Economy

Lord Agnew of Oulton Excerpts

Monday 28th September 2020 Lords Chamber

[Baroness Kramer (LD)]

My Lords, the Government have not really grasped the double whammy of Covid and our departure from the single market and the customs union, even assuming that there is a free trade deal.

The measures announced last week, including job support modelled on the German Kurzarbeit, are welcome but fall far short. Many jobs in sectors such as the creative industries, sports and hospitality are long-term viable if they can survive the next six months, so can the Minister explain why the Chancellor has not targeted the necessary funds to get them through that six-month period? Three million members of our workforce were excluded from support the first time around, especially a swathe of independent contractors. Why are they excluded again, especially when so many who have become redundant will become independent contractors if they are to live?

The pace of companies being dropped from European supply networks is accelerating. Future FTAs outside the EU only marginally offset the lost business. This is completely aside from the issue of chaos at the borders. Why are these injured firms and workers not getting meaningful help? Are they now considered non-viable? Where are the scaled-up and innovative retraining schemes that are needed to deal with over a million redundancies by year end? Firms of all sizes are accruing levels of debt that will cripple their future growth. Where is the fund to recapitalise overindebted SMEs? Can the Minister explain how Scotland and Wales can meet their constitutional responsibilities to set a budget with no Budget this year from the UK? When will we hear from the OBR and get a good working forecast that deals with the situation as we now understand it? Being £2 trillion in debt may be something which the Government are comfortable with, but most of us would like to know what the principles are going to be on how that will be tackled and how it will eventually be reduced and repaid.

[The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con)]

My Lords, in replying to the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Kramer, I gently remonstrate with him on us being “reactive”. We have tried to move as quickly as possible at all stages of this crisis but, as we can see from across the world, it is extremely difficult to be ahead of the curve. The announcements made by my right honourable friend the Chancellor last week demonstrate that a lot of hard thinking has gone on over the last two or three months, and the fact that the Statement might have been prompted by a Question shows that the work had been done.

I do not accept that it is too little, too late. The amount of support that we have provided for the economy over the last few months is almost without precedent, with £39 billion on the furlough scheme protecting at one point up to 9.5 million jobs—that figure has now reduced to some 3 million because many millions have come back to work—and £5.6 billion for almost 2.2 million self-employed people under the second grant self-employment income support scheme. I could go on.

The noble Lord asked about the intention of the job support scheme to keep part-time workers rather than to just go for a single full-time worker. The idea is to keep as many people in work as possible with their skills so that, when the economy recovers, the skills have not been lost. While on a hard, simple basis, it might be more viable to keep one person, in the longer term any employer would try to keep part-time people. I suggest that the noble Lord takes on board the job incentive scheme: £1,000 for those coming back into work between now and January.

The noble Lord asked about good-quality training. Earlier in the year we announced the kick-start scheme, a £2 billion scheme for young people which subsidised employment, as it was a concern that 800,000 young people left school and education over the summer.

The noble Baroness, Lady Kramer, asked about the hospitality sector. We have extended the reduction in VAT for that sector. We also have in place the grants and rates support, again a very considerable sum of money. She asked about us formally leaving the European Union and customs. She will not like it, but that is a major employment opportunity for that sector. We have only 5,800 customs intermediaries. They all need to increase employment. We have provided grants for them to upscale. Another example of new training needed is police officers. Sectors of the economy will grow, and the Chancellor’s comments are to encourage people to move across to those over the next few years.

On the devolved authorities, we have made considerable grants to them under the Barnett formula. While the Budget has been postponed, we are working at pace on the comprehensive spending review which, I would suggest, is a more important long-term method of looking at how we are going to rewrite the economy after the crisis that we have faced over the past six months.

The noble Baroness also asked about the debt. The debt is very worrying. No one is going to pretend that it is not. It was last at 100% of GDP in the year I was born—1961—and, therefore, we are going to have to be very careful over the next few years about how we address that. We were fortunate that, having got the economy and the financial position into a relatively stable state over the past few years, we had the headroom to do what we have been able to do, which has all been about trying to reduce the impact on citizens over the past seven months.

[The Deputy Speaker (Lord Bates) (Con)]

My Lords, we now come to the 20 minutes allocated to Back-Bench questions. I ask that questions and answers be brief so that I can call the maximum number of speakers.

[Baroness Buscombe (Con)]

My Lords, I congratulate the Chancellor on his Statement, which injects an important degree of realism into all this. I pay tribute to my noble friend the Minister who, I know, with his considerable expertise and experience, is an invaluable person at the Treasury.

