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Public Health Restrictions: Government Economic Support

Volume 806: debated on Thursday 15 October 2020

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Tuesday 13 October.

“Yesterday, the Prime Minister and the Chancellor set out further measures to support local authorities through the crisis. On Friday, the Chancellor set out how we will support jobs in every part of the UK through an extension of the Job Support Scheme, and these announcements build on the Chancellor’s September Statement on the winter economic plan.

Throughout the pandemic the economic policy focus has been clear—to save jobs. Last month, we set out our plans to help viable businesses that can open through the Job Support Scheme. However, businesses that are required to close due to coronavirus restrictions will also need our help. On Friday, the Chancellor announced the expansion of the Job Support Scheme. Where coronavirus restrictions legally require business premises to close, we will pay up to two-thirds of an employee’s salary, up to £2,100 a month, if they cannot work for a week or more. The scheme is nationwide and will run for six months.

In addition, businesses in England required to close will be eligible for a non-repayable cash grant of up to £3,000 a month. This can be used for any business costs. On Friday the Chancellor and I agreed with the First Minister of Wales, the First and Deputy First Ministers of Northern Ireland and the Finance Minister of Scotland on this additional package of support. We have now also guaranteed an extra £1.3 billion of funding to the Scottish, Welsh and Northern Irish Administrations if they decide to do something similar, bringing total guaranteed Barnett funding for this year to £14 billion.

In addition, as announced yesterday, we are providing local authorities in England with around £1 billion to protect vital services, and up to £500 million for local authorities at high or very high risk.

These measures build on the Government’s economic package, one of the most generous in the world, and underline our unwavering commitment to the people of this country.”

My Lords, it was disappointing that the Chancellor once again sent his deputy to respond to this important Urgent Question. The Chief Secretary was either unable or unwilling to answer the supplementary questions put to him by the shadow Chancellor. Now the Government have had 48 hours to prepare, I shall try again. Why will local areas be provided with support for test and trace only once they are subject to tier 3 measures? Why will the Government not allow £1.3 billion of unspent local grants to be used to support businesses in affected areas? Why are workers in closed businesses expected to face poverty as a result of their employer doing the right thing?

My Lords, I watched the Urgent Question in the other place and do not agree with the noble Lord’s assessment of the answers given, but I will do my best to supplement them. It is not correct that there is support for track and trace in tier 3 areas only, as £300 million has been provided across all local authorities in England to support local track and trace measures. In addition, up to an extra £465 million has been allocated to further efforts. That includes money for areas in tier 1 with high infection rates, and tiers 2 and 3. I believe that my right honourable friend the Chief Secretary addressed underspend well, but the 67% that workers in closed businesses will receive from the Job Support Scheme will be supplemented, for those on low incomes, by an increase in their universal credit. That could take their incomes up to 88% of normal. I think I have delayed the noble Lord enough.

My Lords, the Chancellor’s Job Support Scheme simply is not sufficient to protect jobs or businesses in the reality of the Covid second wave that we face today. It is also less generous than other schemes in Europe, as the Minister well knows. Will the Government now adopt two critical features of the German Kurzarbeit scheme; first, to step up the percentage of wages paid for lost hours, which in Germany goes to 70% and then to 80% the longer the period of lost hours or restricted furlough, and, secondly, continues with extra money for workers with children? Will this Government, like the German Government, pick up the full cost of the support, which, frankly, is beyond the capacity of many businesses to bear?

My Lords, in international comparisons, the UK is around the average for these kinds of support schemes. There are some schemes, like those in Germany, in which support goes up over time, but there are others in which the support is reduced over time. As I said to the noble Lord, Lord Tunnicliffe, the support for those on low incomes and those with children will increase as universal credit goes up and as incomes go down, and so those on low incomes will receive more than the 67%.

My Lords, it is easy to forget that the combination of nearly full support for the employed and the self-employed, and getting people to stay at home, was part of a suite of measures that was successful, in less than three months, in drastically reducing the number of cases and deaths, if what ultimately was lacking was test and trace. What research is there now on transmission of the virus during a working day? Will the Government consider that such national measures will be needed again if we are to beat the virus and avoid destitution for large numbers of people?

My Lords, a lot of work has gone into the Covid-secure guidelines for workplaces, to enable people to return to work in a Covid-secure way. The approach that the Government are taking is all around balance. National lockdown does not come without costs to people’s livelihoods and wider health costs. With the tiered approach we are trying to target measures more seriously in those areas with the highest transmission. We believe that this is the right approach in balancing the different interests that we must face.

