships. Events such as the one he mentioned are ones that I am sure other Members will wish to follow.
Eat Out to Help Out Scheme
By 31 August, over 84,000 UK businesses had registered for the eat out to help out scheme and more than 100 million meals had been claimed for. By getting people back into the habit of enjoying a meal out, the scheme has helped to support nearly 2 million jobs in the hospitality sector, and it has played an important part in the Chancellor’s wider plan for jobs.
My right hon. Friend’s eat out to help out scheme was also hugely successful in Beaconsfield, where 88,000 discounted meals were enjoyed. I cannot say what percentage of those meals were enjoyed by me personally, but one can wager. What reassurances can my right hon. Friend give the House that he will continue to support the hospitality industry through reductions in VAT on food and attractions until next January?
I am delighted that the eat out to help out scheme has been so enthusiastically taken up in Beaconsfield, as it has been around the country, and I thank my hon. Friend for her personal service in this important area. She will know that the Chancellor’s plan for jobs and support for over 150,000 businesses and the effort to protect 2.4 million jobs are all part of a package. To them, of course, as she will know, the Government have added a reduced rate of VAT for tourist attractions, which will run through to 12 January next year. It all fits together as part of a wider picture of support for these very important sectors of the economy.
In St Austell and Newquay, almost 250,000 meals were eaten—not all by me—as part of the eat out to help out scheme, which put around £1.3 million into our local economy, so on behalf of businesses in mid-Cornwall, I thank the Chancellor for his support. August has been incredibly busy in Cornwall, but the hospitality sector faces a big challenge as we head into winter. Will my right hon. Friend consider a similar scheme to be run in the winter to help as many businesses as possible to survive the winter and be here next summer?
There is a danger of a bidding contest between colleagues over the number of meals eaten under the eat out to help out scheme. I would dissuade them from that. In answer to my hon. Friend’s question, however, I would say that there is this wider package. Of course the Treasury keeps all its measures under review, but it is a pretty formidable combination of VAT reductions, business rates relief and billions in tax deferrals and loans.
Given the great success of the eat out to help out scheme in Lincoln and Lincolnshire and across the country, which has led to higher spending in restaurants, will my right hon. Friend now consider further targeted support for struggling industries, such as the arts and tourism, which are drivers of the Lincoln and county economy of my constituency, not least the excellent Usher Gallery and under-pressure Drill Hall in Lincoln?
I am delighted that my hon. Friend has highlighted the great work of the Usher Gallery and the Drill Hall. As he will be aware, the Government have announced a £1.57 billion package of support for the culture sectors, which is designed to support, and will support, thousands of cultural and arts organisations across the country, including theatres, galleries, museums, heritage sites, live music venues and independent cinemas. I think that he will also know that, within that scheme, priority is given not just to organisations with a national or international reputation but to those that are central to the cultural fabric of our towns and regions. That is a very important further component.
Eat out to help out has been a massive lifeline for many pubs and restaurants in my Bridgend constituency. Some have told me that, because of it, they could remain afloat and keep people in work. What assessment has been made of the number of people and businesses in my constituency supported by the scheme?
I can tell my hon. Friend that 67 local businesses registered for the scheme and that it was used 53,000 times in Bridgend, which, while not like the heroic figures we have seen elsewhere, will have provided a very important boost to the local economy. I am sure that he will have had the experience that Members across the House will have had of walking into a café or restaurant and having the proprietor say, “Thank you so much. It has made a vital difference at a critical time of year for us.”
Covid-19: Business Support
The Government recognise the extreme disruption that the pandemic has caused businesses, which is why we have delivered a generous and comprehensive package of support, in line with best practices globally, totalling more than £190 billion. That has included grants, loans, the furlough scheme, the self-employment income support scheme, deferred VAT payments, business rate reliefs and protections for commercial tenants.
I thank the Minister for his answer. Will he and the Treasury consider reviewing the rules of the furlough scheme to deal with cases in which some small businesses, particularly one in my constituency, missed out on that scheme through administrative error and, in effect, paid staff when that could have been done through the furlough? Will he discuss that with me separately to see whether we could review the rules to deal with that sort of administrative mistake?