The Chancellor talked about living without fear. Many of us do not fear Covid. What we fear is how on earth we are going to pay for it. The Chancellor referred to collective responsibility, costs paid by all of us and truths, so I shall suggest to my noble friend just two of a number of changes that are needed to demonstrate collective responsibility and truth before we have to pay, as we will, more tax. I am not expecting answers today. Will the Treasury lean on the Department for Work and Pensions to use mechanisms already in place with the banks to tackle tax evasion and to expose benefit claimants who do not declare their true assets, because we have to be sure to target welfare where it is needed? Secondly, will the Chancellor once and for all deal with and end the crazy truth that the United Kingdom is a tax haven for people living here who were born beyond our shores? There has to be equality and fairness for all in the tax system.

[Lord Agnew of Oulton (Con)]

I thank my noble friend for her questions. In short, I will write to her on the DWP’s policy on fraud checks for newly registered universal credit claimants. It suspended a number of the checks at the height of the crisis, but I am aware that it is going to reintroduce them. I do not have the date, so I will write to her. On us being a tax haven for dubious people, I share her concern. It perhaps takes a crisis such as the Covid crisis to focus minds, and I hope very much that we will taking much more assertive action.

[Lord O’Neill of Gatley (CB) [V]]

My Lords, I broadly compliment the proactive role played by the Treasury in response to this crisis, which has, sadly, been in marked contrast to the overall policy of the Government. Notwithstanding the sometimes confusing and certainly erratic policies of the Government, and possibly aided by the Treasury and the Bank of England, at least through mid-September the UK, perhaps surprisingly, appeared to be sharing in what some economists might describe as a V-shaped recovery through the third quarter. What will happen beyond this month and through the next quarter looks very uncertain, and the more pessimistic scenarios are not implausible. To avoid them may greatly depend on the introduction of a successful vaccine and a much more truly successful test and trace system.

But what I really want to speak about today is to inquire about the so-called levelling up agenda. Is there ever going to be anything beyond the endless rhetoric? The Government talk frequently and ambitiously about levelling up and the northern powerhouse agenda. They have done so since they were elected and have continued to do so despite Covid-19, yet they show no sign of this rhetoric being backed up by deed. They were close to presiding over a colossal levelling down in school education attainment, they repeatedly postposed plans for a spending review in which infrastructure spending is highlighted as being in the centre—

[Lord O’Neill of Gatley (CB) [V]]

What is happening to this and the spending review as well as the much-talked-about Green Book review as well as the promised paper on devolution? Surely the ongoing consequences of this crisis suggest an even greater need for true levelling up rather than excuses and repeated delays.

[Lord Agnew of Oulton (Con)]

I can confirm to the noble Lord that levelling up is very much on the Government’s agenda. I am, as part of my portfolio, the Minister responsible for government property, and one thing that I have instituted is to ensure that no break clauses for major buildings in London are allowed to run over during the next three or four years to force the issue of moving staff out of London. In addition to that, I receive monthly all the job advertisements for senior civil servants, and I am continually pressing and challenging departments that do not advertise those jobs outside London. That is improving slowly.

In the Budget in March, we announced one of the largest infrastructure commitments since the war, with some £600 billion-worth of infrastructure, and I can confirm that a great deal of that will be going into areas which have been left behind in the past.

Lastly, the noble Lord asked about the comprehensive spending review. I can confirm that 24 September was the deadline for all departments to submit their returns and their bids. We will be responding to that within the next couple of months.

[Lord Monks (Lab) [V]]

I welcome the fact that we will have a short-time working scheme, which the TUC has been pressing for for some time, and that we have learned something from the successful scheme in Germany. Can we be assured that this scheme, while not protecting every job, will be adequate to avoid cliff-edge surges in unemployment at the end of October and at the end of the Brexit transition period? Otherwise, British workers will face a double whammy, and it seems to me important that the Chancellor is open-minded about taking further measures. Finally, how do the Government define “viable” jobs which need support? How is that done and how is it to be carried through?

[Lord Agnew of Oulton (Con)]

My Lords, I can only reply honestly and say that I do not know whether the support announced last week will be adequate. It depends on simply too many moving parts. We all know that if a vaccine is discovered in the next couple of months it would completely change the game. At the other end of the spectrum, if we had a very bad surge which led to huge levels of hospitalisation, that would push us in the other direction. The Chancellor has been consistent in saying that he will respond to the circumstances.

[Lord Fox (LD)]

My Lords, even with the job support scheme, economists and others are predicting at least 1 million being made unemployed by the end of the year. For many of them and their families, the only recourse will be universal credit. The Minister claimed to be proactive, so here is a proactive idea. The Economic Affairs Committee has just issued a report which lays bare the shortcomings of universal credit, so will the Minister undertake that he and his Government will take a look now at that report and respond much more quickly than they normally do because this is an oven-ready way of making sure that universal credit is adequate for all the millions of newly unemployed people?

[Lord Agnew of Oulton (Con)]

My Lords, universal credit has turned out to be a total game-changer for those thrown out of work by this crisis. It has been extraordinarily flexible. If we look at the past three or four years, we have always responded to criticism and have improved universal credit when it has been clear that it needed improving, and I can assure the noble Lord that I will make sure that the report to which he referred is made available to my right honourable friend.

