Covid-19: Economic Recovery

Lord Lancaster of Kimbolton Excerpts

Tuesday 20th April 2021 Grand Committee

[Lord Lancaster of Kimbolton (Con)]

My Lords, I welcome the opportunity to take part in this timely and important debate and, in particular, to follow the thoughtful contribution of my noble friend Lady Noakes. Although she clearly feels that the Government have perhaps put too great an emphasis on protecting the health service from the cost of the economic impact, she highlighted the challenge that they faced in their approach. In effect, we are talking about the three points of a triangle: one point represents the economic impact; one point represents the physical impact; and the third point represents the welfare of the nation. In trying to keep the ball in the middle of that triangle, as soon as you protect one corner, it has a disproportionate impact on the other two. In hindsight, the Government may not have got it entirely right, but I for one do not underestimate the challenge that they faced in trying to maintain a balance between those points of the triangle.

In my brief comments, I want to cover two distinct areas. First, I want to recognise the contribution that the Government have made in delivering financial support to the economy. Secondly, as a key plank in helping to deliver the economic recovery as we transition from these emergency measures, I urge the Government to look carefully at the ways in which we can support individuals, not only through updating and maintaining their skills but potentially through retraining them to ensure that we as a nation have the skilled workforce that we need.

As we have heard, there can be little doubt that the Government have stepped up to the plate and delivered when it comes to offering the economy financial support throughout the crisis, seeking as they have to protect people’s jobs and livelihoods while also supporting business and public services. As of the end of February, the Government claimed in their response to the Economic Affairs Committee’s report on Covid and the economy to have

“spent over £280 billion since March 2020”.

This has already been updated to £352 billion, and is still rising.

In its report, The Cost of Coronavirus, the Institute for Government states:

“The deficit is now expected to be £394bn in 2020/21, which is £339bn higher than had been anticipated before public health restrictions were first imposed back in March.”


I find it remarkable that some still claim that the Government have not done enough. Of course, the deficit is set to be so extraordinarily high because, as the Institute for Government states:

“The government has taken a raft of actions in response to coronavirus, most of which have involved additional spending. These can be divided into three areas: support for businesses, support for households and support for public services.”


Although the exact figures are still unknown, the Institute for Government conservatively estimates:

“Additional support to help businesses weather coronavirus is expected to cost £66bn. Of this, £44bn”


has been in the form of loans, tax deferrals, business rates relief, and general and sector-specific

“grants to businesses in badly affected sectors (such as hospitality and leisure).”

That area was mentioned by my noble friend Lady Noakes.

The Institute for Government goes on to say that “the remainder”—£22 billion—“is through tax changes” and further states:

“The biggest single cost is the anticipated future write-off of loans which the government has guaranteed. In total, £87bn is expected to be loaned to businesses under three separate schemes. Of that, the government is expected to have to foot the bill for £31bn that is expected never to be repaid.”


This, I confess, causes me some concern. Of course some businesses will not recover and will be unable to pay back loans but, equally, I hope that my noble friend the Minister can reassure me that the Government will not be too quick to write off loans but, rather, will work closely with the private sector to put in place realistic schemes where at least part of these loans might be recovered for the public purse without hampering growth.

As the Institute for Government states:

“Support for households has been provided through three policies … First, existing benefits have been made more generous, most importantly through a £20-per-week increase in Universal Credit payments”.


Given the pandemic, that is a reasonable move. However, I urge my noble friend to resist the calls for an early decision on whether this should be made permanent or at least not end until the autumn.

Of course, the largest programme of support is the Coronavirus Job Retention Scheme, or furlough scheme. As the Institute for Government states:

“At its height, it supported over nine million jobs”.


It has undoubtedly been a lifeline for many families across the UK, as the third strand—the Self-employment Income Support Scheme—equally has been. I welcome the fact that both these schemes will be extended until September.

It is clear that the economic package of support, which continues to provide businesses and individuals with certainty over this period, has been one of the most generous in the world. Although we can rightly be proud of that, it presents some major challenges—the obvious one being how the nation will pay for it, which my noble friend the Minister addressed in part in her opening remarks. There are also secondary challenges, such as those faced by some of the workforce. Through no fault of their own, they have not only got out of the routine of work but may find that their skills are out of date. Indeed, they may face the prospect of being forced to retrain as their jobs—or whole sectors, in some cases—simply do not exist anymore.

As we look to the future, there is little doubt that much will never be quite the same again as the nation adapts to new ways of working and, in particular, the use of technology becomes the norm. Some might view this as a threat, but I genuinely believe that it is an opportunity to be grasped. While working from home is neither possible nor suitable for everybody, the opportunities and flexibility it brings will, I hope, continue to be encouraged and recognised by government, not least for the positive environmental impact it has through a reduction of vehicle journeys. There are, of course, downsides. We are social beasts and human interaction plays an important part in our lives, so clearly a balance needs to be struck.

As I have mentioned, for some it will simply not be possible to return to their previous profession. I will briefly turn to the need and opportunity to retrain and the support offered by government. In recognising the need for some to retrain if the economy rebalances itself as part of our road to recovery, I note that there has been some criticism that the Government have not made training more integral to schemes such as the CJR scheme. This is probably an unfair criticism, not least because of the speed with which this and other schemes had to be introduced, but also due to the underlying desire to keep schemes simple to administer and access.

In reality, the CJR scheme has never presented a barrier to training. Employees can undertake training while on furlough, and existing schemes provide an appropriate route for employers to access high-quality training and prepare individuals for the jobs of the future. It is also, of course, why the 2020 spending review committed funding for the Prime Minister’s lifetime skills guarantee, which will help adults to retrain and get into sustainable jobs, and give employers the skilled workers that they need.

The offer of free qualifications at level 3 for eligible adults in courses focused on these skills is welcome, and the full list of free level 3 courses for adult was published in February. While it is comprehensive, I ask my noble friend: what plans are there to review this list of courses to ensure that they mirror the skills employers require? I am equally pleased to see that the Department for Education has introduced flexibilities to ensure that furloughed apprentices can continue their training and assessments.

It is right that the Government have put front and centre access to skills and training, especially for those unemployed or at risk of unemployment as part of their economic response to the crisis. The approach of offering these schemes in parallel to employment support schemes such as the CJR, rather than wrapping them together and running the risk of making them overly complex, is, on balance, the right approach.

However, there is one area that has in my view been overlooked and that I will press my noble friend on: the opportunity for adults to retrain at degree level through distance learning for equivalent or lower qualifications. I should declare my interest in and long links with the Open University, whose headquarters are based in my former constituency in Milton Keynes. As the Minister might been aware, it has been a bone of contention for some time that those who already have a degree and are studying for an equivalent or lower qualification cannot access the same level of support that those studying for their first degree can. This dates back to a decision made by the last Labour Government and is, in my view, a mistake, especially now as so many adults look to retrain.

I simply ask my noble friend whether now is the time for the Government to look again at this issue. It also raises the wider point that, as people may look to update or refresh their skills, the reality is that they will be unable to study full-time but will look to institutions such as the OU to study part-time while continuing to work. For some time now the part-time sector has been disadvantaged in the support offered by government. Given the sector’s obvious importance, I seek assurance from my noble friend that the Government will look with fresh eyes post pandemic at the opportunities that institutions such as the Open University offer when it comes to delivering the skills we will need to recover from the pandemic.