Obviously, the scheme has helped 1.2 million employers, and that involves 9.6 million jobs. I am happy to engage with my hon. Friend on the specific example he raises. No appeal process is available for those who have made administrative errors, but if a mistake has been made by Her Majesty’s Revenue and Customs, a complaints procedure can be followed. I will follow up on this with him personally.
This Government’s support for businesses throughout the pandemic has been wide-ranging and delivered at speed. Without the real-time information held by HMRC, it would have taken significantly longer for those grants to reach employers and many more jobs would have been lost. Digital tax administration not only helps HMRC, but cuts costs to businesses, so what is the Treasury doing to build on those successes and make the UK one of the most digitally advanced places in the world to run a business?
My hon. Friend is right; it is incumbent on the Government, in all Departments, to look at how we can refine the way we operate, to be more effective. That is why in July my right hon. Friend the Chancellor published a 10-year tax administration strategy, setting out our vision for a modern system, which will involve extending making tax digital to more taxpayers. That is a first step, and we hope it will bring us to a world-leading situation in this country.
I have been told by businesses in my constituency that the hospitality VAT cut was a lifeline to them and helped them to continue. Will my right hon. Friend consider extending that VAT cut beyond January next year, to help those businesses with that recovery?
Clearly, every intervention has a cost, and that measure provided support for 150,000 businesses, protecting 2.4 million jobs. As we approach future fiscal events, all contributions and businesses cases for changes will be looked at carefully by my right hon. Friend the Chancellor. I am sure that he has heard my hon. Friend’s representations today.
Covid-19: High Street Businesses
As the House will be aware, in recognition of the extreme disruption caused by the pandemic, the Government have delivered one of the most generous and most comprehensive packages of support around the world. That response is so far totalling close to £200 billion. In addition to affordable Government-backed loan finance, the job retention scheme and deferred VAT, retail businesses have also received specific support, including a 12-month business rates holiday for all eligible retail businesses in England and retail, hospitality and leisure grants worth £10,000 or £25,000.
Since being elected, I have raised on many occasions the issue of the economic and social loss that online trading is inflicting on our towns, cities and high streets, and the pandemic has accelerated that problem. Must not the Government now start to consider a VAT-style online sales tax?
As my hon. Friend will be aware, many offline businesses are also extremely effective online businesses; as Adam Smith almost said, we are a nation of virtual shopkeepers. As my hon. Friend will be aware, the Government are committed to a fundamental review of business rates. We published a call for evidence in July and invited views on reform and on potential alternative taxes, including an online sales tax. Our intention is carefully to consider the merits and risks of introducing such a tax, and I encourage all Members, including my hon. Friend, to contribute their views.
While a number of wealthier inner-city areas have received over £100 million each in rate relief and small business grants, many constituencies in the midlands and the north have been left behind, with some receiving barely a fifth of that support or even less—Dudley North, Rother Valley, Blyth Valley, Don Valley, Penistone and Stocksbridge, Wolverhampton North East, Newcastle-under-Lyme, Redcar, Sedgefield—I could go on. Is that what the Government meant by levelling up?
As the Chancellor has already pointed out, the Government’s intention has been to support vulnerable people, vulnerable businesses and vulnerable families across the country. As he has also pointed out, the evidence appears to be that we have been very successful, with the most targeted support being most heavily felt at the lower end of the income spectrum. If numbers in the aggregate do not please the hon. Gentleman, let me simply tell him the reaction of one chief executive of a retail business in this country, who said to me that without the furlough scheme, that company alone would have laid off 30,000 people. With the furlough scheme, it has been able to continue and recover.
Coronavirus Job Support Schemes
The Government have put in place a broad set of policies to support businesses and individuals through this crisis. The coronavirus job retention scheme and self-employment income support scheme have supported more than 9 million and 2.7 million jobs and people respectively. As the economy reopens, we must adjust our support to ensure that people continue to get back to work, protecting the UK economy and people’s livelihoods.
The Institute for Employment Studies is now predicting 450,000 redundancies over the three months to September and a further 200,000 by the end of the year—more than double the levels seen in the 2008-09 recession. Many of those whose jobs are at risk work in the creative industries, performing arts and hospitality, which would be thriving without coronavirus. Why is the Chancellor persisting with a cliff-edge approach, which will inflict the hardship and misery of unemployment on so many people, instead of taking a flexible approach to furlough to save good jobs for the long term?
