The Chancellor of the Exchequer was asked—
VAT Retail Export Scheme
During the consultation on duty free and tax-free goods carried by passengers in 2020, the Government engaged extensively with various stakeholders and carefully considered 73 consultation responses. I have continued to meet stakeholders, including retail and aviation representatives, following our announcement.
Given the deep trouble within retail and aviation, with Debenhams one of many chains disappearing from high streets with the loss of tens of thousands of jobs and, as the Minister will be aware with Stansted and its importance for employment in her constituency, aviation by and large grounded, does she not accept it was a mistake to scrap the VAT retail export scheme and the extra-statutory concessions, both of which brought much needed revenue to the retail sector at airports, which is now lost from the economy, possibly for good?
We do not accept that. The independent Office for Budget Responsibility set out its assessment of the fiscal impact of the withdrawal of the VAT RES scheme, factoring in a higher than usual elasticity to account for spending on luxury goods. Its estimate is that this will result in a significant Exchequer saving of about £400 million per year. On airports, we recognise the challenges the aviation sector is facing as it recovers from the impacts of covid-19. We have supported the sector throughout the pandemic and continue to do so. This includes the recently announced airport and ground operator support scheme, which will provide eligible firms with support of up to £8 million per claimant.
Financial Support Schemes: Equitable Access
Since their introduction, the coronavirus job retention scheme and the self-employment income support scheme have been available to those unable to go to work because of caring responsibilities arising from covid-19, such as caring for a home schooling child or caring for a vulnerable individual. Those who are unable to work from home and have been told to shield have also been eligible for these support schemes, as well as for statutory sick pay and employment and support allowance.
The Chancellor has let the financial burden of covid-19 fall on women. They have undertaken twice as much home schooling as men. One in five have had to cut their hours. Some 78% of working mothers have not been offered furlough and 71% of those who asked for it have been refused. Will the Chancellor recognise that once again women have disproportionately paid the price of the inequality in his policies? Will he undertake an immediate equality impact assessment and set out in his Budget how he will offer redress for these widening gendered inequalities?
The truth is that this pandemic has had a desperately difficult effect for the whole of the UK economy, and for families and people across our country and regions. It is appropriate to recognise the totality of the difficulty we find ourselves in. It is true that many women have found themselves in the position of either caring for home schooling or vulnerable individuals. They are supported and protected through the schemes we have put in place. Of course, over and above those schemes, we have also put in place significant amounts of support for remote education, laptops and councils to help vulnerable individuals.
Earlier this month, the shadow Chancellor successfully called on the Chancellor to make it clear that working parents and others can be furloughed owing to childcare responsibilities. Most employers will want to do the right thing, but where an employer is refusing to follow the guidance and offer a parent furlough for childcare reasons, can the Minister tell me who the parent should report that to and what action will be taken?
As the hon. Member will know, furlough is an arrangement reached between companies and their employees. Her Majesty’s Revenue and Customs and the Government do not have direct involvement in that. What they say is that where an agreement can be reached between the two sides we will support them, as laid out in one of the most generous schemes available in any country around the world. As I said, that is just one part of a much wider panoply of support for people at risk through the pandemic.
Wholesale Food Service Sector
Throughout the covid crisis, the Government have sought to protect people’s jobs and livelihoods, and support businesses and public services across the UK. We recognise that food and drink wholesalers have been severely impacted by the necessary action we have taken to control the virus, but those businesses have been eligible for a number of our economic support schemes, including the job retention scheme, VAT deferral and bounce back loans.
Food service wholesalers have again seen their trade drop by 95% with hospitality businesses closing, yet they continue to supply our hospitals, schools, care homes and prisons at a financial loss. Many now are on the brink of collapse. What more are the Government going to do to help the industry, which is suffering a double whammy of lost stock and ongoing fixed costs?
I thank the hon. Lady for her question, and, indeed, I met representatives of the sector in my constituency a few weeks ago. The Treasury is in regular discussion with the Department for Environment, Food and Rural Affairs and they are assessing the systemic risks to the food supply chain of the fulfilment of those public sector contracts to schools, hospitals and prisons. We keep these matters under close review, but at the moment there is no threat to those supply chains and, as I referenced, the options that are available to those firms continue to be available.
