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Covid-19: Furloughed Space Grant Scheme

Volume 803: debated on Monday 15 June 2020


Asked by

To ask Her Majesty’s Government what assessment they have made of the proposals by the British Retail Consortium and the British Property Federation for a furloughed space grant scheme during the COVID-19 pandemic.

My Lords, the Chancellor has announced unprecedented support for businesses affected by coronavirus, including giving them access to cash to pay their rent, salaries or suppliers. The Government have also taken steps to protect commercial tenants from eviction and are working with the sector to publish a code of practice to guide and encourage all parties to work together to protect viable businesses and ensure a swift recovery. The Government keep all policies under review.

I thank the Minister for her Answer. However, the code is not cash. It has no teeth. The Government have rightly spent billions furloughing workers, but that money will be money down the drain if they blink now and fail to support businesses who employ such workers; instead, the Government will have to pay many millions in benefits to the burgeoning number of the unemployed. Why not make the grant aid subject to a negotiated settlement between landlords and tenants, based on the code? This would provide valuable support to businesses that are paying and giving what they can afford; it would also encourage others to follow suit and do the same.

The code is designed to encourage landlords and their tenants to find a solution that works for them both. On cash support, in addition to the Coronavirus Job Retention Scheme and others, we are getting cash directly to businesses, providing business rates relief worth more than £9 billion and providing grants to eligible businesses worth over £10 billion.

My Lords, tens of thousands of businesses are still not receiving support from the Government’s existing schemes. The latest figures show that 45,000 smaller businesses are still waiting for a loan through the Coronavirus Business Interruption Loan Scheme, and 60% of larger businesses are still waiting too. What action are the Government taking to speed up the approval of loans to businesses, many of which have been facing cash flow difficulties for months already?

The noble Lord is right: some businesses have had trouble accessing the initial loan support schemes. One thing that the Government have done to change this was the introduction of the bounce-back loan scheme, which has significantly increased the speed of approvals for those businesses that qualify. We are also doing other things to help with cash flow that do not rely on such approvals. As I said, 99% of eligible businesses that are also eligible for a rates holiday have already been granted that and we have released £10 billion of cash grants to them as well.

My Lords, many of the landlords of the retail properties now in need of the sort of help being discussed are local authorities. They are allowed to borrow money from the Government to invest in commercial property to the tune of £6.6 billion. This was always going to end in disaster, so will the Minister give an assurance that in future, the Government will lend to local authorities only to invest in social housing, not in ill-judged ventures into commercial property?

The noble Baroness will be aware that local authorities are obliged to borrow and invest with caution and prudence. On borrowing to invest in social housing, of course this Government have released the cap on borrowing to invest in precisely that.

My Lords, I refer to my interests as set out in the register. Even without the Covid crisis, does my noble friend agree that the trading position of many of our high streets has become problematic? Will the Government consider amending the proposed business rates holiday to benefit property owners with vacant premises by extending the current short exemption period while new tenants are found for those premises?

The noble Lord is right to say that we need to do more to support our high streets. That is why we have a £1 billion Future High Streets Fund. On business rates, the Government committed to and published the terms of reference for a fundamental review of business rates in the March 2020 Budget.

My Lords, I am grateful to the Minister for explaining that the Government are going to review business rates, which are part of this problem. Does she accept that the system of business rates, based on open market rental value, is effectively broken and that urgent action is required to reform the system?

The noble Lord will understand that that kind of question is exactly the type of thing the review will look at.

My Lords, I declare my interests as set out in the register. I agree that property costs are a major issue for the retail and hospitality sectors. But as I have been saying for many weeks, the biggest concern affecting the ability of retail, including restaurants and pubs, to open economically is the two-metre rule. Perhaps I may press the Minister yet again for a speedy review of that and, over the longer term, as others have said, for a rebalancing of the business rates regime so that it bears less heavily and unfairly on physical outlets at a time of digital explosion?

The Government are very cognisant of the impact of the two-metre rule on businesses and it is kept under constant review. The biggest support we can give businesses is to bring transmission of the virus down. That will allow us to take steps forward out of lockdown, as we have been able to do with the opening of non-essential retail outlets today.

My Lords, with consumer confidence at its lowest for a decade, and with local convenience shops, which have been a lifeline for many during the lockdown, relying on the extra hours of trading time on a Sunday evening to keep them viable, what is the economic case needed for the Government to consider a change to the Sunday trading laws?

The noble Baroness will know Sunday trading laws are a topic that has come up numerous times both in this House and elsewhere. There is an economic case for changing them, which is being considered alongside other arguments related to cultural cases with regard to Sunday trading.

My Lords, it will take a long time for shopping to return to normal and shops will need help throughout. As well as providing the short-term cash and rates relief help needed to help tide shops and their staff over during the coming autumn and winter, when the Government undertake their fundamental review of business rates, will they include looking at changing their structure to a fairer one, based on the sites the shops occupy?

I am afraid that I cannot anticipate the results of that review, but I can say to the noble Lord that I will take his point back to the Treasury for inclusion in its review.

My Lords, there are currently two categories of business, among others, not covered by support. Those are B&Bs and hotels that pay council tax in lieu of business rates and businesses operating on industrial estates and in shared workplaces. My understanding is that neither category of business currently qualifies for support. Will my noble friend look kindly on them, in particular B&Bs and hotels, which until now have been so badly hit by the lockdown?

I can happily make a commitment to my noble friend to take that back. My understanding is that local councils have also been given money to fund additional discretionary grants to address those kinds of gaps, but I will take her specific examples back to the Treasury.

My Lords, will the Minister ensure that no additional taxpayers’ money finds its way into the pockets of commercial landlords who hold their entities offshore to avoid paying UK tax?

Our approach to commercial landlords and commercial tenants is to support the code of practice being developed so that between the two of them, they can resolve payment structures and solutions that work for both of them.

My Lords, does my noble friend agree that at this time it is important that commercial landlords should bear their share of the pain? Will she therefore institute a register of those landlords that sign up to the code of practice and fulfil their obligations under it so that in the future, when businesses look to choose which landlord to contract with, they will know who behaved well during this time of crisis?

That is an interesting proposal from my noble friend. At the moment, our focus for the code of practice is to ensure that tenants, commercial landlords and lenders all find solutions so that viable businesses are able to continue working while we deal with the period of lockdown. However, we may want to look at such things in the future.