The furlough scheme, as it is currently constructed, is flexible. It was a key demand from business groups and unions, which we responded to. As the economy is slowly reopening over the late summer and autumn, the furlough scheme has adapted to that, allowing businesses to bring back their employees in a flexible fashion, and that is exactly what they are currently doing.
I congratulate my right hon. Friend on the introduction of the self-employment income support scheme in particular, but does he recognise that it cannot continue indefinitely? Does he also agree that the self-employed are some of the most innovative individuals in our economy, and it is time to release their innovation to kick-start us?
My right hon. Friend is absolutely right. Now that we have begun to reopen the economy, it is right that our support becomes differentiated and the focus shifts to getting people back to work. It is not possible to sustain this level of intervention. I fully agree with him: those who are entrepreneurial and self-employed deserve our support, and they will continue to get it as we drive our recovery out of this crisis.
Hundreds of thousands of people across the country, including many in my constituency, have not been able to get support during this pandemic. The Government have repeatedly said that it is too difficult to get support to people who are not on the coronavirus job retention scheme or the self-employment income support scheme. The Government have had six months to put something in place, so will the Chancellor outline to the House what barriers exist now to getting support to the people who have so far been excluded?
As I have said from this Dispatch Box, we have not been able to help absolutely everyone in the exact way that they would have liked, but that does not mean that support is not available. Through considerable increases in universal credit and local housing allowance, we have provided support to the most vulnerable. Through measures such as mortgage holidays, which one in six mortgage customers has taken up in the past few months, we have ensured that everyone, one way or another, can access some degree of Government support.
Over £33 million of bounce back loans have been granted to businesses in Darlington, but many businesses in my constituency bank with new start-up, online and challenger banks and have faced some issues with accessing bounce back loans. What steps is the Treasury taking to assist with access to bounce back loans for those who need them?
My hon. Friend raises an important point, and we recognise the vital role that alternative lenders can play in providing finance to SMEs. We continue to work with them and the sector to see what more we can do. As he recognises, the bounce back loan scheme has proved enormously successful, and so far we have accredited 28 bounce back lenders, who have provided loans to more than 1 million businesses. In the first instance, I urge businesses in my hon. Friend’s constituency to look online at one of those 28 lenders, and see whether it can provide the loans that they require.
The Chancellor, and all of us whose salaries have been paid throughout the pandemic, may find it difficult to grasp the deep sense of unfairness felt by those who, through no fault of their own, are entirely excluded from any support. Perhaps they followed their entrepreneurial dream and left a good job to start their own business, as encouraged to do by this Government, but did not file their tax returns in time. Perhaps they have an event business that has been left to fend for itself without any events. There are thousands of such people in my constituency alone. How can the Chancellor expect the country to come together to fight the virus when so many have been excluded from all support?
I respectfully disagree with the hon. Lady. Most people in the country recognise that the Government have provided unprecedented support at this difficult time to millions of people, as well as hundreds of thousands, if not millions, of businesses. Although people may not have been able to get support in the exact way they would have wanted, across the spectrum, whether through the welfare system and local authorities, or through banks and the provision of credit, we have ensured that some form of support is available to the vast majority of the British public.
It is now been six months during which 3 million self-employed people have been excluded and locked out of the coronavirus support schemes, and it is no coincidence that this week the Trussell Trust announced an unprecedented need for support. Nearly half those people are first-time users, and if the forecasts are right, the situation will only get worse, with six emergency food parcels being delivered every minute as we get to winter. I implore the Chancellor to tell us what he will do to support those who are excluded, so that this disaster does not turn into a catastrophe for families around the country.
The hon. Lady is slightly confused. She speaks about people who were not eligible for the self-employment scheme, but those who were excluded earned more than £50,000 and were in the top 5% of all earners, with an average median salary of £200,000. In the same question, she speaks about targeting support to those who cannot afford food. She should figure out which issue she cares about.
