|Tue 24th March 2020||
Contingencies Fund Bill
Committee: 1st sitting: House of Commons
|30 interactions (2,904 words)|
Contingencies Fund Bill DebateFull Debate: Read Full Debate
Kevin HollinrakeMain Page: Kevin Hollinrake (Conservative) - Thirsk and Malton)
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Legislation Debates - View all Kevin Hollinrake's contributions to the Windrush Compensation Scheme (Expenditure) Act 2020
May I start by assuring the Treasury Bench that the official Opposition will support this Bill? I support the Government throughout, obviously, but as the Minister might expect, we will be constructively critical as well throughout the process.
This Bill, as the Minister says, will enable the Government to access the resources to tackle the crisis. I have to say, there is a sense of irony here, because only three months ago I hoped to be bringing forward a Bill for about £250 billion as well, for long-term investment in our infrastructure—but that is another story. It probably would have been supported as well, because it was infrastructure spend. Anyway, we will support this Bill, but we have the opportunity to raise some issues on the way in which the resources will be applied—forgive me if I do that.
We recognise that this is the gravest crisis facing our country that any of us in this House has known. We are debating matters of life and death, and the proposals that we make now and the decisions that we need to take in the coming months obviously deserve scrutiny, and that scrutiny should be welcomed on all sides. Last night, the Prime Minister was right to call for people to stay at home to protect our NHS and to save lives. We called for enforcement measures yesterday morning, and the Mayor of London and many others have been making private representations for greater clarity and greater action.
Clear and detailed guidance to employers and workers is needed on which workplaces should close. As we saw in the earlier response to the statement, a lack of clarity remains about certain operations, particularly within the construction sector. We have received reports from unions, particularly those representing construction workers, that there is utter confusion on the ground at the moment about what operations should be maintained and which workers should be on site. For anyone who has been anywhere near the construction industry or worked on site at any time in their lives, things have not changed that much in recent years. These workers also work in some of the most insanitary conditions, so we have to ensure that they are properly protected.
The Chancellor and the Government must act immediately so that every single worker has a protected income. We discussed that earlier today. We want to ensure that every single household is secure in their home, whether they rent or mortgage, so that no one who makes the right choice to stay at home faces hardship. Last week, the Chancellor set out an unprecedented scheme to underwrite 80% of the wages of all workers “furloughed”—as he put it—promising that no redundancies or lay-offs were needed and that the Government would do, “Whatever it takes”. Today is the time to deliver, with clarity and security for everybody, including our most vulnerable, whatever it takes to keep them protected and safe. That is why we are supporting this Bill to enable the resources to be available.
Last night, the Prime Minister effectively shut down every non-essential business. I want the Chancellor and Treasury Front Bench to make it clear now that every single worker, in every single one of those businesses, will be covered by the 80% income protection scheme, and that if, as a result of that 20% cut in incomes, they fall below the thresholds for universal credit or housing benefit, they will be eligible for top-ups. I ask the question, will the Government consider setting a national minimum wage floor for the income protection schemes? That would protect the lowest paid, because 80% of low pay might result in some people being paid below the national minimum wage.
Will we now get more clarity on exactly when the income protection scheme will be operational? Will the Government also condemn employers such as Wetherspoon that have now stopped wage payments and told employees that those will not resume until the end of April? Some senior members of the Government have an influence over that particular employer, so we would welcome the Government making it clear to that employer that that he should pay his staff and that he should close so that that company can play its part in protecting the health of our community.
The Government cannot act only for workers who are furloughed. They must also step up for the many who will be having their hours reduced but not stopped altogether, by topping them up to at least 80% of their regular wage, or through some other scheme. When the Minister responds, will he clarify what will be the protection for workers who have been put on short time?
Sadly, many workers have already been laid off as a result of this terrible virus. The Secretary of State for Health and Social Care was extremely candid and honest last week when he said that he could not live on the £94.25 per week statutory sick pay. I do not think any of us can. How can the Government expect entire families to afford a week’s shop on that sort of income? Will the Government therefore increase the appallingly low level of statutory sick pay and ensure that all workers are eligible for it? So many are not at the moment. Will they also increase the £73 rate of jobseeker’s allowance and employment support allowance for disabled people? Will they also look at the even lower rate of carer’s allowance? Carers are expected to live on £66 a week.
As we discussed earlier today, there are 5 million self-employed workers in this country, many of whom cannot work from home. We desperately need a scheme that will be ready for them soon. It needs to guarantee them the 80% of income that others have been guaranteed. Whether it is a cabbie, a childminder, an actor or a plumber, there are battalions of self-employed out there who need their security. We need confirmation that a scheme will be brought forward not within days but within hours, to give them that assurance.
We also urge the Government to work with the construction industry and the trade unions to find a solution that covers the particularities of that sector—we have pointed them out before—with workers employed through payroll companies and umbrella companies. Most of them are forced into self-employment, and often exploitative self-employment of the worst sort.
