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Support for island communities affected by COVID-19

Volume 679: debated on Tuesday 1 September 2020

The Petition of residents of the United Kingdom,

Declares that the economic fortunes and sustainability of island communities across the UK, such as the Isle of Arran and the Isle of Cumbrae, are more precarious than mainland communities, not least because of the higher number of older people in such communities; further declares that, despite welcome support from the United Kingdom and devolved governments, lockdown has been particularly challenging for island communities; notes that the exiting of lockdown for islands has to be slower than on mainland communities as ferry capacity must be restricted to ensure social distancing, with capacity expected to be initially limited to less than 20 per cent on some routes, presenting an unprecedented economic threat for island economies and leaving them at a disadvantage to the rest of the mainland UK; further notes that island communities are heavily reliant on tourism, levels of which have been significantly reduced by lockdown measures; further notes the impact that redundancies in the tourism industry will have on islands such as Arran, where one resort, the Auchrannie resort, employs 171 people from a total island population of 4,600; and further declares that as the Government prepares to reduce support in September for furloughed workers, fragile island communities will be particularly affected by mass redundancies and unemployment.

The petitioners therefore request that the House of Commons urges the UK Government to bring forward special measures to support island economies, including a furlough extension specifically for island communities.

And the petitioners remain, etc.—[Presented by Patricia Gibson, Official Report, 10 June 2020; Vol. 677, c. 364.]


Observations from the Financial Secretary to the Treasury (Jesse Norman):

The Government thank Patricia Gibson for submitting the petition.

The Government recognise the difficulties faced by island communities during the covid-19 pandemic, and have taken action to support these communities and the tourism industry more broadly.

In March 2020, the Government introduced social distancing and ordered the closure of certain sectors in order to save lives and protect the NHS’s ability to cope with the crisis. The Government recognise the extreme disruption these necessary actions to combat covid-19 have had on businesses in the hospitality and tourism sectors. That is why the Government have announced unprecedented support for individuals and businesses, including targeted support to protect the 2.4 million jobs and over 150,000 businesses across these sectors. Government schemes include:

Grant schemes such as the Retail, Hospitality and Leisure Grant Fund, the Discretionary Grant Fund, the Kick-starting Tourism Package and Reopening High Streets Safely Fund.

A new reduced rate of VAT for accommodation, eligible food and non-alcoholic beverages services and tourist attractions from 20% to 5% until 12 January 2021.

A range of Government-backed and guaranteed loan schemes including the Coronavirus Business Interruption Loan Scheme and the Bounce Back Loans Scheme.

In certain cases, businesses in retail, hospitality and leisure sectors may further be eligible for a business rates holiday for the 2020-21 tax year.

As part of the Government’s road map to reopening the economy, the majority of sectors have been allowed to return from 4 July, if not before, on condition that they can do so safely in accordance with public guidance.

However, the Government recognise that island communities may be facing particular challenges, including the issue of ferry capacity, that make it harder for businesses to benefit fully from the reopening and from some of the support schemes. Public safety remains the top priority and it is right to take action that helps contain the virus and save lives.

To this end, the Government have taken action to alleviate pressure on ferry and freight services, for example by announcing on 24 April 2020 emergency funding of up to £10.5 million for lifeline ferry and freight services to the Isle of Wight and the Scilly Isles. The funding—agreed jointly by the Department for Transport and the Treasury— has supported the continuation of crucial passenger ferries to the Isle of Wight as well as sea and air links to the Isles of Scilly during the course of the covid-19 emergency. Government officials are now working with local stakeholders to ensure a smooth transition to restart and recovery for the lifeline services of the Isle of Wight and Isles of Scilly. Department for Transport officials continue to monitor lifeline services across the UK and liaise closely with devolved Administrations on the support the Government provide in England. However, Scottish ferries are devolved, and the larger Hebrides and Northern Isles services are supported by Public Service Obligation (PSO) subsidies which support a “road-equivalent tariff” scheme for passengers. The UK Government are applying the Barnett formula in the normal way on all funding in relation to covid-19, and to date the Scottish Government have received over £3.5 billion in Barnett consequentials. As support for the Isles of Scilly and the Isle of Wight is being funded from existing Department for Transport budgets, the devolved Administrations have already received their Barnett consequentials on this funding.

So far, the Coronavirus Job Retention Scheme has helped 1.2 million employers across the UK furlough 9.6 million jobs, protecting people’s livelihoods (as at midnight 9 August 2020), at a value of £34.7 billion. Accommodation and food service employers alone have furloughed over 1.6 million jobs at a claim value of £4.1 billion. As we now begin to reopen the economy, it is right that state support is slowly reduced and the focus shifts to getting furloughed employees back to work. It is the case that some firms will be affected by coronavirus for longer than others, and the Government will seek to support these firms appropriately. To provide additional support to firms to retain employees as demand returns, the Government have introduced the Job Retention Bonus, a one-off payment of £1,000 to employers for each employee who was ever furloughed, has been continuously employed until 31 January 2021 and is still employed by the same employer as of 31 January 2021.

Where firms make the decision that they cannot retain all of their staff over the longer run, the Government are ensuring that those looking for work are supported through:

A package of measures in the Plan for Jobs to help people find work by significantly increasing support offered through Jobcentres and providing individualised advice through the National Careers Service.

The Kickstart Scheme, a £2 billion fund to create hundreds of thousands of new, fully subsidised jobs for young people.

Temporary welfare measures announced in March including: £20 per week increase to the UC standard allowance and Working Tax Credit basic element, and a nearly £1 billion increase in support for renters through increases to the Local Housing Allowance rates for UC and Housing Benefit claimants.

During this difficult time the Treasury will continue to work closely with employers, delivery partners, industry groups and other Government Departments in order to understand and address the long-term effects of covid-19 and the challenges it poses to the wider economy.