When the circumstances change, policies should adapt. Infection rates are growing, local restrictions are becoming more common, and this morning’s figures show levels of unemployment at a two-year high, and rising, particularly among the young. France and Germany have extended their employment support for a further year. Is it time to reconsider the jobs cliff edge that is approaching at the end of next month, and at least to extend employment support to sectors that cannot yet go back to work and areas hit by local lockdowns, so that businesses and workers are not punished for doing the right thing?
The right hon. Gentleman is right to highlight the increase in cases, which is why the Government have taken steps to ensure that we remain in control in suppressing the virus. He talks about local lockdowns, and he will have seen the announcement last week about extra business rates support for businesses that find themselves in those areas, with a payment of up to £1,500 per three weeks of lockdown. He mentioned other countries. He is right about Germany and its scheme, but it is worth bearing in mind that Germany has had such a scheme, in co-operation with businesses and through its social security system, for more than a decade.
As you might expect, Mr Speaker, the Public Accounts Committee is already beginning the reckoning of costs, and there is a cost to the Exchequer from all those people who were self-employed, or employed on short-term contracts, and who received no support. Ultimately, the state still has to support those people, and no tax comes in from them. Will the Chancellor go back to the drawing board and consider the long-term issue of the cost to our country of not supporting people who have a good track record with HMRC and who could be supported? They have lived on fresh air for all these months.
I hear what the hon. Lady says and will certainly reflect on it. I refer her to my response to the question from my hon. Friend the Member for Penistone and Stocksbridge (Miriam Cates) about the importance of a digital taxation system, in which I know the hon. Lady’s Committee will have an interest. As has been the case throughout this crisis, our ability to respond in the way that we would want to is often limited by the information that we hold. My right hon. Friend the Financial Secretary to the Treasury has put out a 10-year tax administration strategy that will ensure that our tax system collects in real time the information we need about people and businesses up and down this country, so that, should something like this happen again, the Government can respond in the way that they would want to, as quickly as possible.
Online Sales Tax
The Chancellor has regular discussions on a range of topics with Cabinet colleagues. As the right hon. Gentleman will know, the Government are committed to a fundamental review of the business rates system in England and have launched a call for evidence inviting views on reform. That review will also consider the merits and the risks of introducing an online sales tax.
Online shopping offers a range of choice and opportunities for many of my constituents and other people throughout the highlands and islands that they simply cannot get from local shops, but it often comes with the whammy of delivery charges that make the purchase itself look small, or a refusal to deliver at all. An online sales tax could be an opportunity to give a small tax break to those making online sales who deliver as a universal service with a single price across the whole country. Will the Minister consider that, along with his other considerations?
I am very grateful for the suggestion. Now that the right hon. Gentleman has placed it on the public record, I will ask my officials to look more closely at it and to engage with him on it. He will know that we have already introduced, in a quite different context, a digital services tax. We are open to these potential ideas, and we will be looking very carefully at this area. Intelligent and well-thought-through feedback is always of great interest to us.
Export Costs: Northern Ireland to Great Britain
The Government have been actively engaging with businesses, and fully committed to providing them with the information and support needed to prepare for the end of the transition period in Northern Ireland. As was set out in the Command Paper, the Government’s position is that there should be no additional process, paperwork or restrictions on Northern Ireland goods arriving in the rest of the UK.
While I welcome the provisions of the United Kingdom Internal Market Bill debated yesterday, they do not cover the issue that the EU is demanding that goods coming into Northern Ireland have tariffs imposed on them until it is proven that they have not left Northern Ireland and gone into the EU. This is damaging to business, because it requires additional paperwork, will affect cash flow, and will put up costs. Given that the Government are committed to keeping Northern Ireland in the UK customs union, that the Act of Union says there should be no tariffs on trade between countries within the United Kingdom, and that 75% of goods do not leave Northern Ireland once they enter anyway, will the Minister give a commitment to ensuring in the Finance Bill that the EU demand for those tariffs to be collected will be removed so that Northern Ireland businesses are not disadvantaged?
As the right hon. Gentleman will know, these topics are currently very live matters of discussion between this country and the EU, and I am not going to comment on that. However, we are, as a Government, very engaged with this issue across a number of different Departments, and we will seek to support the principles and positions set out in the protocol as we go forward.