[Baroness Stroud (Con) [V]]

My Lords, since the coronavirus pandemic has struck, two in three, or 65%, of those employed and in deep poverty prior to the crisis have seen reduced hours or earnings, been furloughed and/or have lost their job. I welcome the Chancellor’s strategy of balancing measures to combat the spread of the virus with measures to preserve viable jobs and grow the economy, but what is the Minister’s strategy for ensuring that those who are working and already on the lowest of incomes are protected at this time, particularly as the nature of the work they undertake is often already less stable?

[Lord Agnew of Oulton (Con)]

My Lords, the furlough scheme has protected probably millions of jobs. That was the idea of it. We continue to want to protect jobs that are viable in sectors that will recover quickly. Beyond that, the emphasis, particularly for lower-paid people, is on skills upgrading and training, and that has to be the future for the group of people that my noble friend refers to.

[Baroness Meacher (CB)]

My Lords, despite being a pension recipient, I am appalled that the Prime Minister appears to have blocked the Chancellor’s plan to suspend the triple lock. Does the Minister agree that it is wrong for pensioners to receive a very generous pension increase next year, at vast cost, despite the fact that the incomes of working people will inevitably have fallen dramatically due to Covid, despite last week’s statement of support?

[Lord Agnew of Oulton (Con)]

My Lords, the Prime Minister is hesitant to address this because it was a very strong manifesto commitment and he is very anxious not to break those. As we know, in politics it is very easy to break promises.

[Baroness Blackstone (Ind Lab)]

My Lords, the Statement claims that new investment is being provided in training and apprenticeships. Can the Minister elaborate on what is new rather than already announced? Can he tell the House whether the Government will ensure that workers on reduced hours have real opportunities to use the time they have to develop much-needed additional skills? What conditions will be required from employers to fulfil that need?

[Lord Agnew of Oulton (Con)]

My Lords, the announcements last week included a number of matters around the extension of existing loan facilities and keeping open the window for loan applications under the various support schemes that the Treasury has created. On encouraging part-time working to enable staff to use the spare time for training, I think that that has to be an individual matter between employees and employers. However, to me it seems fairly straightforward that a part-time employee can access, in particular, online training, which has become the method by which most training is now distributed.

[Lord Mackenzie of Framwellgate (Non-Afl) [V]]

My Lords, as vice-chairman of the all-party group, perhaps I may make a plea for assistance for travelling fairs and circuses. This sector, which has been ignored, forms part of our heritage and culture in the UK and is much loved by the public. It needs support to ensure that it is still there after the pandemic. I ask the noble Lord to treat it in the same way as theme parks, for example, and I ask the Government to do what it takes to wrap their arms metaphorically around funfairs and the big top.

[Lord Agnew of Oulton (Con)]

I agree with the noble Lord that this is an important part of our heritage. Only three weeks ago, I went to the Great Yarmouth Hippodrome, which I think is the oldest functioning hippodrome in England. Those working there have used their own initiative, and it was the very first venue to open up after lockdown. They explained to me the various measures that they are using to deal with these restrictions. It takes ingenuity and imagination but they are managing to do it, and I encourage all in that sector to do the same.

[Lord Jones of Cheltenham (LD) [V]]

I want to ask about our valuable music industry. The Government have been interested in getting theatres open and getting bums on seats, but they have given little thought to the people needed on stage in front of those bums. Does the Minister understand that the music business is a pyramid, with stars at the top, and that the bottom of the pyramid is in dire trouble? I refer to the pubs and clubs, where, without exception, musicians, including the Rolling Stones, Michael Bublé and the Kinks, get their break and learn their trade. The Musicians’ Union says that 38% of musicians are considering quitting the industry entirely. What are the Government going to do about it?

[Lord Agnew of Oulton (Con)]

My Lords, the Chancellor has consistently said that his interventions have to be macroeconomic. However, we have tried to create safety nets to protect as many people as we can in the economy. I share the noble Lord’s concern for the music industry. My own father read music at Cambridge before the war, and I completely agree with the noble Lord that it is a very important part of our culture.

[Lord Cormack (Con) [V]]

My Lords, my noble friend says that he is anxious to protect jobs that are viable and has just talked about some jobs in the music industry. Does he accept that the heritage sector would be given a boost and that many skilled craftsmen would be able to retain their jobs if VAT, which is not charged on new buildings, were removed from the charge on repairs to listed buildings of historic importance?

[Lord Agnew of Oulton (Con)]

My Lords, I should probably disclose that I live in a listed building and that what my noble friend suggests would therefore greatly benefit me personally. However, the reality is that in this crisis we have to look at a higher level. I am encouraged to see that the construction industry is coming back at full throttle and that the large number of construction workers who were furloughed in March and April have largely been reintroduced into the sector. We are also about to announce the green energy scheme, which is a £2 billion to £3 billion investment in energy improvements for public buildings that will also be available to the public.

