The Government are providing over £407 billion-worth of support for the UK economy over this year and next. Contained within that is considerable support for business, through discounted loans, cash grants, VAT reductions and tax deferrals, all designed to help business get through this crisis and protect as many jobs as possible.
I very much welcome the £25 million that Ipswich will be getting through a town deal, and the creation of Freeport East. Some 6,000 of my constituents are employed, directly or indirectly, through the port of Felixstowe. The town deal will create a new tech campus and a maritime skills academy to feed jobs—high-skilled jobs—in the area. Therefore, does the Chancellor agree that both the town deal money and the new freeport, together, will be vital to the creation of new local skills in Ipswich and therefore crucial to supporting local business at this difficult time?
My hon. Friend is absolutely right, and I congratulate him; he has long campaigned on the importance of a town deal for his local community and, indeed, a freeport. I am delighted that this Budget could deliver both of those for his constituents and I agree with him that it will deliver growth, jobs and prosperity to his local area.
I thank the Chancellor for his earlier response. The measures in the Budget provided a lifeline to high streets in my constituency, from Westerham to Swanley. In particular, the restart grants are much anticipated. Can the Chancellor confirm when local authorities will be able to begin distributing these vital grants?
My hon. Friend is absolutely right that we must get support to businesses as quickly as possible. I am pleased to confirm to her that guidance will be published, hopefully by the end of this week, for local authorities, and that the restart grants, which are designed to take the place of our grant scheme that runs out at the end of April, will be distributed to local authorities in the first full week—the week commencing 5 April. I hope that is a reassurance to her and her businesses, and that local authorities can get the cash to them at this vital time.
The scale of support for businesses has been truly outstanding, but may I draw my right hon. Friend’s attention to the coach industry? Pre-pandemic, it already found itself heavily indebted because of requirements that the state put on it, such as the Public Service Vehicles Accessibility Regulations 2000 and Euro 6 requirements, so will he look again at how the coach industry can be supported, given the level of debt it is already in?
I thank my hon. Friend for shining a spotlight on this important industry; he is right to do so. I know that he will be talking to the Department for Transport about regulations for the industry, but I can tell him that we will be providing local authorities with discretionary funding of around £425 million to sit alongside the restart grants. That money, at the discretion of local areas, can be used to support businesses such as coach businesses in their areas.
I just want to take this opportunity to thank the Chancellor for the way in which he has engaged with me and other Members representing coastal communities throughout the lifetime of the pandemic. I know the extensive measures he has put in place, particularly for the hospitality sector, will make a huge difference to those businesses surviving. Can my right hon. Friend assure me that he will continue to monitor and work with me to ensure that local businesses get all the support they need for their continued recovery?
My hon. Friend has been instrumental in providing on-the-ground information to me and my team about the particular situation facing hospitality businesses in coastal communities like his. He is an absolute champion for them and rightly so. They are an important part of his local economy and I am glad that this Budget supported them. He has my assurance that we will continue to work with him and them to get them the support that they deserve.
The Office for Budget Responsibility estimates that £27 billion-worth of loans made under coronavirus loan schemes will never be repaid. Why is the Chancellor insisting that banks pursue that as conventional business debt, when the circumstances that gave rise to those loans are anything but conventional? Would lifting the debt burden on businesses and turning it into a contingent tax liability not help to fire up the economy, set business free and really get Britain moving again?
What we have done is provide a scheme called Pay as You Grow to give businesses incredible flexibility and generosity in how they repay bounce back loans. Those loans at an instant can be turned automatically into 10-year loans, which reduces the monthly cash payment by almost 50%. Beyond that, there are opportunities for interest-only periods and payment holidays, all of which will support the cash flow of businesses. We also have to get a balance with the taxpayer in all of this, which is why we have taken the approach we have. I am sad that the right hon. Gentleman did not also welcome the £25 million of investment in his local community through a town deal in this Budget, which will help local businesses there as well.
The Save our Salons campaign presented to the gaps in support all-party group this morning. It remains hugely frustrated that the hair, beauty and holistic service industry has had no sector-specific support from the Chancellor, despite contributing £9.2 billion to the economy. Can the Chancellor explain why he has decided to ignore the calls from this largely female industry to chop VAT to 5%?
With regard to VAT, I am sure the hon. Lady knows that the majority of businesses in the personal care sector are below the VAT threshold, so they do not actually pay any VAT. What we did do is include that sector in the more generous restart grants, so, depending on their rateable value, businesses in that sector, like those in hospitality, will be able to receive grants of up to £18,000.
I very much welcome my right hon. Friend’s announcement in the Budget of the super deduction, which will definitely have a very positive impact on investment. Of course, it will primarily do that by pulling forward what would have been future investment into a more recent time period. What measures is my right hon. Friend looking to, to ensure that that increase in corporate investment in the shorter term is continued into the medium and longer term?
I am glad my right hon. Friend recognises the importance of the super deduction. He is right that it will bring forward investment, but I believe it will also increase the amount of investment as well, given the attractiveness of doing so. What I would point him to are a couple of other announcements in the Budget. One is a consultation to reform our research and development tax credits regime, which we hope to conduct over the course of this year to make sure of support for investment in R&D in a way that reflects current R&D practices. Secondly, our freeports agenda contains enhanced capital allowances, and structures and building allowances, which last well beyond the period of the super deduction and will serve as an incentive for capital investment in those areas for years to come.