Energy-Efficient Homes: Support
The Government recognise the importance of energy efficiency in achieving our climate change objectives and tackling fuel poverty. That is why in July my right hon. Friend the Chancellor announced over £2 billion of new funding to upgrade homes through the green homes grant scheme. In addition, we have a range of policies in place to support home energy efficiency improvements.
From the end of September, homeowners and landlords across England, including my hon. Friend’s constituency, will be able to apply for vouchers to fund at least two thirds of the cost of upgrading the energy performance of their homes. In additional, Greater Manchester Combined Authority has the opportunity to bid for part of the £500 million being made available to local authorities to help low-income households directly.
Official Development Assistance
Yes, Her Majesty’s Treasury is responsible for the allocation of ODA across all Government Departments. The comprehensive spending review will determine all ODA budgets.
I know my hon. Friend takes a close and expert interest in this issue, not least through her work on the relevant Select Committee. Individual Departments are responsible for ensuring that all money spent as ODA meets the criteria of the OECD Development Assistance Committee, and that it is spent through the powers of the International Development Act 2002, which requires funding to be likely to contribute to a reduction in poverty.
The Government are committed to all groups in society, including the most vulnerable, facing the challenges caused by covid-19. That is why we have put in place an unprecedented package of support, including the job retention scheme, the self-employed income support scheme, and a package of welfare measures that the Office for Budget Responsibility estimates to be worth in excess of £9 billion.
The commitment of this Government to ensuring that the most vulnerable in our society are protected through this crisis cannot be questioned. The scale of the intervention has been remarkable, but may I encourage the Chancellor and the Treasury team, as they begin making their plans for next year’s spending, to bear in mind the importance of the increase in universal credit that we made at the beginning of the pandemic, and to ensure that we keep it in place, because many more families will be relying on it in the months ahead?
My right hon. Friend is a passionate champion of this issue. He will have noted from the answer given earlier by my right hon. Friend the Chancellor that the distribution analysis at the time of the summer update illustrated that the measures taken by the Chancellor had protected the poorest households the most, as a proportion of income. I know that he will have listened closely to my right hon. Friend’s representations.
Local Authority Funding
Analysis undertaken by 10 Greater Manchester councils and combined authorities shows that the impact of coronavirus and the actions taken to manage the pandemic will be in the region of £732 million by the end of 2021. The Government have promised to level up the country, and it is time to make good on that promise, so will the Minister give Greater Manchester and its councils the resources they need to lead the recovery and build back better?
The hon. Gentleman is right to highlight the importance of levelling up across the United Kingdom. It is a key objective of this Government. That is why we are backing councils with the resources they need to meet the challenges caused by coronavirus. That includes more than £3.7 billion of grant funding so far, to address many of the pressures that they face.
Social Care Workforce Special Payment Scheme
Spending on devolved matters is a matter for the Welsh Government. The UK Government do not set the levels of pay for care workers in England, but we are focused on ensuring that the social care system is funded, so that providers pay a fair wage.
Can the Minister tell my constituents who are care workers why, when they have worked their hearts out and been given a £500 thank you by the Welsh Labour Government, this Government see fit to deduct money from them, leaving those on universal credit with around £125? That is just mean-spirited.
The hon. Lady should point out to those same workers that this Government have allocated an unprecedented £4 billion of guaranteed funding to the Welsh Government to enable them to allocate funds in accordance with what is a devolved matter. If she is drawing attention to a shortfall in what she feels should be going to care workers in her constituency, she needs to address why more of that £4 billion is not being allocated to care workers in what is a devolved arrangement.
The manufacturing sector has a key role to play in the Government’s ambitious agenda to build back better, which is why last week I met representatives of the UK’s major manufacturing trade associations to hear their views directly. To support the sector, we continue to provide extensive support for research and development as part of our commitment to increase it, economy-wide, to 2.4% of GDP by 2027.
Many of the communities that voted for Conservative MPs for the first time in the recent election rely on our key manufacturing sectors such as aerospace and automotive for jobs. Given that the Government were prepared to create a £3 billion demand stimulus for the housing market, which was not as adversely affected by the pandemic, why will they not do a lot more to protect those jobs and communities with a demand stimulus for aerospace and automotive, which is desperately needed?