[Baroness Quin (Lab) [V]]

My Lords, at a time of great difficulty for so many of our citizens, do the Government agree with the British Retail Consortium that a no-deal Brexit at the end of this year would add over £3 billion to the cost of importing food and drink, making life even more difficult for those on low incomes? If the Government do not accept the British Retail Consortium’s figures, what is their own assessment of the effect?

[Lord Agnew of Oulton (Con)]

My Lords, I think that we have published our worst-case scenarios for a no-deal Brexit or leaving the European Union without a free trade agreement. Of course there are risks, but we remain optimistic that a deal will be done.

[The Earl of Clancarty (CB)]

My Lords, “viable” is a dangerous word if all that can be said to be truly viable financially in these unusual times is a prescribed number of businesses, including those making money out of Covid. How do the Government intend to further protect the self-employed—including those working in the creative industries, who will fall off the edge of the cliff at the end of October if the Self-Employment Income Support Scheme is not extended—because the job support scheme is clearly not nearly enough? That includes freelancers, who make up 70% of the workforce in the performing arts, which are so important to this country both culturally and financially in the longer term, as the noble Baroness, Lady Kramer, pointed out.

[Lord Agnew of Oulton (Con)]

I share the noble Earl’s concern about the creative sector. I am sure that he is aware of the support being given under the latest SEISS grant extension, which of course will be available to those who were previously in it. But I do accept that we face difficult times.

[Lord Davies of Gower (Con) [V]]

My Lords, following the Chancellor’s Statement last week, the Welsh Labour Government issued this Statement in response:

“More needs to be done to help people find new jobs and incentivise employers to hire new workers.”


They added that there was a need for

“more action on skills, training”

and a

“greater focus on supporting job creation”.

Does the Minister agree that responsibility for the devolved issues of growth and development of business, and support for inward investment and enterprise, rests firmly with the Welsh Government and that they should refrain from passing the buck and get on with accepting their devolved responsibilities?

[Lord Agnew of Oulton (Con)]

I am not quite sure that I heard the full question from my noble friend, but I absolutely agree that inward investment is crucial for the future. As I mentioned in response to an earlier question, I believe that the huge infrastructure projects that we have committed to in the Budget will form part of the regeneration of the economy.

[Baroness Donaghy (Lab) [V]]

The Government modelled this scheme on those adopted in France and Germany, but in a rather half-hearted way. The German scheme is set to last for two years, compared with six months for the UK scheme. How did the Government reach that decision, when it would have added stability to employers’ plans to have two years?

[Lord Agnew of Oulton (Con)]

My Lords, I think the noble Baroness is looking too narrowly at the comparison. If we summarise the total fiscal interventions of the various economies over the last few months, the UK contribution has been somewhere just under 11%, those of Canada and France under 10%, Germany’s about the same, and Italy’s is about eight and three-quarters. My point is that you should not look at any one of these individual interventions as the single solution; we have tried to aggregate them.

[Lord Lea of Crondall (Non-Afl)]

My Lords, as has been said by the noble Lord, Lord Monks, and the noble Baroness, Lady Kramer, there is a need to integrate policy that arises from Covid and policy that arises from Brexit. Does the Minister agree? This is described as a plan for the winter, and there is the danger of a Brexit without even a framework agreement with the European Union, as is the case with Switzerland.

[Lord Agnew of Oulton (Con)]

My Lords, I agree with the noble Lord that there needs to be integration. The overriding priority is to crank up the economy again; that is why we have created a group in Downing Street called Project Speed, which is designed to take hold of any opportunity that is being blocked in any way, to shake it and make it happen quicker. I remain optimistic, as I said in response to an earlier question, that we will resolve our difficulties with the European Union and will have some form of workable deal by the end of the year.

[Lord Browne of Ladyton (Lab) [V]]

My Lords, in the other place, the Chancellor was asked four times about help for the 3 million working UK taxpayers who, until now, have had no access to any of the Government’s Covid-19 support packages. Four times he ducked the question. So, in the words of my honourable friend Gerald Jones, I now offer the Minister the opportunity to correct that repeated omission. What assurances can he offer that the measures announced in this Statement, and any ongoing policy, will not continue to exclude them?

[Lord Agnew of Oulton (Con)]

My Lords, while there might not be individual schemes available for the group of people that the noble Lord talks about, we have made wider funding available through the uprating of universal credit and additional grants to local authorities. I am very aware that there are people in difficulty but we believe that the wider social security safety net is there to support them.

[The Deputy Speaker (Lord Bates) (Con)]

My Lords, all those listed to ask questions on the Statement have now done so.