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Areas with Additional Public Health Restrictions: Economic Support

Volume 806: debated on Wednesday 7 October 2020

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Tuesday 6 October.

“The decision to extend tighter lockdown measures to Liverpool City Region, Warrington, Hartlepool and Middlesbrough was based on the latest health evidence, including advice from the Chief Medical Officer and local public health authorities. The resurgence of the virus has demanded further action to minimise harm to health and well-being, while preserving the ability of people to work and businesses to trade in the areas affected. That is why, throughout this crisis, we have sought to strike a balance between minimising the burden faced by businesses and protecting public health. To that end, we have provided one of the most generous and comprehensive packages of support for people, businesses and public services, totalling £190 billion by July.

As the path of the virus and the threat to the economy have become clearer, we have taken further decisive action. Last month, the Chancellor announced the winter economic plan—a package of targeted measures to protect jobs and businesses, including the job support scheme to support the wages of employees in viable jobs and an extension of the self-employed income support scheme to the end of April 2021. We are also continuing the temporary reduction in VAT for hospitality until the end of March 2021 and the Government-backed loan schemes until the end of November this year. We are also providing an additional £100 million in surge funding to support the hardest-hit areas in containing Covid-19. That is on top of the £300 million provided through the test and trace programme. We are offering grants to businesses that have been required to shut because of the new measures, worth up to £1,500 for each three weeks of closure.

Throughout this pandemic, we have prioritised a flexible and adaptable approach to economic support. We will continue in that spirit, and we stand ready to evolve our policies as required.”

My Lords, one-quarter of the population are now living under additional local restrictions. People are trying their very best to abide by the rules and guidelines, but have to do so in the face of senior Ministers misspeaking on crucial points of detail, contradictory policy initiatives, particularly in relation to homeworking and in the hospitality and events sectors, gaps in economic support schemes, leaving our creative industries and others on the brink of survival and accused of being unviable jobs, and serious shortcomings in what was supposed to be a world-leading test, trace and isolate system. To that list we can now add the lack of meaningful engagement with local leaders over the introduction of new restrictions, and late and inconsistent decisions on support for local authorities enforcing restrictions and for the businesses and jobs put at risk by them.

In recent days, we have seen packages worth £3 million for Leicester, £7 million for Liverpool City Region, an undefined amount for the north-east of England and nothing for Greater Manchester or the West Midlands. So, what criteria determine the allocation of support to areas under local restrictions? Will they be published? If not, why not? When can we expect a sector-by-sector plan to protect jobs and rebuild businesses?

My Lords, taking those two questions in turn, I have to disagree with the noble Lord on the issue of funding. Greater Manchester has received £2 million in surge funding for test and trace, out of a £100 million pot. A £300 million pot has been provided to local authorities across England to fund local test and trace responses, while those affected by local lockdowns can bid into the £100 million pot. That is in addition to the extra grant funding of £3.7 billion that has gone to all local authorities.

There is then the economic support. There are two main components to the economic support that comes with local lockdowns. If areas have businesses that have been forced to close, the local authority has received funding to provide grants to those businesses of either £1,500 or £1,000 every three weeks, depending on the size of the business. Then there is the support for self-isolation payment, which is funding provided by central government to local government to deliver for those who have received a positive result from test and trace, have been asked to self-isolate and are on low incomes.

My Lords, the Chancellor replaced the furlough scheme in the expectation of a V-shaped recovery. We have anything but that: as the noble Lord, Lord Stevenson, described, the reality is severe restrictions across the country and across the nations, and experts are now calling for a second lockdown. Will the Government listen to local leaders, who understand what is happening, and save thousands of businesses and hundreds of thousands of jobs that are viable in the long-term but will be lost without action, and reinstate furlough into 2021?

My Lords, the furlough scheme was not replaced in the expectation of a V-shaped recovery. The Government would, of course, love to have a V-shaped recovery, but I do not think anyone has been that optimistic so far. However, we are in a very different place from when furlough was put in place. We are not in the position of a lockdown—we are attempting to do everything we can to avoid such measures—and, while there are restrictions in place, many businesses are able to trade and go about their business, albeit at reduced levels. That is why so much support has been put in place, including, for example, extending the VAT cut on hospitality from January to March. We will continue to respond when necessary, but the furlough scheme represented a particular phase in our response to coronavirus and we are in a different phase now.