The Government are acutely aware of the demands required across various sectors. The hon. Lady mentions the aerospace and automotive sectors, which the Government are supporting with over £8.5 billion through the covid corporate financing facility, grants for research and development, loans and export guarantees expected over the next 18 months. There is also further support in place for the automotive industry through the Budget, in which the Government committed over £1 billion to promote the uptake of ultra-low-emission vehicles, including up to £500 billion to support the roll-out of a superfast charging network. Those amounts will help those various sectors.
This Government’s comprehensive and generous package of support in response to the coronavirus has protected millions of livelihoods and supported hundreds of thousands of businesses up and down the country. Our plan for jobs announced in July will protect, create and support jobs, notably through our recently launched kickstart scheme, as we look to get the UK economy back on its feet.
Scottish Government analysis has revealed that ending the transition period in 2020 could cut £3 billion from the Scottish economy over the next two years—on top of the impact of coronavirus. With the UK Internal Market Bill making the risk of a no-deal Brexit even greater, what reassurances can the Chancellor give my constituents and the people of Scotland that there will be no real-terms spending cuts that would inflict even greater damage on our economy?
The Government and I remain committed to getting a deal, and will continue to engage constructively with our European partners in pursuit of that aim. With regard to funding for Scotland, I can tell the hon. Lady that the Scottish Government have received £6.5 billion in advance of its being called for, so that they can provide the support required by their residents.
My hon. Friend is absolutely right. Manufacturing and exports, especially from the west midlands and the Black Country, will play a key part in driving our recovery. I am pleased to tell him that the Exchequer Secretary will shortly be meeting the Mayor, Andy Street. That comes on top of our plans to provide £1 billion to develop the UK supply chain for electric automotive vehicles over the next five years, and £850 million of allocations from the local growth fund for his region.
The Chancellor will be aware of concerns that the UK risks a slower recovery than comparable economies for self-inflicted reasons. Despite the devastating impact on jobs, the Treasury Front Benchers have yet again today—six times—rejected targeted wage support. Economists are concerned about the Government’s inability to get a grip on the public health crisis, which evidence from the Scientific Advisory Group for Emergencies suggests stems in part from a failure to adequately support people who have to self-isolate. Rumour has it that the Chancellor is blocking attempts to improve sick pay, so I put it to him: can he put himself in the shoes of those low-paid workers who often have to choose between paying their rent and bills, and putting food on the table for their kids? If those workers are advised to self-isolate, they get £95.85 a week—and that is if they are even eligible for statutory sick pay. Surely the Chancellor must agree with the Secretary of State for Health and Social Care that statutory sick pay is not enough to live on.
From the beginning of this pandemic, we have made changes to the operation of statutory sick pay and our welfare system to ensure that those who are isolating in any circumstance receive support from day one, and that we improve flexibility, particularly for the self-employed, through the removal of the minimum income floor. As the hon. Lady knows, we are also trialling incentive payments in local lockdown areas.
I did not ask the Chancellor about the precise details of delivery and I did not ask about the scope; I asked him about the value of statutory sick pay. He needs to get a grip on this issue. If he fails to do so—and the blockage appears to be his responsibility—then we will see additional localised reimpositions of lockdown, with all the implications that that has for jobs and businesses. Please, Chancellor, get a grip on this issue.
There are two other reasons why economists are worried about the UK’s recovery. First, of course, there is concern about our future as a trading nation. Both the Chancellor’s predecessors have warned that the threat to override the withdrawal agreement could damage our country’s reputation and prosperity. Why do those former Chancellors appear to be more concerned about our country’s economic prospects than the current one? The second reason for concern stems from the prospect of premature spending cuts or tax rises. According to the Financial Times, it is politics that could drive the Chancellor towards early tax rises, so will he rule them out for the rest of this year?
The hon. Lady talks about our place as a trading nation. She may have missed the news last week that this country has concluded an enhanced free trade agreement with Japan. I pay enormous tribute to my right hon. Friend the Secretary of State for International Trade for concluding a deal that will be better for British businesses, particularly in the areas of the economy in which we do so well, such as digital and services. It will protect more of our great agricultural produce, open up more markets for our businesses to sell to, and reduce prices for British shoppers. That is what the future of global Britain looks like.