I turn to housing. We welcome the moves to protect mortgage holders, with payment holidays now put in place for mortgagees, but we need the same security for renters and for the Government to understand the difference. For a renter, a rent holiday is not the same as a mortgage holiday. Rent is paid continuously during a tenancy, while mortgages have a fixed term, meaning that repayment terms can be simply extend. It is therefore important that the Government act to ensure that rents are paid, not merely that payments are suspended for this period.
We are extremely disappointed by the legislation published yesterday. Frankly, many believe that the Prime Minister has broken his promise to the country’s 20 million renters in 8.5 million households. It was not an evictions ban, as the Prime Minister promised. That legislation will not stop people losing their homes as a result of the virus; as my right hon. Friend the shadow Secretary of State for Housing, Communities and Local Government said, it just gives them some extra time to pack their bags. To be frank, it is just not good enough. The Government must look again; we urge them to look again.
There are also wider problems. Over recent years, austerity cuts have lessened the value of support available via housing benefit. The Government must immediately suspend the benefit cap and rid us of the bedroom tax that has affected so many families. We welcome the moves announced last week on local housing allowance, but the Government must go further and restore the local housing allowance from the 30th percentile back to the 50th percentile of market rates, as it was before 2010.
People will have made rental decisions based on their incomes, and they should not be penalised by the unforeseeable impact of the coronavirus, when we are asking people to lock themselves away. Now is not the time for families to be downsizing or sofa surfing with parents, grandparents or friends in cramped conditions. Many of us represent constituencies where overcrowding has become the plague of modern existence.
May I briefly pay tribute to the Mayor of London, Sadiq Khan? His team has worked tirelessly and creatively in securing hotel accommodation to get London’s rough sleepers off the streets, though we would like to know more about the duration and the cost of the deal that the Government have procured with hotels. It is important that the Government act to keep households in their homes so that that attachment to work, school and study can continue seamlessly at the conclusion of this extraordinary period. We cannot have a situation in which, at the end of this, tenants have either depleted all their savings or, worse, have amassed large and unpayable bills. If this is the case, the Government will be deferring evictions only a few months down the road, so the suspension of evictions for private and social tenants should be extended, we believe, from three months to six months. Shelter has estimated that as many as 20,000 eviction proceedings are already in progress and will go ahead over the next three months unless the Government take action to stop them, and they must be stopped. When the Financial Secretary to the Treasury rises to his feet, he must be clear that there will be no evictions of any kind during this period.
In addition, we also believe it necessary to suspend all bailiff proceedings for the same period. Practically speaking, there are clear health and safety issues about bailiffs entering the homes of families who may be self-isolating. Furthermore, what measures is the Chancellor proposing for suspending payments of household utility bills? That was raised in the discussions this morning and we will support measures that are brought forward. During this period, we cannot have bailiffs and we cannot have disconnections of water, energy or internet.
What are the Government doing about those without internet access? Many people in our communities rely on libraries to access the internet, but now those libraries are closing. What measures will the Government bring in to ensure that people can get online, whether for benefit services or to maintain some form of social contact? These are huge demands being placed on the civil service, and I pay tribute to all those public servants throughout our public administration who are working day and night to establish these schemes. They are not often praised, but they are in this situation.
The civil service has been depleted by a decade of austerity. As extra demands are placed on, for example, Her Majesty’s Revenue and Customs and the Department for Work and Pensions, other civil servants are being redeployed. Are those recently retired or made redundant from the service being asked to come back to assist, just as we have invited other professionals to come back into the NHS?
Will the Minister also confirm that the current round of HMRC office closures and redundancies will at least be paused, if not reversed, at this stage? What adaptations have been made for those working in the mass call centres of HMRC and the DWP? Is the telephony technology there for them to work at home? Is there greater social distancing within the call centres themselves? We all know that universal credit cannot cope now, but its roll-out was again delayed in the Budget. Millions more households are becoming eligible for universal credit, housing benefit and other payments, so are the Government confident that the system can cope with this increased demand, because the feedback that we are getting from our constituents on the frontline is that they find it impossible because of the long waits to get through and have their case dealt with successfully. No one is blaming the civil servants; it is about resources and investment.
What are the Government doing to encourage businesses to take up business interruption loans, when some businesses see loans as less effective than grants for keeping them afloat? Is there potential for increasing the level of grants and extending their range? Have the Government considered our proposal that such loan agreements should include job retention clauses, which would mean that when businesses receive a loan, they can give workers the security they need in the knowledge that they will not lose their jobs? It is not much to ask of a business receiving financial support from the Government in this way that they work towards our overall objectives.
In the real world, that is exactly why trade unions have asked that when loans are given or support is provided through the jobs retention scheme, there is a requirement for businesses to sit down with their trade unions and work through a plan for the future. In that way, security could be given to workers, because they would be involved in determining that, and judgments can then be made at different stages of the business development process. We are looking for some form of assurances that will give wider security than there is at the moment. If a company is being supported by a loan or the job retention scheme, it is not much for them to sit down with their workers to work honestly and fairly on a plan for the future to see how they can work together to secure those jobs.
