Business and Planning Bill

Kevin Hollinrake Excerpts

2nd reading & 2nd reading: House of Commons
Monday 29th June 2020 Commons Chamber

[Alok Sharma]

My hon. Friend makes an important point. I know she is working incredibly hard to support businesses in South Ribble, and I am sure she is looking forward to going to the Tesco’s once it is up and running.

We also want to support the transport sector by enabling shorter-term licences for drivers of heavy goods vehicles and passenger carrying vehicles and allowing for the risk-based testing of HGVs and public service vehicles. These measures will allow goods and public transport to keep moving. We want to continue to support small and medium-sized enterprises through the quicker delivery of bounce-back loans, which have provided a financial lifeline for more than 920,000 small businesses so far. This measure is retrospective and will disapply elements of consumer credit law.

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

I speak as co-chair of the all-party group on fair business banking and support the suspension of the Consumer Credit Act 1974 with regard to bounce-back loans due to affordability issues, but does the Secretary of State agree that it is vital that lenders still comply with the requirement to treat customers fairly in the collection process or if there are debt issues later on and that forbearance is applied?

[Alok Sharma]

As ever, my hon. Friend raises an incredibly important point. Yes, forbearance is part of these measures, and we would expect that very much to apply.

Before I turn to the detail of the Bill, I want to thank all those across industry and both Houses who have engaged with the Government to help develop the measures in the Bill. I also thank the Local Government Association, the National Police Chiefs’ Council, the Home Builders Federation and the British Property Federation for sharing their expertise. I am pleased to say that the measures in the Bill enjoy wide stakeholder support. The LGA, the Federation of Small Businesses, the British Beer and Pub Association, UKHospitality, the Freight Transport Association, the Road Haulage Association, the Royal Town Planning Institute, the British Property Federation and UK Finance have all expressed their support.

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[Edward Miliband]

Of course there are, but just because we cannot do everything does not mean that we should not do anything. The grants programme that the Government introduced was done by sector—retail, hospitality and leisure. The hon. Gentleman makes an important point about boundaries, and some business organisations would raise that issue, but I worry that technical concerns about boundaries, which have been overcome for the grants scheme, stop us doing something that makes real sense.

[Kevin Hollinrake]

What the right hon. Gentleman says about the sector-based nature of the grants scheme highlights the problem in his argument. All MPs in this place, I am sure, have been contacted by people—in the hospitality supply chain, for example—who were not getting support. It is so difficult to take a sector-based approach. Will he concede that that is not as easy as he thinks?

[Edward Miliband]

Of course it is not easy, but the hon. Gentleman’s implication is that nothing can be done for those sectors that are obviously more affected by the public health measures.

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[Kevin Hollinrake]

indicated dissent.

[Edward Miliband]

The hon. Gentleman is shaking his head. If things can be done, they should be done, but my point is that the strength of the Government response is that it has been comprehensive. It has used the power of Government and it has not necessarily taken a one-size-fits-all approach. I am worried—we see this in the evidence that has been brought forward—about the one-size-fits-all approach.

[Kevin Hollinrake]

I speak as a business person as well as a Member of Parliament. In my view, the Chancellor made the job retention scheme very generous, continuing it a lot longer than many thought it would; and rather than have a sector-based scheme to help some people and not others, he has tried to help all employers and make it flexible for all the different categories of employer.

[Edward Miliband]

I do not disagree with the hon. Gentleman that it is important that we have had the furlough, but I disagree that it should be cut off at the end of October, because I really worry about the economic impact. We have 2.8 million people already claiming unemployment-related benefits, and I worry about the implications for these other industries.

The tragedy is that the Government have spent £22 billion on the furlough, but I fear that we will throw away some of that investment  by not recognising that specific sectors face specific challenges. I urge the Business Secretary —he knows this, as he talks to the same people that I do—to use all the powers of his office to make representations to the Chancellor to find a way of fixing that, so that we have a sector-specific approach to the furlough, including an extension beyond October.

Just as I do not believe that the furlough should be abruptly ended, I believe that there are issues of access to loan finance. As I have said, the bounce back loans scheme has been successful at getting money out of the door, but the same cannot be said of the other small business loan scheme, the coronavirus business interruption loan scheme. In the case of CBILS, only half of all applications have been approved, and the supposed freeing up of the scheme as a result of bounce back loans being made available is yet to materialise. We still do not know why 48,000 out of 98,000 CBILS loans are stuck in a holding pattern, and we do not know how many have been rejected and how many are still in the queue. One of the things we are asking for in the Bill is for the Government to publish data on the true number of rejections and the total number of inquiries.