My hon. Friend makes an excellent point, and I thank her for it. She will know that some of the interventions we have already put in place will last through into next year, for example the removal of business rates for businesses in hospitality, which has been particularly affected. She may be reassured to know that we recently introduced the new business support grant for businesses forced to close as a result of local lockdown, when the Joint Biosecurity Centre gold command has instituted that measure, and grant payments will be up to £1,500 per three-week cycle.
The right hon. Gentleman is absolutely right to highlight the importance of the aerospace industry to our economy. It is, in common with aerospace industries across the globe, suffering a deep depression in demand for all the obvious reasons. He can rest assured that we engage regularly with the companies in that sector. In particular, to support their future success, we are investing heavily in R&D alongside those companies to make sure we remain on the cutting edge of advanced manufacturing capability.
My hon. Friend is absolutely right to highlight the importance of good childcare, and the fact that the Government support people with 20% of their childcare costs up to a cap of £2,000 through tax-free childcare. I can also tell him that, in recognition of the importance of this issue, we made some adjustments to the way in which tax-free childcare operated during the pandemic, so that if someone’s income fell below the minimum income requirement as a result of what was happening, they would continue to receive financial support up until the end of October.
The hon. Gentleman is absolutely right to highlight the disproportionate economic impact that this crisis will have on young people. I have spoken about that from the Dispatch Box before, and he is right that we should focus our attention on those people. That is why, in our plan for jobs, we outlined the kickstart scheme, which will initially make available fully funded Government job placements for a quarter of a million young people at risk of long-term unemployment. I am confident that many young people in his constituency—and all of ours—can benefit from that scheme, and I urge him to work with his local businesses to get them signed up to the scheme and taking on a young kickstarter.
My hon. Friend is right to draw attention to the particular impact on that sector. We are engaging closely with the sector, and I am very happy to continue to engage in dialogue with my hon. Friend on the issue.
I think my right hon. Friend addressed this in his reply to the shadow Chancellor. The key issue is the package of measures that the Government are putting in place. First and foremost among those is retaining people’s link to employment. That is the most important issue. Alongside that, the measures on welfare, including support for businesses that are in lockdown, are part of the comprehensive response, and statutory sick pay is one of a suite of measures.
My hon. Friend is absolutely right. That is the underlying principle behind furlough—to enable the labour market to bounce back, with jobs in businesses that were viable before the pandemic being able to recover quickly. It is also part of the three-phase strategy that my right hon. Friend the Chancellor has set out. The second phase is to concentrate on skills to create jobs, protect jobs and support jobs, and to enable those workers to come back into the economy and for the economy therefore to recover more quickly.
The hon. Gentleman is right to raise the issue of Arm, which is obviously a key employer in his constituency. The Government are taking a close interest in this transaction. It was pleasing to see yesterday that parties close to the transaction had said that the headquarters would remain in Cambridge. It is a matter on which we are engaging very closely, and I am happy to engage with the hon. Gentleman personally on any questions arising from that.
My hon. Friend is right to raise this point, which he has raised before. In his constituency, 1,400 businesses have benefited from the bounce back loans from 28 providers across the country, but I am happy to engage with him in relation to the number of cases he has dealt with and see what interventions can be made at this time.
It is right that companies pay the tax that they owe the Exchequer so that we can fund the public services that all our constituents rely on. That is why the Government instituted the digital services tax for online companies, which came into force this year. We remain committed to that tax, although we work with our partners around the world to replace our unilateral one with a multilateral solution through the OECD that will tackle this issue properly once and for all.
The Government have a range of schemes that have been supporting businesses throughout the pandemic, as my colleagues have mentioned time and again. If my hon. Friend has specific requests from the businesses in his constituency, I shall be happy to discuss those with him so that we can work out the best way to continue to spur economic recovery.
We have been looking at this relief for several years now, and the changes that we have made will benefit the vast majority of brewers. The smallest brewers will be exempt from most of the changes, and brewers which have been unable to grow will now be able to do so. We had a long consultation, and quite a few brewery groups have been very supportive of this change. We will make further announcements after the next technical consultation on this relief.