Consideration has been given to extending grants to many small businesses that cannot afford to take on additional debt. We would welcome information on how the Government will extend coverage by extending the range of eligibility criteria, to make the grants more flexible.
We also need clarity for workers beyond the retail sector—those on construction sites in particular, but also in factories, call centres, warehouses, distribution and other settings. What are essential workplaces? What is the clear definition? I think that many of these issues can be dealt with fairly readily in the discussions that the Government are having with the trade unions, but they need to be more detailed and on a more permanent, structured basis.
The NHS was promised budget increases over the next five years. We suggest that the Chancellor brings forward the funding for years two, three and four into year one. Can the Minister assure us that we will not have another weekend when doctors and nurses working in intensive care have to go on the media to beg for personal protective equipment and clothing? There were instances over the weekend, and we have heard assurances from the Government, but action is needed rapidly. Can he also assure NHS workers that they will get not only the equipment they need but the tests they need? The World Health Organisation has made it clear from the start that its advice is test, test, test. The scale and the speed of testing need to be addressed.
Can the Minister assure the House and the public that everything is being done to procure more critical care beds? I welcome the news that 7,500 recently retired staff have returned to the NHS, and I pay tribute to each and every one of them. The Government have begged retired NHS staff to return. We believe that the same must happen with social care staff. Chronic low pay in the care sector, with many paid just the minimum wage, means that staff have left for less stressful jobs in retail and other sectors. Those workers need to be brought back. They need the appropriate personal protective equipment and clothing, and they need proper recompense.
Many will have seen the devastating news from the Oaklands nursing home in the constituency of my hon. Friend the Member for Hove (Peter Kyle), where 16 of the 20 residents and seven staff have coronavirus symptoms. I was most concerned about the reports that, despite pleading for it, the home has been unable to source the proper protective equipment. Just yesterday, my right hon. Friend the Leader of the Opposition and the shadow Minister for social care, my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley), demanded an urgent action plan for social care—a system that looks after those most at risk from the virus. As the Chancellor said, our social care system needs whatever it takes. Whether that is residential care, domiciliary care or family carers caring for loved ones in their own home, the resources have to be there now. Can the Minister tell us how much has been allocated immediately to councils and care providers?
Let me turn to local government. I welcome the sectoral consultation that is taking place and the dialogue with trade unions across all departments. Councils have a key role to play as the guarantor of social care provision, but they too have been devastated by cuts and now have the responsibility of the hardship funds to administer. Will the Minister be clear what extra resources are being made available to local councils, especially as many are likely to start seeing drops in council tax and business rates revenue? What extra funding is being made available so that councils can extend council tax support schemes in this period as well?
Although we fully back the measures outlined yesterday, there are unfortunately some households where these measures could mean more abuse and even risk to life. This is where domestic abuse takes place. For victims of domestic abuse and for others, this home isolation will be terrifying. We need the police, refuges, mental health services and other social services to have all the resources and capacity they need. I pay tribute to my hon. Friend the shadow Minister for Women and Equalities, who has raised these issues repeatedly. We need a positive Government response that is backed by sufficient resources and full consultation.
Others, like me, have raised the issue of the charity and voluntary sector. Many charities whose work is essential in filling the gaping holes in our public services and our safety net are desperately worried about their finances. Charities dealing with the immediate response to the coronavirus and its effect on the most vulnerable need access to enough grants to allow them to scale up their operations. Others need to be assured that they can access the same level of support that small businesses are rightly getting so that they can suspend some of their operations without having to lay off their hard-working staff and can restart once the crisis passes. Can the Minister tell us what reassurances have been provided by the Government to the charity and voluntary sector? Will the Government work with the sector to find suitable reliefs in these unprecedented times and can the Government outline what schemes are available now to charities struggling with the loss of revenue?
On schools and education, I understand that schools remain open to the children of key workers and to vulnerable children, but only if no safe alternative is available. As for the universities sector, may I ask the Minister about the fees that will have been paid by students in further and higher education and what refunds and deferments will be available? Many students—in fact most students these days, because of tuition fees—work in term-time and during holidays, and that work will no longer be available to them. May I ask the Government immediately to reduce the interest rates on student debt to zero for the duration of this crisis to assist those students?
On transport, what provision has been made by Her Majesty’s Treasury to refund lost revenue for transport authorities, whether that is Transport for London or those that run bus services across the country? On railways, I echo what my hon. Friend the shadow Secretary of State for Transport has said: we back the measures that will keep key workers and freight moving on our railways during this crisis, which has exposed, as he says, the fundamental weaknesses of the franchise model. May I also thank all the railway staff and bus workers who are keeping the essential parts of our country moving? Will the Minister assure us that all public facing railway staff will also have the appropriate personal protection equipment and clothing that they need? Can the Minister tell us whether any consideration has been given to making public transport free for key workers who are risking their lives every day? NHS staff are receiving free rail travel in Wales and a similar move is being rolled out in other countries, such as New Zealand. We would welcome that in this country.