Disused Coal Tips: Safety
Treasury Ministers regularly speak to their ministerial colleagues on all matters of public spending. Remediation of coal sites is a devolved policy and responsibility lies with the devolved Administration through their Barnett funding.
Well, that was a depressing start, because the truth is that 40% of all the disused coal tips in the whole United Kingdom are in Wales, which is much higher than the Barnett formula would normally allow for. Ninety per cent. of all the disused coal tips in England and Wales are in the poorest communities, so if the Government really stick to this policy of “It’s down to the local authority, which has to find the funding for this”, they are going to see the poorest communities in Britain pay for the legacy of an industry that made this country rich. I urge the Minister, please, to think again about how we can make sure that communities are safe and that the money and the funding are there to make sure that the coal slides, which are likely to come more frequently, do not provide long-term financial and economic problems for those communities.
I am a little surprised by the hon. Gentleman’s response because the last time that he raised this issue at Treasury questions, the UK Government responded extremely constructively, with £31 million of financial support, including £22 million to address the flooding of coal sites and £9 million for coal tip repairs, which I thought he might at least have welcomed. Notwithstanding that, at the request of the Welsh Government, the Coal Authority is supporting work to undertake a safety review of all the small tips in Wales, regardless of ownership, but he should also recognise that it is a devolved matter.
Sport and Wellbeing: Covid-19 Recovery Strategy
Sport and wellbeing is of major importance to this Government as we manage the effects of the pandemic. That is why we announced the £300 million sport winter survival package to protect major spectator sports, why we have supported clubs through covid business support schemes, such as the furlough scheme, and why we have introduced the £100 million national leisure recovery fund to support publicly owned leisure facilities through this crisis.
The Chief Secretary shares my passion and enthusiasm for sport, and I know that he appreciates the consequences of good physical and mental health on the wellbeing of individuals, but he may also be aware that poor physical health and wellbeing cost the Treasury tens of billions of pounds per annum. Given that covid-19 has had a negative impact on both, does he agree that our recovery strategy should put sport, physical activity and wellbeing at its heart, and will he consider the merits of a wellbeing budget that looks at shifting the focus away from GDP as the only measure of economic growth?
I agree with my hon. Friend that sport and wellbeing should be at the heart of our recovery plans and pay tribute to the work that she has done not just on football but on sport and loneliness in championing these issues. There are lessons from other countries that we can look at as well. One of the areas that I am very keen to work with her on are the opportunities around social prescribing, where the role of sport and wellbeing—in terms of how we treat people with regard to mental health and recovery from covid—has a lot to offer, and I know that she will continue to champion that.
Living Standards in Scotland: UK Fiscal Policy
I have frequent discussions with the Scottish Government’s Finance Minister, and may I take this opportunity to add my congratulations on the announcement yesterday of her engagement?
I think every Member will join me in congratulating Scotland’s Finance Minister, Kate Forbes, on her happy news. A decade of UK austerity delivered unprecedented declines in living standards and incomes, especially to those already struggling. Now even the OECD says that making cuts instead of investment after the financial crisis was the wrong approach. With the Scottish Budget set for Thursday, will the Minister confirm that this time the UK Government will invest to stimulate economic recovery, or will more Tory cuts put Scotland’s recovery at risk?
It is a little odd, in a year when Scotland has received £44 billion through the Barnett formula, to be talking of cuts. The hon. Gentleman refers to the Scottish Budget, and he will be aware that there are opportunities with the powers that the Scottish Government have, whether that is to exercise their flexibilities on elements of universal credit, to top up benefits and create new ones, or to introduce new tax powers. The Scottish Parliament has powers, and we wait to see how the Scottish Government use them.
In asking the public to stay at home, protect the NHS and save lives, there must be an understanding that in doing so consumers are running up higher electricity and gas bills. Does the Minister understand that 2.1 million people are behind in their energy bills at the moment, and that one way to help them would be to reduce VAT temporarily on home energy bills?
The hon. Gentleman makes a fair point; there are household costs. That is why my right hon. Friend the Chancellor, through the package of measures, has supported the incomes of the poorest. The distributional analysis from the Treasury shows that the poorest working households have benefited most from the measures introduced by my right hon. Friend. The best way of supporting those families is through schemes that the UK, through its broad shoulders, is able to offer, such as the furlough scheme and the self-employed income support scheme, which have supported so many jobs across Scotland.
