The Economy

Anneliese Dodds Excerpts

Monday 27th April 2020 Commons Chamber

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

I am grateful to the Chancellor for advance sight of his statement, and to all the Treasury civil servants, and those in HMRC and the Department for Work and Pensions, who have been working incredibly hard to get these schemes running. I fully appreciate that the Chancellor’s job has not been an easy one, but it is our job as a constructive Opposition to point to problems that we are hearing from the frontline, and to indicate solutions. It appears that at least some of those problems are more acute in our country than in many others.

The Purchasing Managers’ Index figures that came out last week indicated a sharp fall in business confidence. Sadly, that was not a surprise. It has been clear for some time that the economic slowdown we are currently experiencing is sharp and deep. It was, however, unsettling that those figures suggested that business confidence has taken a stronger hit in the UK than across the eurozone. I have heard from small business owners who put their life and soul into their firms, but have less than two weeks of cashflow left, and they are devastated. We all need to work together to get the different support schemes working for our country. We must fix this.

I am well aware that many of the conditions for shifting out of lockdown are not within the Chancellor’s grasp. However, his Government need to be open about blocks on progress and how they will remove them. That applies to the test, track and trace regime, which must be in place before key sectors can open again. It also applies to the creation of a national tripartite system to ensure that workers and employers have confidence that they can return to work safely when the right time comes.





The Chancellor is directly responsible for the economic package, and he knows that we supported him in creating the furlough scheme; indeed, we called for it. But the evidence is that some other key elements of the economic package are failing, so, in a constructive spirit, I want to ask the Chancellor whether he would countenance solutions in three areas—first, on CBILS. It is a relief to hear from the Chancellor that he has listened to calls from the Opposition, business and others that we need a full guarantee for at least some loans—he has stated those of up to £50,000—but we need to be clear that the UK has an enormous mountain to climb. Switzerland has a population of under 9 million, yet it approved four times as many loans in its first week as the UK has done in a month. We are running out of time, so how will the Chancellor ensure that the bounce-back loans get to the businesses that need them? How will they get out of the door, and what plans does he have to ensure that the banks will have the capacity to provide those loans?

Secondly, recent figures suggest that one in 10 in our workforce looks set to be unemployed as a result of this crisis, with all that that entails for people’s future prospects, incomes, and their and their families’ health. Again, I say to the Chancellor that we will work with him. We have indicated many of the gaps in existing schemes to protect incomes, and will continue to push for them to be filled. However, we must be clear: the reason that those gaps are such an income-crushing, insecurity-producing crisis for so many is that, in most cases, the only alternative to coverage by these schemes is universal credit, which pushes people right down to an average of 10% of the income of the rest of the workforce. The DWP has made some welcome changes, but failure to change the initial loan into a grant threatens to create even more of a debt crisis among households. Apparently the Government are sympathetic to changing the loan into a grant, but we are told that the computer system just will not allow it, so my second question is: will the Chancellor knock heads together and get the computers to say yes to switching UC loans into grants?

Finally, as the Chancellor knows, before this crisis we had an economy that simply did not work for so many. Around a quarter of all families lacked just £100 in savings, even before the crisis began. The UK is the most regionally unequal country in Europe, and we have just had the longest squeeze on living standards—not just in a generation, but in eight generations. The recovery from this crisis must be faster and wider to ensure that as many people as possible have a job to come back to. We need a flexible furlough scheme. The Chancellor told me previously that it cannot currently be made more flexible, but other countries have done so. Will he work to amend the furlough scheme to allow workers to come back on a part-time basis, and will he do as so many other countries are doing, from Germany to New Zealand, and talk about how those hit hard by the crisis can be supported not just now, but in the future, with employment-boosting redeploying retraining schemes? The aftermath of the pit closures tells us that an approach where the Government shrug their shoulders will scar our economy for generations to come, so my last question is: will the Chancellor work together with me, trade unions, businesses and local authorities to develop a plan to offer the hope of work to those who have already become unemployed, and get our economy moving again?

[Rishi Sunak]

May I welcome the shadow Chancellor to her place, and thank her for the constructive dialogue that I have had with her over the past two or so weeks? Let me address her questions directly and swiftly. First, I turn to her question about the loan guarantee programme and the banks’ operational capacity. Obviously, this is something that the Economic Secretary and I, working with the banks, have spent a lot of time on over the past few weeks. I am grateful to the banks for re-engineering their entire systems to offer this brand new bounce-back loan. I am assured that it will be available from next Monday morning. There will be a very simple application process, and the banks will not have to conduct more than the customary fraud and anti-money laundering checks, which of course would be reduced for their existing customers. If someone has an existing business account with a bank, the process should prove incredibly rapid, and they should have the cash in their bank account within a day or two. The banks are readying their systems for that launch date as we speak.

I hear a lot from many commentators that we should copy what was done in Switzerland. Now, Switzerland does have 100% guaranteed loans—I absolutely agree that it does—but it is worth bearing in mind that it does not provide very much else in the way of direct fiscal support for their businesses. Indeed, after extensive dialogue with the Swiss Government, it is very clear that, for them, the loan guarantee scheme is the primacy of their direct fiscal support to businesses. In this country, we have provided tens of billions of pounds in direct cash support—in tax cuts through reducing business rates, in cash grants of £10,000 or £25,000, and by paying people’s statutory sick pay bill. These very direct cash impacts, I believe, are more generous than asking companies to take on a loan, which is why I believe that the Switzerland comparison is not analogous. Secondly, the Switzerland furlough scheme requires employers to contribute a fifth of the payment to the scheme, whereas in this country, our furlough scheme removes that very considerable cash burden from businesses.

As I always say when I am at this Dispatch Box or answering questions elsewhere, it is important to look at the totality of all our economic interventions. When measured as a percentage of GDP, it is very clear to me, as has been empirically shown by others, that the sum total of our fiscal intervention to support businesses and people through this crisis is one of the most comprehensive and generous, in terms of scope and scale, anywhere in the world.

Turning to the next question—on universal credit and support for the most vulnerable—I firmly agree that during this crisis, we must of course look after the most vulnerable in our society, and from the Budget onwards, I have strived to do exactly that. We have invested extra funds into tax credits and into universal credit, improved eligibility for statutory sick pay, improved employment support allowance, improved how these schemes work for the self-employed, improved the local housing allowance and, indeed, created a brand new hardship fund for local authorities to help people with their council tax bills. All these investments have a sum total of over £7 billion of investment by this Government to strengthen the safety net to help the most vulnerable in our society through this difficult period.

Lastly, with regard to the future, I wholeheartedly believe that the best way out of this is to ensure that as many people as possible can return to the job that they had. That is the best way to protect people and to protect their livelihoods, their families and their household incomes, which is why all our support has been conducted with that aim in mind—how can we help to support businesses? How can we help them to keep their employees attached to that business? I believe that our furlough scheme stands at the centre of that. All the other interventions will help to support that aim so that as we emerge from this crisis, we can bounce back as quickly as possible to the life that we once knew.