Prisons were understaffed and overpopulated before this crisis. This is not just a question of resources but of safety. I welcome moves to escalate prisoner release schemes for those who do not pose a threat to our society, but the probation service was in crisis before this virus hit us and the lockdown announced yesterday complicates matters even further. Can the House be assured that the police and the probation service will have every resource possible to keep people safe and to monitor those who need supervision? I welcome the moves last week to release detainees from detention centres due to health and safety concerns. Can the Minister be clear about what extra resources are going in to protect people’s health overall?
I was brought up a Catholic. Our local parish priest optimistically calls me a lapsed Catholic, so I welcome any sinner who repents. I therefore reach across the divide and pay tribute to the hon. Member for St Austell and Newquay (Steve Double), who yesterday said that
“many people who we considered to be low-skilled are actually pretty crucial to the smooth running of our country”.—[Official Report, 23 March 2020; Vol. 674, c. 17.]
I also echo his call to the Home Secretary. The point has been made repeatedly by the shadow Home Secretary and many of our Members on the Opposition Benches. The hon. Gentleman asked for the new points-based immigration system to be reviewed, in his words,
“to reflect the things that we have learnt during this time”.—[Official Report, 23 March 2020; Vol. 674, c. 17.]
Have the Government given any consideration to temporarily suspending no recourse to public funds, which is blighting so many people’s lives, or to allowing temporary access to benefits for non-UK nationals so that they can survive this period? That is important at a time when more and more people are out of work and unable to travel.
As a public service to all Conservative MPs, I say that the market does not distribute wages fairly or efficiently in a capitalist society, and there is no correlation between pay rates and the social value of many jobs. If there is one lesson that we learn from this crisis, maybe that will be the one that lasts the longest.
Just three weeks ago, I asked the Government to take a lead internationally in tackling this virus. It is vital that we are engaged in all global health and political forums and that we learn from best practice and share solutions, because this virus respects no borders. By helping others globally, we help ourselves. By neglecting others, we neglect ourselves. Will the Minister assure the House today that extra resources are being made through the international development budget to aid the poorest countries in combating this virus?
I think we will look back at this period as an unprecedented moment in our lifetimes. I know that this is already a tragic time for so many, and all of us will be hurt by this, but I want us all to be able to look back with pride about what we did in this period—to be able to say, “We widened who was covered by our safety net when we had to. We protected people and their jobs and wages. We cared for people around us. We provided all the support that was needed and, as a result of that, we came through this all the stronger.”
This Bill, as the Minister said, shows decisive leadership by the Government and, indeed, by the whole House. It is supported by the Opposition parties. As the Minister explained, this is really a cash flow Bill. It is not a provision at this juncture for the extra £266 billion of Government spending for Departments; it is an advance to those Departments.
The first question I ask the Minister is, bearing in mind the advance, what is the Treasury’s current estimate of how much extra it thinks it will be borrowing when we come to estimates in July? That is something the House would like to consider and start thinking about.
Another point related to the fiscal and monetary management of this crisis, which I think this Government have done admirably, is whether the Treasury has done any thinking about the Government balance sheet, and in particular the balance sheet that will be looked at by international sovereign investors. Bearing in mind that this crisis is affecting every country in the world, have they done any thinking with our partners on whether money spent relating to this particular crisis may be somehow itemised differently on the balance sheet, rather than just being lumped in with all the other Government spending that may have taken place? If we could somehow delineate crisis spending and normal spending, that may well help investors, this House and anybody else in the future in trying to assess the fiscal health of this country and others. I think that is something the Treasury should consider.
However, there is a broader issue here. This is obviously thought about as primarily a global health crisis, but many people think about the economic impacts, and that is indeed correct. However, the health crisis and the economic crisis are intertwined, and I will focus, as so many in the House have today, on the self-employed, although this issue does not relate just to them.
This virus requires us to do social distancing, which is a phrase all of us have become so familiar with, although I do not think any of us knew it existed up until two to three months ago—all I can say is, bring back Brexit. To save lives, we are having to shut down major parts of the economy, and for people to save their own lives and the lives of others, they are having to shut down their personal economic activity. These people have families, houses and responsibilities; if they do not feel that they can meet those responsibilities, some may choose to take the path we have asked them not to take. Some may choose to do the risky thing and not what they know to be right, because they are caught in this difficult conflict between health and wealth. The job of any Government in a responsible society—indeed, this Government have met this challenge—is to make sure nobody is faced with that choice. I think that principle has underpinned all of the response from the Treasury and should continue to underpin it when the Treasury comes out with its proposals for self-employed workers.
I have a couple of specific questions for the Minister. I have been contacted by many constituents who are trying to use the business interruption loan scheme. Could the limit on unsecured lending be extended above £250,000? Many constituents have told me that they have been asked for personal guarantees above that threshold by the banks. Quite understandably, many are not willing to provide personal guarantees. Indeed, one asked me, “Bim, would you give a personal guarantee on a £500,000 or £1 million loan?” I said I could not say in all honesty that I would. Will the Minister consider extending that threshold for unsecured lending above £250,000—perhaps to £500,000 or £1 million?