The Chancellor’s chaotic stop-start approach to furlough last autumn undoubtedly cost jobs. Failing to continue the £20 universal credit uplift and extend it to legacy benefits is set to plunge struggling families into hardship, and now the Conservatives are signalling tax rises and a return to austerity. To what extent does the Minister believe that that approach has contributed to 20 consecutive polls in favour of Scottish independence?
It continued throughout; that is just a statement of fact. In terms of the wider package, I would refer the hon. Lady to the fact that the UK Government have provided £280 billion-worth of support and that bodies such as the International Monetary Fund have said that the UK’s economic response has been one of the best examples of co-ordinated action globally. We are able to do that because we are working as one United Kingdom acting together and using the broad shoulders of the UK.
Support for Businesses: Covid-19
The Government recognise the significant impact of coronavirus on businesses across every region and nation of the United Kingdom, and that is why we have put in place an unprecedented series of measures to provide support, whether that is through the coronavirus job retention scheme, tax cuts, tax deferrals, Government-backed loans or cash grants.
Business support that was originally designed for three months is now wholly inadequate for 12 or 18 months. Business debts and deferrals are mounting and now have to start being repaid, and the holidays are coming to an end, all at one big danger point in April. Cash grants are worth less and many still do not qualify for them. While the Chancellor might pat himself on the back, reports out this week show that nearly 250,000 businesses are likely to go bust this year, taking many jobs with them. Does he recognise that he cannot pull the plug all in one go in April, given that many businesses will not even have reopened at that point, and that with the effects of the vaccine around the corner, it makes no economic sense to allow businesses to go bust at this critical point, having supported them for so long?
No one, least of all me, is patting themselves on the back while hundreds of thousands of people are losing their jobs and many businesses are seeing extreme dislocation as a result of what is happening in our economy. I have put in place a series of measures, but I have always said that we cannot protect or save every job and every business. The hon. Lady makes a fair point, which is why we have said that we will review all our economic measures to support people through coronavirus at the upcoming Budget, in the first week of March.
Many female business owners have found themselves working full-time jobs at home while bearing full-time responsibility for childcare and home schooling, all at the same time. May I thank my right hon. Friend for all the steps he is taking to alleviate the difficulties experienced by mothers who just want to work and contribute to the economy with their children safely back in school?
My hon. Friend is absolutely right, and we owe mums everywhere an enormous debt of thanks for doing the enormously difficult job of juggling childcare and work at this tricky time. I know she will join me in being happy that early years settings have been open for a while, but she is right to say that the only way to sustainably solve this challenge is safely to reopen our schools as quickly as we can.
I have long believed that there was a compelling case for reducing VAT for the hospitality sector, and the pandemic-inspired cut helped to save the season between lockdowns. May I ask that my right hon. Friend, when he is looking at his Budget, considers making the cut permanent, to power the recovery across the UK, including in my destination town of Eastbourne, where one in four jobs depends on tourism?
My hon. Friend is rightly a champion for her local tourism and hospitality businesses, and she is not alone; across the country, hundreds of thousands of these businesses employ 2 million people. Those businesses are particularly vital in constituencies such as hers, which is why we reduced the rate of VAT—it runs all the way through to the end of March. She will know that we have an upcoming Budget, where we plan to review all our measures of support.
As you know, Mr Speaker, many of our manufacturers here in Lancashire have worked through the pandemic. Will my right hon. Friend congratulate businesses such as J & J Ormerod plc, James Killelea and Co Ltd, WEC Group and Perspex, who not only have worked through the pandemic, but show that high-value manufacturing and the real economy need to be things the Chancellor fosters and supports in his forthcoming Budget?
I am very happy to join my right hon. Friend in congratulating the businesses he mentioned. We know that many manufacturers, especially those in his area, have worked very hard, particularly with regard to ventilators and personal protective equipment at a time of this country’s need. He is right to say that that should play a part in our recovery. One initiative I would point to, which I believe will be in and around his area, is the Made Smarter partnership between Government and high-value manufacturing, which seeks to foster innovation, digital adoption and the latest and greatest management processes. It seems to be working very well and I look forward to learning more about that initiative.
