Finance Bill

Lord Lamont of Lerwick Excerpts

2nd reading & Committee negatived & 3rd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Friday 17th July 2020 Lords Chamber

[Lord Lamont of Lerwick (Con) [V]]

My Lords, I thank the Minister for his observations and applaud the bold measures taken by the Chancellor and the announcement last week. Taking the measures as a whole, the UK is, proportionately, giving a larger amount of fiscal support than Germany or Japan and about the same as America. The latest measures, including the furlough bonus scheme, may partially postpone the cliff edge back to January, but it is difficult to believe that we will avoid a tsunami of job losses.

The hard truth is this: no Finance Bill, no fiscal stimulus, no monetary stimulus can entirely compensate for the effects of restrictions such as lockdown and social distancing. Last week, for example, the Government announced a £1.75 billion package of assistance for the arts. It was well received—as well it might be, because it was extremely generous—but I doubt if it will result in theatres or concert venues putting on a single extra performance. Most of the money will go on mothballing facilities, because theatres would need to sell some three out of four seats. In the meantime, in South Korea, “Phantom of the Opera” is selling to packed houses because social distancing does not exist in theatres.

What is true for culture is true for the commercial sector in spades. Financial support is fine; lifting the restrictions is better and should be the goal, when health considerations of course allow. It would be good if Ministers could emphasise this more. Instead, some Ministers talk about social distancing being here to stay, or face masks being here for the foreseeable future. For an economy like ours, largely service-based, in which services depend partly on human proximity, social distancing is not easily compatible with them.

Sir Patrick Vallance has said that there is no reason why people should not work at home, but we have to consider the economic effects on our offices, on the City of London and on the hospitality sector. There is much debate about the cost of the Chancellor’s measures, which he has promised to address in the autumn. He does not need to act then, but he does need to set out a timetable to which he will consider acting in order to show that, long term, the finances will be sustainable.

There is, however, another cloud approaching: private and corporate indebtedness. The longer restrictions go on, the greater this becomes. Already in the US, some banks have made huge provisions. The new head of the OBR has warned of the possible need for a massive write-off of toxic Covid debt in order to stop the economy stagnating. The Chancellor has already rejected this, but I fear he may find, as politicians so often do, that words are for eating. He has been bold and I applaud it, but the difficult part is yet to come.