I thank my hon. Friend for that point. More broadly, the key question for the Minister is whether the Treasury is willing to adapt the scheme over the coming days and weeks as we hear more about the distinct problems and difficulties that there may be with it. That is not to quibble with the fundamentals of the scheme; it is a good scheme, and we need to recognise—indeed, I want to put on record—the fact that it was put together in record time. That is an incredibly difficult thing to do, and we need to give officials and Ministers credit for what they have managed to achieve, but let us try to improve the scheme so that it can be useful to more people, and addressing the issue I have raised is one way of doing so.
The final point I want to make is about tech start-ups—early-stage businesses. These are not necessarily all over the country; they tend to be concentrated in certain parts of the country. Indeed, I have several people who work for them in my constituency. The hon. Member for Hackney South and Shoreditch (Meg Hillier) cannot be here today, but I have been speaking with her, and there are many of these companies in her constituency. The nature of the support package that has been outlined is not particularly helpful for this type of company, because typically an early stage tech start-up deliberately incurs up-front losses as a result of heavy investment in research and product development. Such companies tend to rely on equity rather than debt funding, so the package that has been put in place is less helpful to them. The investors that back them usually back several dozen such companies and do not have enough cash to put into all their portfolios or their portfolio businesses. There is, therefore, a problem—a specific problem, but an important one, because although the number of the jobs in the sector is about 6,000 to 10,000, these are the companies that drive innovation and will drive the creation of tens if not hundreds of thousands of jobs in the future. Bearing in mind the Government’s ambition for the country, we need to safeguard these businesses as much as we can.
I have been discussing with many in the sector a proposal to join with the British Business Bank to put together a £300 million not-for-profit fund—not a fund that will take management fees or try to make any money—to invest in roughly 600 start-ups, to provide working capital for nine or more months. I ask the Financial Secretary or one of his colleagues to consider meeting me and industry representatives to see whether we can get that sort of thing going. It is a specific sector of the economy, but an extremely important one.
Everyone recognises the enormity of the challenge. Everyone recognises the speed and complexity of what we have to do. The money in this short Bill is critical, but in the coming days—especially if Parliament is to rise by the end of this week—we need to do what we can to improve the schemes as much as possible. Once Parliament is out and does not sit for however long it may be, it will be much harder for Members to do that. I ask the Minister to take those points into account.
Break in Debate
My hon. Friend makes an excellent point. People will be watching very closely to see how companies behave in this crisis and how they react to the support that is there. It is very clear that while some companies have behaved very responsibly, with a real social conscience and with a sense of duty towards their staff, others are not behaving as creditably. I am sure we will hear of more examples of that as time progresses.
All the measures that have been outlined come at a considerable commitment, but the costs—in financial terms, but, more importantly, in human terms—of doing nothing are very much greater to us than the costs of intervening. The response to covid-19 is one that will need all of us to make our own contribution. On behalf of my party, I pay tribute to the public servants, the charities and the many volunteers who will be working around the clock to keep people safe and comfortable over this period. I thank those in the private sector who are working so hard to keep other essential activities in the supply chain under way, and all involved in all spheres and tiers of government—local and national—who will be helping to co-ordinate that activity in the days and weeks ahead.
I will draw my remarks to a close by saying that it was important this week that we gave all those in those spheres and tiers of government the political permission to act as they need to in pursuit of the greater good. This Bill provides the resource to underpin those permissions, and subject to good choices being made with the resource that is now available, it will also give us the ability to support businesses and families through this most trying of times. The Bill has our support.
Last Friday, four or five businesses in my constituency came to see me, looking for help because of the coronavirus. The first constituent told me that he had asked for his loans to be reduced, but the bank—I will not say which one it was—said, “No, what we’ll do is charge you £100 for each amount of money that you’ve borrowed, and then we’ll charge you interest at 6% on top of that.” Does the hon. Gentleman agree that, in these difficult times, that is totally outrageous? The banks should be there to help, not to take advantage.
The hon. Gentleman has done some sterling work on this, so would he like to comment on the figures that are coming out on 6 April and the interest rates for overdrafts from HSBC, First Direct, M&S Bank and TSB? Nationwide have already gone there, with an increase from 9.99% to 39.9%. What does he think about that?
It is a pleasure to follow the hon. Member for Thirsk and Malton (Kevin Hollinrake). He made two points with which I wish strongly to agree. First, I agree on the need for clarity on people who can go to work: who are the essential workers? The issue is causing huge concern. If there are too many people on public transport because we are not leaving it for the essential workers, that is bad for the whole public objective of stopping the virus spreading. The hon. Gentleman is absolutely right on that. The bad news is that people are almost going to be forced to stay at home anyway because business is collapsing. Let us take the construction industry, which the hon. Gentleman talked about. I am getting messages telling me that because mortar supplies are basically collapsing, people will not be able to do any construction. That shows Members how dramatic is the impact of what is happening out there. There should be clarity from the Government on that because leadership is important.