Cheadle businesses that faced fines for failing to submit self-assessment returns by the end of this month will be relieved by yesterday’s announcement of an extension until the end of February, as that will remove a great deal of worry and anxiety from business owners who are already under great pressure. With the original deadline only a week away, what steps will the Department take to ensure that all businesses are aware of these changes?
As an accountant herself, my hon. Friend knows all too well the fantastic job that these people are doing, under enormous strain, at this current time. I know that, as she said, she warmly welcomes the announcement yesterday by Her Majesty’s Revenue and Customs to waive penalties until the end of February for late filers. She is right to say that we must make sure that everyone is aware of this, and we are doing everything we can, on all our channels of communication, to get this news to businesses. I ask other colleagues across this House to do exactly the same in their constituencies.
There is a looming bloodbath for many businesses at the end of March, when the moratorium on commercial landlords taking action against tenants in arrears comes to an end. Does my right hon. Friend recognise that acute danger? What action might he consider taking to avoid it?
My right hon. Friend knows that the Secretary of State for Housing, Communities and Local Government is engaged with that issue and has worked with the industry to put in place various codes of practice to encourage good and constructive dialogue between landlords and tenants throughout a difficult situation. There are promising signs that that is happening.
Self-employment Income Support Scheme
The self-employment income support scheme is one of the most generous in the world and has received claims from almost 2.7 million people so far, totalling more than £18.5 billion. The amount of the scheme grant is determined based on the applicant’s average profits from self-employment in the previous three tax years, as reported through their tax returns. By calculating the grant on an average of three years of profits, the scheme supports people who saw a dip in profits for any reason, including pregnancy.
The Chancellor likes to claim that the UK offers one of the most generous support schemes for self-employed people in the world, but self-employed women who have taken maternity leave in the past few years are not supported generously at all—in fact, they have received a lot less financial support than their peers who have not taken maternity leave. The charity Pregnant Then Screwed reported that around 75,000 self-employed women have been subject to— [Inaudible.]
If I may just say, the hon. Gentleman is wrong. We are not talking about a claim that is not validated by third parties; it is understood internationally that the scheme is one of the most generous in the world. He will be aware that the issue is subject to legal challenge, which limits what I can say, but I can tell him that the Government are well aware that some self-employed people found that their eligibility for the scheme was affected if they had taken time out of their trade in 2018-19, which is why, in June last year, the scheme’s eligibility criteria were revised to ensure that people in that situation were able to claim self-employment income support.
Since the beginning of the pandemic, the UK Government have consistently failed to prioritise support for women on maternity leave. Despite the issue being raised by me and a host of others repeatedly in this House, the UK Government were taken to judicial review last week by Joeli Brearley and the tireless campaigners at Pregnant Then Screwed. Do the UK Government now accept that it is not a sabbatical, sick leave or a holiday—it is maternity leave? Will they end their discrimination against 75,000 self-employed mothers?
I am not sure whether the sound system was working but, as the hon. Lady will know from my previous remarks, the issue is subject to legal challenge so I cannot discuss it. I will say, though, that I met maternity groups as part of the excluded in early December, and we have taken steps to remedy the situation, where we have been able to do so, in relation to those who took time out in the year 2018-19.
Environmentally Sustainable Economic Growth
The Government are clear that we will drive growth by investing in infrastructure, innovation and skills. In doing so, we will build back better and greener as we recover from the economic impact of coronavirus, starting, of course, with the Prime Minister’s green 10-point plan.
My hon. Friend is absolutely right—our 10-point plan can create hundreds of thousands of jobs up and down the country. He is also right that we can lead the world in this journey. We have been one of the fastest countries to decarbonise over the past few years and are one of the leading countries not only in phasing out coal and internal combustion engine vehicles but in offshore wind and carbon capture and storage. Where Britain goes, hopefully the world can follow.
This year, the UK Government have a chance to show global leadership on the climate emergency
as the host of the UN climate change conference in Glasgow. Green gilts will be a vital part of the transition to a clean economy. Last year, the Chancellor promised to launch the first ones this year. Will he tell us when and why not yet?
We are doing the technical work required to make sure that the launch of our green gilts is successful. I hope to provide an update at the Budget, but the hon. Lady can rest assured that we are working very hard at it. As I said, this will be the first step in building out a green curve. By doing that and making sure that the curve has fidelity in terms of confidence in where the money is going, we can unlock investment for the private sector across the economy. I know that she will join me in welcoming that progress.
