Contingencies Fund Bill

John McDonnell Excerpts

Committee stage & 2nd reading & 2nd reading: House of Commons & Committee: 1st sitting & Committee: 1st sitting: House of Commons
Tuesday 24th March 2020 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

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.

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

The difficulty with what the right hon. Gentleman suggests is that most businesses do not know the extent of this crisis and the impact it will have on them. It is impossible at this point to determine exactly how long this will last or how deep a recession might be. Is he not asking the impossible of businesses?

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[John McDonnell]

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.”

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[Kevin Hollinrake]

I thank the hon. Gentleman for that contribution, and indeed for all the work he does on the all-party parliamentary group on fair business banking and for the many speeches he has made on the matter. I absolutely agree. The two best things that I have heard the Treasury say over the past two weeks—and there have been many—are, “We will do whatever it takes” and, “We are all in this together.” The banks should take that approach as well. I and many other Members of the House will be watching to make sure that this time the banks do the right thing and restore their reputation.

[John McDonnell]

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?

[Kevin Hollinrake]

I think it is an absolute disgrace. I do not think that the FCA saw it coming, which is one of the flaws of the regulator. The FCA has been criticised many times in this place, including by the right hon. Gentleman. It told the banks, “Right, you’re not going to charge anybody any more than anyone else is.” But that let them all put their rates up to the highest level. It is exploitative and absolutely outrageous.

The banks need to look at this as a sector and start to treat their customers fairly, which of course is a basic requirement of the principles of banking, so the FCA should step in and look at this. In fact, I think it should be the subject of an inquiry by the Competition and Markets Authority. The fact that the rates are not just high, but all the same, smacks of directors getting together in a room and agreeing a figure. It cannot be a coincidence that all the rates are exactly the same in this supposedly competitive market.

On commercial loans, it is right that the Government have negotiated with the banks to give mortgage holidays, which of course have to be paid back but nevertheless give borrowers vital breathing space. I think the same is true of some commercial loans, but the banks are saying, “We’ll give you a holiday only on the payment of the principal, not the interest.” Those paying for a commercial loan are paying much more on the interest than they are on the principal, which again seems grossly unfair if we are all in this together.

We are going to work together to try to get through this, so I call on the banks to look at this again, to be fair and to rebuild their reputation. The final way they could do that is by suspending legal action, certainly in relation to residential repossessions but also for repossessions against businesses. They should show forbearance and use the business banking resolution service—I am one of the people who have been working on that in recent months—which will be like a super ombudsman for banking disputes. They should defer any issues they have with their customers until that service is properly established, so that those complaints can be resolved fairly—fair to the bank and fair to the customer.

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[Bill Esterson]

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.

[John McDonnell]

What we were trying to establish in our discussions with the Government last week was equality of sacrifice. Yes, workers and the Treasury have realised that there will have to be some sacrifice, but we were expecting some contribution from employers themselves. An hour ago, 400 workers at Tristar in my constituency were laid off. Those 400 drivers were told that they will get paid 80% of their wages by the Government and they have been laid off for three months. We expected the employers to contribute to that 20%, but, in this case, that will not be paid. The crisis is falling on the shoulders of workers, rather than on businesses. There is no equality of sacrifice in a number of these companies, some of which are being ruthless.

[Bill Esterson]

My right hon. Friend highlights the fact that some employers do not behave in a way that we should be able to expect them to behave given the nature of the crisis. We have heard other examples of large companies behaving in a way that is irresponsible and, frankly, downright wrong.

In addition to what my right hon. Friend says about employers not paying the 20% element of the wage replacement scheme and taking advantage of it, it is also the case that, for employers who wish staff to go on to short-time or part-time working, or reduced hours of some sort, the scheme does not apply. There is a real challenge for businesses in those categories, too.

That brings me on to the self-employed and this point about desperation. People are desperate now. We have debated that a number of times today and over the past few days as well. I just do not get the sense of urgency in this place. We are in here, and away from the real world. The same applies with Whitehall. I just think that, sometimes, people here do not have a sense of just how desperate things are when two members of the same household are both self-employed and have no money. They cannot put food on the table. When the Chancellor says, as he did this morning, that he is worried about the scheme for self-employed going to wealthy people, I say, as indeed did the right hon. Member for Kingston and Surbiton in his urgent question, let us not make the perfect the enemy of the good. Let us get a scheme in place and let us make it comparable with what the Government have offered to employees.

I want to say just a word or two about food supply and how the fund might apply there. There will be challenges around security of food supply; obviously, given the closing down of international transport links, that will be a challenge. We heard about the pressures on supermarkets. Some of the behaviour in supermarkets has been completely unacceptable, and the same applies to pharmacies. I hope that some of this money will go to ensuring security of deliveries, to protecting retail workers, to making sure that food and medicine get to those who most need it, and to helping pay for deliveries. The same applies to the supply of PPE, which hon. Friends have spoken about.

The right hon. Member for Kingston and Surbiton is right to raise the issue of helicopter money; at some point, that is something that the Treasury should consider. Any scheme, whether on PPE, food or access to funds, is only as good as the information out there, the awareness of the scheme, and the immediacy of access to it. The Government need to do much more to ensure that people know what is available in all those areas. The gov.uk website will carry that information, but lots of people and businesses do not know that it is there.

There is a real imperative on the Government to work much harder on the information that is getting out there, and on access to what is being offered. Television and radio will lose their commercial advertising; there is a great opportunity to replace it. I can give an example of the power of really good advertising: the video put together by the Belfast Health and Social Care Trust respiratory department. It was one of the most powerful pieces of advertising about the need for people to stay at home that I have ever seen. The BBC showed it; I think Sky might have, too; and it had viral attention on social media. The Government need to produce advertising of that quality to demonstrate what is available in a range of areas across society. Some of this money can be used to deliver on that agenda. Information and proper access will ensure the most effective use of this enormous necessary injection of funding.

The debate has been an opportunity to bring together the issues. I hope that the Financial Secretary will take them to all his colleagues across Government, as appropriate. It is interesting that the right hon. Member for Kingston and Surbiton said that 1919 was the last time there was this sort of scrutiny; that was the year of the Spanish flu pandemic. We will not vote against the measure this time, but let us hope that, this time, it is effective, and that the money gets through as quickly as possible.