The problem is not just with the small loan scheme. We have seen a wave of job losses in manufacturing, from Rolls-Royce to McLaren to Jaguar Land Rover. Make UK is predicting that as many as 170,000 jobs could be lost this year in the manufacturing sector alone. Any talk of levelling up will come to nought if we lose those jobs—I am sure that sentiment is shared across the House—and I urge the Secretary of State to look at the international comparisons of France and Germany, which have protected and supported strategic sectors of the economy, such as steel, aerospace and automotive, in a number of different ways. That is why our amendment to the Bill calls on the Government also to publish the true number of rejections in respect of the larger loan scheme, the coronavirus large business interruption loan scheme, and explain why 400 larger businesses have not been able to access support through the scheme. Again, we do not know whether they are stuck in a holding pattern and still waiting in the queue or have just been rejected. These sectors are calling for tailored Government support to help them through the crisis, but it has not been forthcoming. The big point is that, from hospitality to leisure to manufacturing, this is a general recession, but it was also much more acute in specific sectors, and the Government need to recognise this far more in their response.

If one part of the Government’s strategy is about shielding sectors of our economy from the sectoral recession, the other part must be about job creation and employment. We are to have a speech tomorrow from the Prime Minister. It is a shame that we do not have a Budget; I do not really understand why we do not have a Budget in what is potentially the worst recession in 300 years. If now is not the time for a Budget, I do not know when is the time for a Budget, but there is a speech tomorrow and big promises are being made about it.

The Bill rightly talks about what can be done in the construction sector. The way to help the construction sector is not just to tweak the operational hours, although that is important, but also to deliver on some of the promises the Government have made. Again, I think this view can be shared across the House; I do not often quote the Conservative manifesto approvingly—[Interruption.] —or at least not enough, but it promised £9.2 billion for energy efficiency in public and private buildings. Conservative Members all stood on that manifesto and I am sure that they support it.

We know how behind the Government are on building retrofits. The Committee on Climate Change recently said that there has been “negligible progress since 2015” and that the challenge of retrofit and renovation has gone “largely unaddressed.” We know that investing in retrofit is the ultimate win-win. This is the ideal opportunity —it would help the construction sector, not just in relation to operational hours, and could create tens of thousands of jobs—but today there are reports that it is being blocked by none other than Dominic Cummings. Apparently, he is uninterested and thinks it is “boring old housing insulation”. The Secretary of State and I have a good relationship, and I am happy to give way to him so that he can say that the £9 billion is going to happen. We need the £9 billion, so I am happy to give way. He has overruled Dominic Cummings on Sunday trading; now is the time to overrule him on this.

Let us also bring forward the £12 billion of social housing spending that has been promised. All these things are important, and they are also part of job creation. I think the idea that we need a green recovery is shared throughout the House, as least at the level of principle. Some people—assiduous readers—will have read over the weekend the Chancellor of the Duchy of Lancaster’s rather long speech, which mentioned Franklin Roosevelt 17 times. [Interruption.] I see Members nodding. Let me tell the House about Roosevelt: he put 3 million people back to work in the Civilian Conservation Corps. We need that kind of ambition on retrofit; on manufacturing low-carbon engines; on adapting our towns and cities to walking and cycling; on creating green spaces; and on reforesting and rewilding. We need what I call a zero-carbon army as part of a youth jobs fund.

We should see all these things as part of the green new deal because—this is the point—we face an unemployment emergency in this country. We should be under no illusions: a million young people are forecast to be out of work this year. We need a scale of action that matches that. That is my point. The Government measures we have supported over the past few months have recognised the power of active government in a crisis like this. My appeal to the Government is not to shrink from that now, because we are just at the beginning.

To conclude, we welcome the Bill as a step to help the hospitality and construction industry to reopen, but it is not nearly enough. The Government have shown that they are willing to take action, but we face the deepest and sharpest recession, possibly for hundreds of years, and Government power has to be continued to be used. The decisions taken by the Government in the coming weeks will determine how many jobs are lost and how many businesses survive. The commitment to do whatever it takes cannot be a hollow promise. We are calling for an extension to the furlough for specific sectors; an urgent job-creation programme with a green recovery at its heart; and real action on infrastructure, not just words. I urge the Government not to step back when our economy, our businesses and our workers desperately need support.

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

It is a pleasure to speak after my hon. Friend the Member for Arundel and South Downs (Andrew Griffith), and an even greater pleasure to speak after my hon. Friends the Members for South Ribble (Katherine Fletcher) and for Sedgefield (Paul Howell), who made wonderful maiden speeches. It is great to hear those regional voices. They are from the north and for the north, and they will add to the compelling case to rebalance this country by further investment in the north. It is great to hear them make that case.