Self-employment Income Support Scheme.
The self-employment income support scheme was designed to target support at those who most need it while protecting the taxpayer against error, fraud and abuse. The Government recognise that some of the rules and criteria that have been vital to ensuring that the scheme worked for the vast majority have meant that, in some cases, people were not able to qualify. This is one reason why the Government put in place a much wider £280 billion support package, including increased levels of universal credit, bounce back loans, tax, deferrals, rental support, mortgage holidays, self-isolation support payments and other business support grants.
It is understandable that, as support schemes were constructed at short notice, there would be gaps in them. It is less understandable why, a year later, those gaps have not been better closed. Many of my constituents are among the millions who have been excluded from support schemes so far, so, as we approach that anniversary, what message does the Minister have for them?
The message would be that the Treasury is doing everything it can to protect jobs, families and livelihoods in the face of the worst pandemic crisis that we have experienced in recorded history. It is important to say that, in the case of this scheme, we have spent considerable time engaging with groups that have brought forward potential ways of addressing some of the gaps in support that may exist. As I mentioned, we have had meetings in December and evaluated suggestions all the way through last year, including a concrete suggestion in relation to the directors income support scheme, so we are heavily leaning into this issue.
I want to raise the case of my constituent, Teresa McGeough, who is a newly self-employed special educational needs expert. She has not been eligible for any financial assistance during the pandemic. Does the Minister think that the Government are doing enough to help people such as Theresa and others?
As I have said, the Government are doing everything they can and have been working round the clock for a year to address the full needs of the country across all the different aspect of our economy and society, including through support for the self-employed.
The self-employment income support scheme’s third grant closes this Friday. The crisis has not ended, but the Chancellor has not provided many details on the future of the scheme. Will the Minister explain why he thinks it is right that employees can be furloughed until 30 April but self-employed people have no clarity about the future of support beyond the end of this week?
Financial Services: Equivalence Recognition
Equivalence is an autonomous technical process that each side is undertaking separately. Officials have had a number of meetings with their counterparts in the Commission over the past 12 months to discuss each other’s processes, and we remain open and committed to continuing dialogue with the EU about its intentions for equivalence.
I thank my hon. Friend for that answer. Clearly, it would be disappointing if the EU could not follow the UK’s offer on equivalence, given the relative starting positions. Will my hon. Friend comment on the Government’s ambitions with regard to mutual recognition of professional qualifications? What are those ambitions and does he hope that they will be achieved by the signing of the memorandum in March?
My hon. Friend has a lot of expertise in this area. He will know that, alongside the trade and co-operation agreement, we had a joint declaration to establish a structured regulatory co-operation for financial services and to discuss a whole range of matters around equivalence determinations going forward. The memorandum of understanding will be agreed in discussions between the EU and UK by March 2021. That will establish a framework for that co-operation. It would not be appropriate for me to give a running commentary on that, but the plans will come to fruition over the coming weeks.
The Brexit deal was, in effect, a no-deal outcome for financial services. Already some trade has moved, and there is big uncertainty hanging over access to European markets for this vital UK sector. Can the Minister confirm that it is in fact a Government negotiating aim to secure equivalence recognition for UK financial services in the memorandum of understanding being discussed between now and the end of March?
To clarify for the right hon. Gentleman, the equivalence granting process is an autonomous, separate process from the MOU discussion. The MOU is about a framework to evaluate the future direction of financial services across the EU and UK. I remain very ambitious for the financial services sector. The Chancellor and I are continuing to have a dialogue—with roundtables with representatives of the sector this week and next week, as well as one-to-one meetings—to ensure that we listen to the sector, and respond appropriately and ambitiously for the future.
UK-EU Trade and Co-operation Agreement: Regional Effect
We have secured an unprecedented free trade agreement with the European Union—the first free trade agreement that the EU has ever reached based on zero tariffs and zero quotas. Across sectors and regions, it is a good deal that will protect jobs and investment.
The assessment conducted by the Treasury in 2018 concluded that there would be significant regional variation in the impact of any Brexit deal. We are certainly seeing that, with fishing fleets grounded, manufacturers hit with extra costs, and the Department for International Trade apparently advising businesses to move parts of their operation to the EU to avoid problems. It is clear that there will be a significant regional impact. Does the Chancellor agree that he needs to redress that regional damage from the Brexit deal? Alternatively, does he agree with the new Business Secretary’s comments in “Britannia Unchained” that regional division is an “irrelevant” debate?