The second thing on which the hon. Gentleman is right—I really want to impress this upon those on the Treasury Bench, and we have heard other colleagues talk about it already—is the genuine accessibility of the loans that have been made available via the Bank of England. The Government trumpeted their announcement and we all welcomed it, but I keep hearing stories of small businesses that find that, if they can get through to the bank—by the way, it is taking quite a long time, although that is not a complaint, because of course a lot of people are contacting the banks and I expect they are extremely busy—they have to give personal guarantees. At a time when it is very difficult for people to know how their business is going to pan out—how can they know that in such an uncertain certain time?—no one their right mind would give those sorts of personal guarantees. It is just not realistic for them to put their house and the whole family’s income and savings on the line. The Government are going to have to think again about the terms of the loan guarantee scheme. These are unusual times and the Government have made money available; rather than just giving a guarantee to the financial institution, they will have to find a way to transfer that guarantee to the business concerned. I know there are huge moral hazards with that—I get that—but if they do not, it is not going to work.
Break in Debate
The hon. Gentleman makes a really important point, and backs up the thrust of what I am trying to say. The banks have been given access to free money. They are being looked after by the Bank of England through this extension of the Bank of England’s balance sheet, so they are doing okay. So why are they not stepping up to help the rest of the economy? There are some really quite serious questions on this issue. I hope that the Government say in response to this debate that they, the Bank of England and the Financial Conduct Authority are going to look at this situation, because it is just not good enough. I want to work on a cross-party basis on this issue, as the hon. Member for Thirsk and Malton (Kevin Hollinrake) said; this is vital to all of us, and we need to send a message to those who are running the banks that we are expecting them to step up. It is time that they did their duty, right?
I actually want to come to my speech, because that was just a response to the hon. Member for Hitchin and Harpenden (Bim Afolami). I want to talk about the Bill in front of us—I know that is a bit unusual—as well as the supply process of which it is a part, and then I will give some thoughts on the economy.
On the Bill, will the Minister tell us why the Treasury chose to change the percentage limit of the contingencies fund, which is normally set at 2% of total authorised expenditure in the preceding year, to 50% until the end of 2020-21? In absolute figures, the amount before this Bill would have been £10.7 billion. That has gone up to £266 billion. I hope that the Minister can explain why. It does not seem unreasonable, given the pressures on Departments, but it is quite a big change. I am not against it—let me be clear that I will be supporting the Bill today—but it would be good to put on the record, for the House and for history, why that figure has been chosen. When people look at this situation in the future, they will need to know why that decision was taken.
The Minister said in his opening remarks that this was not an increase in expenditure. Well, I hope that he meant to say that it is an increase in expenditure in that it takes account of commitments that the Chancellor has made both in the Budget and since the Budget. If I have understood correctly, there is a big increase in expenditure because we need one—for the health service, our social care system and other parts of our public services that need the cash now.
I have another question for the Minister. If these contingencies are being given to Departments so that they have the cash they need, is the money also being given to local authorities? I want to underline this point: local authorities are on the frontline now, and they are having to spend money all the time on a whole range of things that are completely unbudgeted for. They are confused about the proposals for business rates, whether they are going to get any income in, what money they have to give out and all the rest of it. Local authorities are slightly unclear about what is happening. I hope that there will be genuine desire and action on behalf of the Treasury to get some money out—on account, if you like—to them so that they have the cash flow to ensure that they can provide the extra services that they are being asked to provide. It is essential that we hear that local authorities are getting the support that the Whitehall Departments seem to be getting.
I said that I also wanted to talk about the supply process. This legislation is part of the almost anachronistic supply process in this House. I am afraid that I am a bit of a geek on this. In 2000, I wrote a pamphlet called “Making MPs Work For Our Money: Reforming Parliament’s Role In Budget Scrutiny”. It is a cure for insomnia, so I do not necessarily suggest people read it, but in it I tried to argue that this House does not really have sovereignty over the Budget. We look at these Bills when they come along and we nod them through, but our processes of examining draft budgets and estimates are shocking. In my pamphlet, I made the comparison with all the OECD countries, and this House has the worst processes for examining draft budgets and measures such as this Bill—that is worrying. I do not wish to resurrect the Brexit debate, but it was supposed to be about parliamentary sovereignty and I used to say, “I wish we had some.” That is because this House rarely, if ever, looks at the estimates properly, analyses them in Select Committees and makes proposals about draft spending decisions. Other Parliaments do those things quite easily—the Swedish and New Zealand Parliaments are good models. Our approach undermines the value for money and undermines what we are here for, and we really need to look at the estimates procedure.
That is why this Bill looks so weird in many ways; it is called the Contingencies Fund Bill and we are not used to doing this sort of thing, because we have given up control over supply—it is just nodded through. The last time MPs voted against a spending request of the Government was in 1919, more than 100 years ago We have given up properly controlling the draft estimates. Although I will be supporting the Bill tonight, because it is really important that we let this one through, I just want to say to the Minister that I hope we can reflect on this. I raised this issue when I was in government and tried to get the then Chancellor to look at it. There was a flurry of excitement and then the dead hand of the Treasury said, “No way, we are not giving up control.” That was the wrong move, because control can be exercised with greater transparency. I hope that that may be one thing that comes from this experience in this emergency situation.