My Lords, I draw the House’s attention to my interests in the register. I remind the Minister of the plight of performing arts organisations and practitioners in the areas newly affected by restrictions, and indeed, all over the UK. Has she seen the evidence on this subject, given last week to the Economic Affairs Committee? The Culture Recovery Fund, welcome as it has been, is not enough. When will the Government bring forward further targeted support for this very hard-hit sector?

My Lords, I will look at that evidence. On the Culture Recovery Fund, the first tranche of funding has just been announced. There will be more to come. Noble Lords are interested in international comparisons: the cultural recovery fund in Germany is £1 billion, whereas in the UK it is £1.57 billion.

My Lords, I commend the Government for the unprecedented levels of support that they are providing, and for so far resisting a second national lockdown, which would be disastrous. Does my noble friend the Minister agree that it is vital that we keep the economy moving, and, in this context, will the Government at least review the 10 pm curfew on pubs and restaurants, which is having such a damaging effect on the night-time economy in places such as my home city of Leeds, where the impact is simply to throw thousands of people on to the streets at the same time?

My Lords, as I said earlier to the noble Earl, Lord Clancarty, the Government’s approach is all about trying to find a balance. I acknowledge that the 10 pm curfew has caused difficulty for those in the hospitality sector. That is one reason why there is additional economic support, such as VAT cuts lasting until March. We keep all measures under review so that we can continue to strike the right balance.

My Lords, the pandemic has hit the north-east of England harder than it has the south, not least because fewer jobs in this area lend themselves satisfactorily to working from home. Will the Government level up by taking account of these factors and considering financial support for those unable to work in this region through no fault of their own because of government regulations?

My Lords, that is exactly what the Government are trying to do with the new Job Support Scheme. Where people are unable to work due to their workplace being closed or need to work reduced hours due to a reduced level of demand, the Government are there to step in with support for those workers’ wages.

My Lords, yesterday the Leader of the House misspoke, no doubt unintentionally, when she told us that the level of wage support being offered was in line with that of most other European countries, including Germany. Germany has lower rates of infection and its economy has not been hit as hard as ours has. As the noble Baroness, Lady Kramer, just said, Germany offers up to 80% in wage subsidy. For the public health measures to work, people must be able to comply. If people cannot pay their rent and cannot put food on the table, are the Government not setting up these new local lockdowns to fail?

My Lords, as I explained to the noble Baroness, Lady Kramer, the support to people’s incomes does not come only from the Job Support Scheme; for those on low incomes, universal credit is designed to go up in value as people’s incomes come down, meaning that those on the lowest incomes can expect to receive about 88% of their incomes. On the international comparisons, the figures that the noble Lord quoted for Germany are correct. I am happy to write to him with some other comparisons, so that he can see how we are doing compared with other countries.

My Lords, I congratulate the Government on what has been a substantial and comprehensive series of packages. I declare an interest as set down in the register. Will my noble friend the Minister comment on what may happen months from now? We have seen Governments across the world now indebted, so what conversations, if any, are taking place with our European partners, and, more broadly, in relation to the impact that this level of indebtedness will have on the global economy?

My Lords, I do not want to speculate too much about what may happen months into the future. That seems a long time away from where we are now, given the pace of change. We need to distinguish between the short term, when we must do everything that we can to support the economy while we fight the pandemic, and the medium term, when we will need to get public finances back on a sustainable footing. My honourable friend the Chancellor announced today the work at G20 level of international co-operation for the economic response to this crisis.

My Lords, I am on record as being in favour of a local rather than a national fiat in dealing with this pandemic, but since Tuesday, 28 million people are now in either tier 2 or tier 3, and where businesses are not mandated to close, inside and outside of tier 3, they are dying on their feet, because in tier 2 and tier 3, people cannot meet others except for their families outside the home. Surely it is now time to provide a much more comprehensive approach than the Government have managed in this phase so far?

My Lords, the financial support that the Government provide to businesses is not limited to those in tier 3. We have the £1.57 billion Culture Recovery Fund for those in the arts and the VAT cut to 5% for those in hospitality, and we have billions of pounds in the Bounce Back Loan Scheme. In the Winter Economy Plan we said that we would extend the terms of those loans to halve monthly repayments for most of those who take them out, and of course, there will be no repayments and no interest for the first year while businesses struggle with their cash flow.

My Lords, I am pleased to say that all supplementary questions have been asked. There will now be a short pause while we change Front-Benchers to allow for the next business.