Financial and Social Emergency Support Package

Debate between John McDonnell and Bill Esterson

Wednesday 25th March 2020 Commons Chamber

[John McDonnell]

I support the words of Mr Speaker last week, when he made clear the practices that Ministers should pursue, and I believe that this is an act of bad faith on the part of the Prime Minister.

Let me make other demands on the Government. Here is a small one: can apprentices, many of whom are paid just £3.90 an hour, be furloughed too? Can they please get 100%, not 80%, because they earn so little? As I asked the Chancellor yesterday, can the scheme be flexible? Workers put on reduced hours must be eligible, so that the shortfall in wages can be made up. Some businesses will lose part of their operation. We need them to carry on in a reduced form, so that would be the right solution for them.

[Bill Esterson]

I want to take this opportunity to thank my right hon. Friend and the Leader of the Opposition for the work they have done over the last five years and for their friendship and support of all Opposition Members.

My right hon. Friend mentioned furloughing. Can he reiterate that there should not be any situation in which pay is allowed to be below the national living wage, and if that means going above the 80% rule, that is what should happen?

[John McDonnell]

I am grateful for my hon. Friend’s words. We have asked for a while, not least when we put forward our proposals last Thursday, that there should be a floor of the national minimum wage. If those who are on low pay get 80% of their pay, many of them will be taken below the national minimum wage. It is set at that level because it is a basic survival level, so we urge the Government to act. Again, that is only a small step.

It cannot be beyond the wit of the great minds in the Treasury to find a way to resolve a number of these issues, and that call was reiterated by the Resolution Foundation this morning. A YouGov poll found that one in 10 people surveyed are still in work but with reduced pay or hours. Those people are not protected by this scheme. For businesses to stay afloat, many of them will need part-time workers, and those part-time workers need the support that this scheme should provide.

Zero-hours contract workers and agency workers who are not on PAYE are limb (b) workers, as I explained to the Chancellor and wrote to him about at the beginning of the week. They must be made eligible for the job retention scheme; otherwise, there is the potential that 2 million workers will not be included in the scheme. These are some of the workers who are most at risk of losing work and not being able to put food on the table during this downturn.

Several Members mentioned this, but I urge the Government to give an assurance that non-UK nationals are eligible for this scheme. I also appeal to the Government to ensure that support is provided for non-UK nationals in the coming weeks when travel is so restricted. Let me echo what several Members have said: that must include the suspension of the rules of no recourse to public funds. The rules that have been put in place may be acceptable to some Members, but in this period those rules are brutal and will force people into penury.

Staff who can no longer work because of childcare responsibilities must be protected as well. Why on earth are they not eligible for this scheme? Just think of the single parent who cannot work because they need to stay at home with their child—surely they should be covered as well. On the subject of childcare, can the Minister be clear that childcare providers should not be charging parents for services that they no longer deliver or cannot now deliver? Those childcare providers must be supported in the long term as well, because we will need them.

My concern, which many Members have expressed today, is the gaps in the scheme and the fact that it will not be operational until April. People will not receive funding for weeks, and it certainly will not be taken up at the rate that many of us would hope for, given the indications from a large number of employers. Lay-offs are happening at scale.

Contingencies Fund Bill

Debate between John McDonnell and Bill Esterson

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

[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.

Finance (No. 3) Bill

Debate between John McDonnell and Bill Esterson

Tuesday 5th July 2011 Commons Chamber

[John McDonnell]

Yes, I had forgotten that example. It is a good example of how unilateral action can raise the standard overall across Europe and globally.

Another issue raised in our debate on the Tobin tax a number of years ago concerned whether it would be practical. Things have moved on since then and the system for undertaking financial transactions is highly automated and centralised. New systems have been put in place, and I refer Members to the study by the Institute of Development Studies that identified how the system now operates:

“The Continuous Linked Settlement Bank, launched in 2002, now settles more than half of all foreign exchange transactions, with the remainder processed through national real-time gross settlements systems.”

Now we have the systems in place, through advances in new technology, to monitor the process and thereby ensure that tax is collected easily and that avoidance can be prevented.

[Bill Esterson]

My hon. Friend just mentioned avoidance and the problems that it causes. Does he agree that if avoidance was the reason for not doing what he proposes, the Government would give up on collecting any taxes? Avoidance of tax is a far greater problem than any to do with claiming benefits, yet the Government focus their energy on benefits and not on tax.

[John McDonnell]

The main argument on the Tobin tax involved the inability mechanically to identify the transactions and therefore levy the tax. I think that that has been overcome with the new systems.

The avoidance issues will concern migration to tax havens and elsewhere and the report on this tax would have to address them, but we must also attack them more generally. That is why I was so disappointed that my amendment on that subject was not called for debate. That is another issue, however, that I shall raise at another time.

Financial transaction taxes have been introduced elsewhere in the world. In fact, they have been identified in about 40 countries—including ours, with stamp duty. Another question that was raised concerned whether, if we introduced this tax, it would be passed on to the customers. That is a concern, but the report we receive from the Government can consider how to design the tax so that it is targeted at the casino banking that has resulted in this crisis and so that we can protect ordinary people and businesses.

The key point about this tax is that, as the IMF study said, it is “highly progressive”. It falls on the richest institutions and individuals in a very similar manner to capital gains tax. As for the competition element and whether the cost will be passed on to customers, thereby hitting individuals harder, the finance sector is competitive and institutions that try to pass on the cost of the tax to customers will find themselves attacked through a shortage of business.

Another argument that has been made more recently is that this tax could help to assist in addressing high-frequency trading, where transactions happen every few seconds. There has been a huge increase in the number of transactions to do with derivatives. The volume of such financial transactions is now 70 times the size of the world economy and commentators have argued that that is dangerously large and destabilising. Lord Turner, the chair of the Financial Services Authority, said that many such speculative transactions are socially useless. Many of them are based on extremely small profit margins, so even a low rate financial transaction tax of 0.05% would reduce the size of the market by reducing the profitability of these risky transactions. In that way, it would contribute to stabilising the economy overall.

I do not want to delay the House. Many Members have considered the issue in some depth as a result of the lobbying, but for all the reasons I have given I agree with the 1,000 economists who wrote to the G20 summit. This is an idea whose time has come. Issues still need to be addressed, which were set out by Neil McCulloch in the IDS study, but the principal issue is political will. I hope that we can display political will across the parties and across the House to move on this matter.

I finish by quoting from the letter from the 1,000 economists to the G20:

“The financial crisis has shown us the dangers of unregulated finance, and the link between the financial sector and society has been broken. It is time to fix this link and for the financial sector to give something back to society.”

The letter says that a Robin Hood tax is not only “technically feasible”, but “morally right.” That is why I invite the House to support my amendment.