Let me end with some reflections on the economy, where we are at and the lessons we are taking. I talked about the importance of the banks really delivering, given the agreement with the Government and the Bank of England. That is probably the most essential message from me tonight. There are some longer-term things and possibly some relatively short-term things to address, one of which is the way we do the Bank of England’s quantitative easing. That is monetary policy, where we are, in effect, printing money and sending it out. That happened after the 2008 crash and it is happening now. I am not against it, but I just say that the way it works is not some sort of technical, politically neutral, value-neutral system; it has implications for economic equality in this country, because the money tends to go to people in the City—the financial institutions. It does not go to ordinary people and ordinary businesses. So if we are going to get things right this time and have quantitative easing, I urge the Minister to let us have a debate about how those mechanisms actually work, because in crises we do not want economic inequality worse; we want to make it better. These technical things sound as though they are available only for pointy-heads in the Treasury, but quantitative easing is a political issue and we have not debated that. It has massive social and economic consequences, and we need to make sure that there is democratic accountability on them, and that they are properly understood and work in the interests of society.
The hon. Gentleman has a point and he is right to take me up on that. I think that there is an improvement, but I do not think we have debated this in the context of QE and the monetary side of the policy response. I think we need to do that, because we need to unpick some deep issues here and I do not think this House has understood that. Although I am a big fan of the independent Bank of England, and I do not think we should interfere with the setting of interest rates, I do think QE raises some political questions which are not technical and require accountability.
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I half agree with the hon. Gentleman, but I do not think inflation is going to be the problem; people have not got any money. This form of QE is often called helicopter money and perhaps that is the right move now, and we need to be debating it.
I have a final comment to make and then I will sit down. When we reflect in a few months on this crisis and what has gone on, we will have to look at some of the underlying assumptions of our economic models. I am not saying that we should rip them up—I do not believe that at all—but how the state underpins and works with the market is really important. What I mean by that is that there is an assumption that the market can do it all, that the market is fantastic and that Governments should come out of the way, but markets only exist because of Governments. Regulations and laws make markets and there have always been those.
The hon. Gentleman is shaking his head. Without rules and regulations on competition, on fair play for employees and on consumer protections, markets will not work. Where there is no consumer protection, consumers do not have faith in the products and services being provided, so the markets cannot work. I absolutely think that we need to reflect on that, because I do not think that the model has been working well enough. I will end on that comment, because I hope that we will learn from this and have a proper debate about how our economy will work in future.
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I want to start by echoing the sentiments expressed by my hon. Friends, and particularly my right hon. Friend the Member for Hayes and Harlington (John McDonnell). The urgent need for provisions to support the self-employed gets greater by the day, and my concern is that desperation is turning to anger. The “What about us?” sentiment will be driving that anger, understandably, and making the situation a whole lot worse. I urge Ministers to bring that support forward.
We are also promised support for renters in both the social sector and private rented sector. That has not happened yet. Again, as days and weeks go by, the desperation and uncertainty become greater, and I urge Ministers to bring that forward. My right hon. Friend was right about the Government apparently going back on a commitment to bring forward provisions to ban evictions. If someone is evicted, where are they going to go at the moment? There is no reason at all why that provision should not be brought forward. If we are serious that people have to stay at home, let them stay at home by making sure that they are not evicted. It shows either misjudgment in making the promise in the first place, or misjudgment and bad faith in breaking that promise. I urge Ministers to take that back to the Prime Minister and ask him to make a change.
My hon. Friend the Member for Blaydon (Liz Twist) was absolutely correct in what she said about charities. In Cheshire West and Chester, we have brought together Cheshire West and Chester Council, West Cheshire Voluntary Action and lots of charities and church groups to try to provide a co-ordinated service to all those who need support at the moment. But as my hon. Friend said, the charities are running out of money because their commercial activities are running down, which is affecting their income. That is calling into question their ability to deliver services to the most vulnerable, which they do much of the time and which is often taken for granted. Right now, with everyone expected to stay at home, the ability of charities to deliver those services is perhaps limited anyway, but as this situation hopefully gets better, we will look to charities to get those services up and running straightaway. At the moment, without the support for charities, their ability to do that is diminished.
I do accept that, but that would be the case in normal circumstances anyway. We are talking about giving people peace of mind during this national crisis and ensuring that people do not even have to live with the worry of being chucked out on the street or into temporary accommodation. That is my concern.
My right hon. Friend the Member for Hayes and Harlington reflected on his childhood in Liverpool and on his priest considering him to be a lapsed Catholic. That reminded me of my mum and dad, who also grew up in Liverpool, albeit a couple of decades or more before my right hon. Friend. The formative period of their childhood was the second world war, when they were both young children, suffering the bombings in Liverpool and the uncertainty of the war. We all know that the second world war in Europe ended formally on 7 May 1945, but my mum and dad did not know that—they had no idea when the hostilities would end and things might start to get better. Listening to my right hon. Friend, I reflected that that is the situation in which we find ourselves now.