No one can doubt the Government’s commitment to uniting and levelling up across our United Kingdom, with an unprecedented infrastructure investment programme. Notably in the spending review, we announced something called the levelling-up fund, which will fund the infrastructure of everyday life in communities up and down the country, on top of our once-in-a-generation increase in infrastructure investment in road, rail and broadband that will benefit equally all parts of our United Kingdom.
Air Passenger Duty
The consultation on aviation tax reform has been delayed in recognition of the unprecedented circumstances that the aviation industry is currently facing. However, I will update hon. Members on the timing of the consultation in due course.
The United Kingdom charges the highest air passenger duty of any country in the developed world. Now that we have left the EU, domestic air passenger duty is something that we can alter. As we seek to recover from the covid-19 pandemic and take the advantages of a global Britain, can we have an early review of this tax, which is a pressure on our industry?
The Government recognise the important role that the aviation sector plays in the UK economy. The sector can draw on the wide range of support measures available, including the recently announced airport and ground operations support scheme, which will provide eligible firms with support of up to £8 million per claimant. However, I reassure my hon. Friend that we remain committed to delivering the consultation, and will look to proceed once the challenging circumstances that the sector is currently facing have eased.
NHS Funding: Wales
As healthcare is devolved, it is for the Welsh Government to ensure that the NHS in Wales has enough funding, using the over £20 billion of funding they receive from the UK Government through the Barnett formula.
The covid-19 vaccination programme in Wales is unfortunately lagging behind England, but despite that, the Welsh First Minister has announced that he intends to slow the release of vaccine to avoid, as he puts it, vaccinators
“standing around with nothing to do”.
Can my right hon. Friend confirm that there are no financial constraints that he is aware of that would justify this perverse and irrational policy decision or prevent the Welsh Government from deploying the vaccine as quickly in Wales as in any part of the country?
I am happy to confirm to my right hon. Friend that there are not financial constraints. The UK Government have guaranteed that the Welsh Government will receive at least £5.2 billion in additional resource to deliver their coronavirus response, including the vaccine deployment activities.
Covid-19: Regional Economic Disparities
The Government recognise the significant impact of covid-19 on every region and nation of the UK. I can assure hon. Members across the House that levelling up remains a key priority for the Government. That is why the spending review also announced longer-term measures to support every region and nation, including a new £4 billion levelling-up fund to invest in local infrastructure priorities.
It is good to hear that the Government are still committed to levelling up, but all the academic studies that have been done have shown that covid has disproportionately affected the regional economies, with Greater Manchester the third most badly affected region in the country. Those regions need more support, but Transport for the North and Northern Powerhouse Rail are being cut; is that not going in exactly the opposite direction?
I would dispute the hon. Gentleman’s claims. We have taken unprecedented steps to support people and businesses around the country. We have supported 19,100 jobs in his constituency through the coronavirus job retention scheme. Greater Manchester Combined Authority has been allocated £54.2 million from the Getting Building fund for a wide-ranging package of projects. We have also provided over £170 million for the Greater Manchester-Preston city region and Liverpool city region to improve public transport. We have also supported the regeneration of 33 towns in the north-west through the towns fund. There is a lot that is happening on levelling up. If he would like me to write to him to explain everything that we have done in his region, I am happy to do so.
Government Financial Support: Low to Moderate Incomes
The impact of tax and welfare policy is best analysed at the whole-household level. As the Institute for Fiscal Studies has said, because most people live in households with others and we do not know how incomes are shared, it is very hard to look at effects separately for many men and women. That is why the Government support has been targeted at the most vulnerable. Our distributional analysis published last year shows that the Government’s covid-19 financial support protected the poorest households’ incomes the most as a proportion of their income.
The pandemic has been a difficult time for pregnant women in work, and one in four have faced discrimination, including being unlawfully singled out for redundancy—a problem not confined to the pandemic. Will my hon. Friend look again at how other countries tackle this problem and consider adopting Germany’s approach of protecting pregnant women from redundancy, which would also give families much-needed financial stability at what can be a very challenging time?