I will focus most of my comments on clause 12, but I welcome all measures in the Bill, particularly the aid to the hospitality sector. I have some fine hostelries in my constituency, including, I have to say, the world’s best restaurant, as identified by TripAdvisor—the Black Swan at Oldstead. It is a wonderful place, about four miles from my house, and is run by celebrity chef Tommy Banks, a local person from a local family. It has a wonderful back story. There are many, many good restaurants through my patch, and they will get lots of support through the Bill.

Clause 12 talks about bounce back loans, which have been a huge success of the Government’s and an excellent scheme that many businesses have taken advantage of; I think about a million businesses have secured a bounce back loan. The scheme gets money out the door as quickly as possible to businesses in need. It is fair to say that because of the length and depth of this crisis, not every business will get through this recession. This is the third recession that I have been involved in with my business, and it is no doubt the most difficult.

It is absolutely right that we have suspended the provisions of the Consumer Credit Act to get that money out the door quickly, so that lenders did not have the responsibility of ensuring that businesses were creditworthy for the amounts of money they were taking. The worry is what happens down the line. I am the co-chair of the all-party group on fair business banking, which has spent much of the last decade trying to fight for justice for lots of businesses that were badly treated in 2008 and post 2008. We desperately want to make sure that that does not happen again.

It was great to hear the Secretary of State confirm in his opening remarks that although the Consumer Credit Act provisions have been suspended in terms of credit worthiness, they have not been suspended in terms of collection, which should mean that lenders show forbearance if things go wrong. Inevitably, some businesses will need help to get through this, and, sadly, some businesses will simply fail, but we have to ensure that those businesses are treated fairly through the process. For our larger banks, which are regulated firms, there is now the senior managers regime, which has a requirement to treat customers fairly through the process and a requirement to stick to the Lending Standards Board standards of lending practice for business customers. That is good, because there are checks and balances that we can apply to the bigger banks.

I sound a note of caution, though. Quite a few lenders are distributing loans through this scheme that are not regulated firms, so they do not come under that regime. Additionally, I believe that some of them are not even accountable to the Financial Ombudsman Service, so if there is a dispute there is not a means of alternative dispute resolution. We have to ensure that the message goes out loud and clear to lenders that have distributed money through these schemes that they must treat customers fairly through that process if things go wrong and ensure that any restructuring gives that business every chance of staying in business and getting through this crisis.

The loan scheme has been a huge success. One of the big successes in the SME lending market over the last few years has been the emergence of FinTech sector alternative lenders, which is breaking the stranglehold of the big four banks. Some 80% of SME lending is controlled by the big four banks, and we want to see much more choice for SMEs in their borrowing decisions. The British Business Bank has authorised about 80 lenders for the CBIL scheme and about 20 lenders for the bounce back loan scheme. The difficulty is that it is not just about getting authorisation; it is also about getting access to funds. The big banks, being deposit takers, get access to something called the term funding scheme. They can borrow money from the Bank of England at 0.1%, so if they are lending money at 2.5%, 3% or 4% through the CBIL scheme, that still makes commercial sense, and they have access to moneys.

Non-bank lenders—FinTech companies such as Funding Circle, Tide and iwoca—and lots of lenders in the asset finance space do not get access to the term funding scheme. They are relying on borrowing from their normal sources—wholesale markets—and they cannot borrow as cheaply. The Government loan guarantee also specifically excludes situations where money is being borrowed from third parties. That puts these lenders in a very difficult situation. Tide had secured £500 million to distribute to UK businesses through an EU wholesale funder, but it could not provide that money because of the lack of guarantee for that lending. The Treasury is aware of that, and we need to deal with it, to ensure that the choice of finance provision is as wide as possible for our SMEs. The other way to deal with this is for the banks that can access the term funding scheme to simply on-lend to non-bank lenders, but that is not working currently. This is a work in progress, and we need to deal with it.

As a number of Members have said, bounce back loans are relatively easy to get, whereas CBILs are much more difficult to get. It is possible to move from one to the other—a company can get a bounce back loan quickly and then upgrade to a CBIL of a higher amount, to pay off the original loan. That is right and proper, but lots of businesses are not managing to get CBILs because the criteria are stricter. One reason behind that is that there are restrictions on state aid, one of which is that undertakings in difficulty cannot be supported through those schemes at the moment. The EU has said that it will drop that requirement, which is good—it is an EU requirement, and we are still bound by that currently—but we need to implement that quickly, so that more businesses can get access to the CBIL scheme and borrow as they need more money. That aside, this is an excellent Bill. I will be supporting it if we go through the Division Lobbies, and I very much welcome it.