We have no idea how long this crisis is likely to last. That uncertainty drives desperation, anxiety and as the hon. Member for Hitchin and Harpenden (Bim Afolami) and my good friend the hon. Member for Thirsk and Malton (Kevin Hollinrake) said, business uncertainty. That is why it is essential that the Government are clear in their statements and oblige other businesses—we have talked about the banks; I want to consider insurance companies—to ensure that they play their part. If we cannot plan ahead, we will not know how to address the problems, and it cannot simply be down to the Government.
I make that point because insurance companies are not living up to their obligations. I know of businesses in Chester that have been told that their business contributions to insurance do not apply because coronavirus was not a notifiable disease at the time of the outbreak or because the Government had only suggested, as was the case last week, that events did not take place rather than saying that they must not take place. As I mentioned at Question Time, for events, conferences and sports that have a long lead-in time to prepare, it would help if the Government were clearer now that those businesses could not get back up and running for four or six months and that insurance companies should ensure that their policies kick in.
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Desperation was the word used a number of times by my hon. Friend the Member for City of Chester (Christian Matheson) and, prior to him, my hon. Friend the Member for Blaydon (Liz Twist). It sums up the feeling of many people for many reasons. I think it also underpins what the hon. Member for Hitchin and Harpenden (Bim Afolami) did. I wish he was two metres from the Minister to demonstrate good social distancing in this place. He was right. This debate is about improving the schemes as far as we are able to do so, as part of our contribution to scrutinising the Bill.
My first point, which was mentioned by my right hon. Friend the Member for Hayes and Harlington (John McDonnell), is about construction sites. We have all seen the pictures, and some of us have passed examples today, of construction workers working in big numbers in close proximity. That cannot be right and it is certainly not what was intended by the Prime Minister’s guidance. Perhaps the Minister can take that point on board and consider how that situation might be prevented. It is a very serious matter, not just for those workers but in terms of spreading the virus elsewhere. We must all remember that, even if we are fit and healthy and do not become sick ourselves, it is not about the individual, but who we pass it on to.
On banks and loans, the problem, as has been stated by a number of Members, is that loans mean debt which cannot be repaid without the certainty of an income. My hon. Friend the Member for City of Chester just made the point about us not knowing the end date. If people do not know the end date, they will not be able to plan to pay the loans back. That is a real problem. If we then add on the uncertainty of having to provide personal guarantees, it becomes extremely problematic for many businesses to take advantage of the loan scheme. The suggestions made by Members for how the loan scheme might operate are really important, and it is really important that the Government go away and look into them.
On the behaviour of banks, in other debates we have heard descriptions of pharmacists and food retailers hiking up prices. The banks are doing exactly the same thing with interest rates. That cannot be allowed to continue. I thought the right hon. Member for Kingston and Surbiton (Sir Edward Davey) was going to suggest nationalising the banks as a way forward. He was at one stage channelling his inner Marxist for the benefit of some in the Chamber. [Interruption.] There is agreement from my right hon. Friend the Member for Hayes and Harlington on the Front Bench. The point is that the taxpayer bailed out the banks. People paid the money back through higher interest rates in the financial crisis. They are now about to repeat that behaviour at a much more dangerous and difficult time in our history. There has to be intervention by the Treasury, in whatever shape or form, to prevent that and to ensure that the banks behave responsibly, provide support and do not put apply onerous terms, whether through personal guarantees or ultra-high extortionate rates of interest.
There is also the trust issue. Businesses do not want to borrow because of their past experiences. During the financial crisis when I was running a business, I had the experience of having my overdraft facility recalled overnight. We were lucky that we were able to cover that out of personal savings, but very many businesses were not able to do so and went to the wall. People suffered grievously—some took their own lives. We have debated that many times in this Chamber, and we do not want a repeat of that over the coming months and years after the immediate crisis has passed. I therefore urge the Government to intervene now to get that right.
As well as taking advantage of the Government’s employee retention scheme, businesses will need to pay additional costs such as rents and insurances. My hon. Friend the Member for City of Chester made the point that businesses are being told that they do not qualify for business continuity insurance. The same applies to income protection for the self-employed and small business owners, because this disease did not exist when their policies were written. Those issues need attention. The vast sum of money that the Government are making available provides the opportunity to look at some of the other costs for businesses to see whether there can be help beyond that suggested for employees. Grants are certainly a part of that. Given how long this situation might last, the size of the grants will need to be constantly reviewed so that they are sufficient.
Absolutely. It is important, and I certainly welcome it. None the less, there are some challenges with it. The fact that it is not available for the March payroll is a big problem for many businesses. We have already seen a significant number of businesses close and many workers laid off who will not now be eligible to be part of that scheme. The Government, totally understandably, have used examples of furlough schemes elsewhere in the world, but it will be difficult for the scheme to deal with the nature and the scale of this crisis.