My Lords, does my noble friend agree that if you break it, you should pay for it? Do the Government not have an absolute moral duty to compensate and support viable businesses made unviable as a result of their regulations?

My Lords, we are putting in place a huge amount of support to businesses affected by the regulations to contain coronavirus. I referred to the support for businesses that may be forced to close by local lockdowns. Of course, there is also the bounce-back loan scheme that has provided billions of pounds of support, and we have extended both the application period and the repayment period for that scheme to up to 10 years. This will halve monthly payments, which do not even come in in the first year—the Government are covering those.

My Lords, a second national lockdown will be devastating for our economy, so it is right to prioritise bringing infections under control. Local lockdowns are a crucial piece in the puzzle of managing the risk of infection and reopening the economy, so we must get good at them. Does the noble Baroness agree that all restrictions must be based on clear, transparent evidence, that rapid mass testing must be turbo-charged—where are we with that?—alongside test and trace, and that further support should be considered for those sectors worst hit by lockdown measures? Does she agree that, with local lockdowns becoming more prevalent, we should have a tiered or graded approach to local lockdowns to make it easier for firms and individuals to know the rules, as well as what sort of support to expect? Moving from grade 1 to grade 2 or grade 3 lockdowns should trigger escalating levels of support. It is important that the support is available to business in lockstep with any tightening of restrictions.

My Lords, the decisions made on local lockdowns reflect the situation in the local area and, wherever possible, are made in agreement with local leaders. We are working each week to increase the capacity of our testing system so that it can support track and trace. Those areas affected by local lockdowns can access more money to support those who may need to self-isolate or businesses that need to close, and more money to support local test and trace measures to get the infections under control.

A major concern raised by mayors and other local leaders is the lack of communication from the Government. The Minister will know that the economy looks very different in different parts of the country. For example, in London it is said that about four in 10 workers could work at home, whereas in Barnsley it is only two in 10. What can be done to improve the communication from the Government with mayors and other local leaders to put together and negotiate economic packages of support?

My Lords, my understanding is that there is ongoing communication with local leaders in all the areas affected by local lockdowns. I am sure we can always do better, and we will continue to strive to do so. The noble Baroness is absolutely right that the economy in different parts of the country is incredibly different, so we will work with local leaders to try to reflect that in our response. We have provided some national measures to support jobs, but there will also need to be a local response in areas that have the severest restrictions.

My Lords, will my noble friend look at cities such as my own, Leicester, where we have been in a second lockdown since June and where sole traders and small businesses have really struggled to access the packages that the Government have generously put forward? They have just failed to be able to get the money and are really struggling. We have been in lockdown for a very long time in Leicester, and those businesses will go out of business if there is no support, so will my noble friend be willing to have a meeting with some of those small businesses and sole traders, just to see if there are things that they have missed out on?

My Lords, I will take that request back to the Treasury. I would be happy to meet local leaders, but it may be that someone else might be slightly more appropriate. There may be small businesses and sole traders that feel they might not qualify for the support, many of which actually would qualify for bounce-back loans. A further piece of reassurance that can be given to them is the change in repayment terms for those loans, bringing down the monthly repayments, should they wish to take advantage of that. I also emphasise to those local businesses that local councils in areas such as Leicester have been given funding to provide support for local businesses that might not meet one set of criteria or another but still rightly expect some kind of support from the Government. I urge them to engage with councils and ask how they can access that additional funding provided by the Government.

Has the Minister seen yesterday’s letter from the four mayors of the major cities of the north asking to be involved in the implementation of new lockdown measures? In view of their unique, detailed local knowledge, will the Government do so?

My Lords, I have seen that letter. I have two things to say in answer to the noble Lord’s question on the implementation of local lockdown measures. First, local authorities have been given £300 million for locally implemented test and trace initiatives and a further £100 million of funding is available for local authorities which have higher outbreaks to bid into. In addition to that, £60 million has been made available for further enforcement of lockdown measures—£30 million for the police and £30 million for local authorities.

Sitting suspended.