We are aware of the difficulties that families are experiencing during the pandemic and we have put many measures in place to look at this, but if my right hon. Friend has examples of specific schemes happening across the world that she would like me to look at, I am happy to do so within my other role as Minister for Equalities.
Covid-19: Support for Local Authorities
The Government have committed more than £10 billion to support local authorities in dealing with covid in this financial year and the next, including an unprecedented guarantee to compensate them for their income losses as a result of the pandemic.
I welcome the considerable support that has already been given to local councils during the pandemic. However, I recently had discussions with leaders of North Warwickshire Borough Council, which is an incredibly well-run council, and they are still finding a shortfall of about half a million pounds against an annual budget of £10 million, due to a mix of lost revenue and providing additional services to residents, such as extra home waste collection services. What more can be done to ensure that we give councils the full backing they need to continue providing services?
North Warwickshire has received more than £1 million to meet its expenditure pressures this year, exceeding the expenditure pressures that it has reported to the Ministry of Housing, Communities and Local Government. I urge my hon. Friend to express any further concerns to MHCLG at the earliest opportunity. As he recognises, a comprehensive package of support has already been provided, and that support continues.
Throughout this crisis, our overriding economic priority has been to support people’s jobs and businesses through a range of measures worth more than £280 billion, including the furlough scheme, tax cuts, tax deferrals, loans and grants. There will be a Budget on 3 March, when we will set out the next steps in our economic response to coronavirus.
Last week the Chancellor received a detailed and costed policy proposal for a targeted income grant scheme, written by Rebecca Seeley Harris and supported by the gaps in support all-party parliamentary group. That scheme would be a vital first step in giving meaningful financial support to many of the millions who have been locked out of the current schemes and who are desperate, after nearly a year of the covid pandemic. Can the Chancellor tell us today whether he plans to progress with that proposal, or does he have another scheme in mind for the millions in need of support?
My hon. Friend is right about needing the private sector to drive growth and create jobs. I am pleased to tell him that the Prime Minister and I chaired the first meeting of the Build Back Better Business Council, where we outlined our plans to invest in infrastructure, innovation and skills alongside businesses. We have also established a new Office for Investment, led by Lord Grimstone, which is charged with securing high-value investment opportunities, and I look forward to hearing from him ideas that we can productively take forward.
In recent days, the Treasury has been at loggerheads with the Department for Work and Pensions, insisting on taking £20 a week from the pockets of 6 million families. It has also been at loggerheads with the Scientific Advisory Group for Emergencies, by claiming that financial hardship is not inhibiting self-isolation. Why is the Treasury putting our economic and health recovery at risk in this way?
The hon. Lady should not believe everything she reads in the newspapers. The Treasury and this Government have put in place a comprehensive and generous set of support to help people get through this crisis, and the results show that we have protected those on the lowest incomes the most.
I was actually following the words of the Secretary of State for Work and Pensions and of SAGE, but I appreciate the Chancellor’s response. The kickstart scheme was much heralded, but yesterday we learned that it appears to be missing out around 99 of every 100 young jobseekers. What does the Chancellor say to them today?
I am not entirely sure I know the figures that the hon. Lady is referring to. What I can say is that, since this scheme was announced at the beginning of July and opened for applications in September, it has created over 120,000 jobs for young people. That is, I think, an extraordinary achievement. I pay tribute to the team at the DWP for doing that. I am grateful to the thousands of businesses that are taking part in the scheme. They are working with us to provide hope and opportunity to a generation of young people so that they are not scarred by coronavirus, but can look forward to a brighter future.
My hon. Friend will I hope appreciate that the various things he just mentioned total about, I think, £20 billion or £30 billion, so he will understand it is reasonable that we consider all these things in the round at Budget, when we will set out the next stage in our economic response to coronavirus.
The Office for Budget Responsibility estimates that HMRC will forgo around £800 million in customs income and VAT over the next year. Some is deferred, but much is forgone. Will the Chancellor tell us what he is doing to make sure that that number shrinks and that revenue comes in at a time when the Exchequer needs it really very badly?
I will have to go and check the exact figures, if the hon. Lady will forgive me for not knowing the specific paragraph that she refers to. In general HMRC is providing easements over the next few months as we transition to a new set of trading relationships, but she can rest assured that we are always mindful of the impact on revenue and intend fully—very much so—to have a robust set of mechanisms in place. As she will know, there is a phased response for getting to that point between now and July, and hopefully we can work with her to make sure that that path is as seamless as possible.
