Oral Answers to Questions

John Glen Excerpts

Tuesday 1st December 2020 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

What recent estimate he has made of the number of loans provided through the bounce back loan scheme.

[The Economic Secretary to the Treasury (John Glen)]

As of 15 November, the bounce back loan scheme has supported nearly 1.4 million businesses with facilities totalling over £42 billion. This includes the extra amounts received from our bounce back loans, which have been topped up to a higher amount, providing further help to businesses that are in need of monetary support.

[Kevin Hollinrake]

The scheme has been a huge success, but according to research by the all-party parliamentary group on fair business banking and Funding Xchange, about 250,000 businesses were locked out of the scheme because they banked with non-bank lenders and the banks that have liquidity to provide funds in this way either closed to new customers or have no appointments left until the end of January, when the scheme closes. What action is my hon. Friend taking to address this very important issue?

[John Glen]

The Government cannot force lenders to open to new bank customers for bounce back loans, but we have repeatedly encouraged lenders to open when it is operationally possible for them to do so. Indeed, nine lenders have managed to open to new customers for a period, and two are currently open, although for limited services. Their efforts, combined with the fact that accredited lenders account for a very high proportion of business in personal current accounts, mean that the vast majority of businesses should be able to get a bounce back loan through their existing relationship. Following the decision by the Chancellor to extend the scheme to 31 January, there are now two and a half months left to apply for a loan, after which we will be introducing a new guarantee scheme.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

This weekend, we will mark Small Business Saturday, when we all have the opportunity to praise the work of the fantastic small businesses that contribute so much to our local economies and have been through a tough time this year. Bounce back loans have helped small businesses, but because of the ongoing pandemic, they have, by definition, also left some businesses with debts that they may not be able to pay. What is the Government’s estimate of the likely rate of default on bounce back loans, and what further support can the Government give to small businesses whose trading conditions will continue to be severely impaired for months to come?

[John Glen]

The right hon. Gentleman rightly praises the work of small businesses up and down the country, and I echo his sentiments. He asks about the provision we have made for the future of bounce back loans. Those who have taken out the loans will not be starting to repay, because there is an interest-free period until May next year. Indeed, we have decided to extend the time to pay for up to 10 years. Clearly, we keep these matters under review and are very sensitised to the burdens that small businesses face. That is why, as the Chancellor said earlier, we have introduced a number of measures in addition to the bounce back loans to support small businesses at this time.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The Minister talked about the default issues on the loans but also about extended payback. Has he or the Treasury done a calculation about whether that will reduce the up to 80% expected potential for default on the payback of these loans, which obviously businesses need but will hit taxpayers very dearly?

[John Glen]

There have been a range of estimates due to the considerable challenges in verifying data. What I would say is that our priority has been to protect as many businesses and jobs throughout with this intervention. We have always considered the fraud risks and the need to maintain a sense that the loans need to be paid back, but the Cabinet Office and the British Business Bank are continuing to work on that mitigation strategy, where we have a mandatory system to detect multiple applications. The default risk is an evolving picture that we will keep very close to.

[Chris Grayling (Epsom and Ewell) (Con)]

What recent financial support his Department has provided to the aviation sector; and if he will make a statement.

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[James Sunderland (Bracknell) (Con)]

What fiscal steps his Department is taking to support businesses affected by the covid-19 outbreak.

[The Economic Secretary to the Treasury (John Glen)]

The Government recognise the extreme disruption that the pandemic has caused to business, employment and the nation’s economy, and our goal remains to protect people’s jobs and livelihoods. That is why we have provided one of the most comprehensive and generous packages of support, worth £280 billion.

[James Sunderland]

I commend the Treasury on what it is doing at the moment to support businesses across the UK. Is the Treasury willing to extend the VAT cut to the hospitality, leisure and personal care sectors, and will it perhaps encourage businesses to pass on that VAT saving to consumers?

[John Glen]

The temporary reduced rate of VAT was introduced on 15 July to support the cash flow and viability of more than 150,000 businesses and protect 2.4 million jobs in the hospitality and tourism sectors, and it will run now until 31 March next year. This obviously comes at a considerable cost to the Exchequer, and while we keep all taxes under review, there are no plans to extend it further. Although the Government want businesses to pass on the benefit to customers if they can, obviously decisions on prices are ultimately for businesses rather than the Government.

[Stephen Timms (East Ham) (Lab)]

What assessment he has made of the economic effect of increasing legacy benefits by £20 per week in line with the recent increase to the standard universal credit allowance.

--- Later in debate ---

[Elliot Colburn (Carshalton and Wallington) (Con)]

  Carshalton and Wallington businesses, particularly pubs and restaurants, have been in touch and while they welcome the support that has been offered so far, they are concerned about having a road map to reopening and, indeed, the support over Christmas. Does the Minister anticipate, as we begin to roll out several vaccines, that we will have the road map to reopening, and will he look again at tiering restrictions, particularly in tier 2?

[The Economic Secretary to the Treasury (John Glen)]

The covid-19 winter plan, published on 23 November, sets out the Government’s plans for the coming months, and our objective is to find new and more effective ways of managing the virus to enable this route back to normality. That will be achieved through the deployment of vaccines, but also through improved medical treatments, expanding the capacity of the test and trace programme and using rapid testing to quickly identify and isolate cases. These measures will provide confidence as we approach spring that life will get back to normal.

[Ruth Jones (Newport West) (Lab)]

Like so many in this House and across the country, I am very concerned by the threat to thousands of jobs triggered by the collapse of the Arcadia Group. The loss of Debenhams in Friars Walk in Newport West will have a massive impact on Newport city centre and the livelihoods of local people and their families. Will the Chancellor outline what discussions he has had about how he can give those people the support they deserve?

--- Later in debate ---

[Robert Halfon (Harlow) (Con) [V]]

Thank you, Mr Speaker. I thank my right hon. Friend for the financial package worth more than £150 million to support Harlow businesses and hard-working residents, but will he recognise the difficulties that are being faced by my constituents, particularly freelancers and directors of limited companies, who have been without any form of financial support—or almost any form of financial support—for eight months now? This is having a detrimental impact on my constituents’ livelihoods and mental health, so will the Minister outline what steps he is taking to ensure that these individuals, who have so far found themselves excluded from covid-19 support schemes, are able to access some significant financial assistance?

[John Glen]

I thank my right hon. Friend for his question. Throughout the crisis, as he has acknowledged, the Government have spent over £280 billion. He referred to the self-employment income support scheme. Support for the grant has recently been increased from 55% to 80% of average trading profits from November to January, capped at £7,500 in total, and the claims window will be open until 30 November. Obviously, a range of additional support mechanisms have been put in place, including the additional restrictions grant. As my right hon. Friend the Financial Secretary said earlier, we will continue to look sympathetically and constructively at all other representations made.

[Munira Wilson (Twickenham) (LD)]

  I hear concerns from many pubs in my constituency, such as the Barmy Arms in Twickenham and the White Hart Inn in Whitton, about how on earth they are going to make it through this winter. Given that London is to be placed into tier 2, with some of its perverse rules for pubs, will the Chancellor look urgently at further extending VAT relief and business rates relief, and further grants for the sector, please?