I thank my right hon. Friend for his question, which tempts me into indiscretion. He may be aware of this, but HMRC publishes annual estimates to illustrate the impact of changes in tax rates in a document sexily entitled “Direct effects of illustrative tax changes”. It is worth saying, however, that these estimates are themselves uncertain, because of different levels of behavioural response to tax changes, the potential for wider macroeconomic impacts and, of course, the interaction with other measures.
It is absolutely right that businesses get the funds as quickly as possible. What I would say is that central Government have disbursed that funding to local councils across the country, so it is actually for businesses to take up with their local authority why they have not received the money. There are two sets of grants: there are of course our monthly grants, which have been going for a while now, and the one-off payments of up to £9,000 that we announced earlier this year. But the hon. Gentleman is right to urge urgency. I know my colleagues in the Business Department are doing exactly that with local councils, but ultimately the responsibility will lie with individual councils.
I thank my hon. Friend for his question. He is a doughty champion for his region and he should know that we remain focused on the commitment we made at Budget 2020 to have 750 roles across the economic campus by the end of the Parliament. The Treasury is still considering a range of location options for the new campus. We want to ensure that the chosen location supports our wider levelling up agenda, but we will certainly take his comments and representations into account.
The hon. Lady is right to draw attention to the commitment the Government have made to infrastructure, including in the forthcoming integration infrastructure plan, but the levelling up is not just about rail, as the Chancellor said; it is also about the £4 billion levelling up fund and, most importantly, about the review of the Green Book. As Lord O’Neill and others have commented, that ensures that a whole range of projects better address the levelling up alongside the significant investment in rail and other transport infrastructure.
The Government understand that this is a very challenging time for the UK hospitality sector, and we are constantly reviewing the package of covid-19 support. In order to ensure that decisions are made to meet these challenges, we will outline plans for 2021-22 business rates relief early this year, but my hon. Friend should let her constituents know that for existing tax liabilities the VAT deferral new payments scheme will allow businesses with deferred VAT to spread their payments over up to 11 equal payments to 31 March 2022 interest-free.
I am happy to look at the specific question the hon. Lady raises, but she will know that in the last Budget we introduced a manifesto commitment to bring in neonatal leave, which was warmly welcomed and many had campaigned for, and I know will make a difference to families up and down the country.
My hon. Friend raises a point mentioned by several Members about the difficulties businesses in the hospitality sector and their supply chain have faced during the pandemic. He can tell his constituents that £1.6 billion is being made available for local authorities to support businesses that are ineligible for closed business grants but that may still be impacted by restrictions, and local authorities have discretion to determine how much funding to provide to businesses and the flexibility to target local businesses that are important to their local economies, which could include businesses in the supply chains for retail, hospitality and leisure.
The hon. Gentleman can write to me with the specific issue he has with the guidance, but in general the grants have been functioning, I think, very well and local authorities are getting them out to businesses. They also have access to discretionary funding. As the name suggests, although there are broad guidelines, ultimately that funding is to be at the discretion of individual local authorities.
As my hon. Friend says, and I thank him for it, the temporary reduced rate of VAT was introduced to support the cash flow and the viability of over 150,000 businesses and to protect 2.4 million jobs in the hospitality and tourism sectors. It was extended in September and extended again, and will now run until 31 March of this year. But the relief comes at a significant cost, and while the Government keep taxes under review, we have no current plans to extend it further. I remind my hon. Friend that there are many other aspects of our financial support that may be of assistance to his constituents.
I thank my hon. Friend for his question. Across the pandemic, the Government have created a number of innovative responses, like Eat out to Help Out. We will continue to examine very carefully what package of measures we need to intervene with, and the Chancellor has indicated that he will be coming forward at the Budget with an update to the House on that package in due course.
Given the current imperative to forge new trade deals worldwide, and also to make the new EU trade deal work, what incentives are being considered by the Treasury to both attract new companies to the UK and retain those that are already here?
As my right hon. Friend the Chancellor set out a moment ago, the Office for Investment, led by Lord Grimstone, is focused on exactly that issue, working in tandem with the Build Back Better Business Council, which the Prime Minister and the Chancellor chair.