Economy: Update

Lord O'Neill of Gatley Excerpts

Tuesday 28th April 2020 Lords Chamber

[Lord Agnew of Oulton]

I share my noble friend’s concern for these particular sectors, and I understand absolutely where she is coming from. It is worth reiterating the specific support which has already been made available. I refer to the 100% holiday for business rates which is estimated to be worth £11 billion just to English businesses, as well as the grant system. Some 203,000 properties are eligible for a £10,000 grant and 120,000 properties are eligible for a £25,000 grant which in aggregate comes to around £5 billion. I also refer to the bounce-back loans which were announced yesterday since they will be some which these businesses can take advantage of. However, I repeat that I share my noble friend’s concerns.

[Lord O’Neill of Gatley (CB)]

My Lords, I would like to thank and congratulate the Chancellor and his advisers in the Treasury for speed and agility of their economic policy response. I recall that in his response to our debate on 18 March, the Minister described my proposal for a version of a people’s QE as the most radical of any that had been proposed that day, yet within two days the Government announced what were essentially half of what I proposed, particularly that which related to the furloughing scheme. I have had, and continue to have, many concerns about aspects of the loan scheme which relate to a couple of questions which have already been asked by other noble Lords. Will the Minister consider taking back to the Chancellor and the Treasury the following idea and question?

Why not, as I proposed specifically that day, link the two together and make the business support conditional on not gaming the furloughing system, and, along with that, further consider replacing aspects of the loan-based system with something more grant or equity related, where the Government could take a secondary type of equity stake, which would allow for small businesses in particular to plan for this uncertain future—especially ones such as those in hospitality. For them, the idea of taking a loan when they read and hear that a vaccine could still be 18 months in the future would, generally speaking, be a completely undesirable option. However, for the Government to directly support them in a way other than encouraging debt would be likely to be much more substantive and less damaging to the long-term outlook for the economy.

[Lord Agnew of Oulton]

I thank the noble Lord for his question and indeed for his perspicacity in the statements he made on 18 March, and on them becoming policy very shortly afterwards. In that light, if the noble Lord would like to write to me with his ideas, I assure him that I will follow that up with the Chancellor of the Exchequer and see what more we can do. I completely agree that we will need a more flexible and nuanced system as we move into the next phase of this crisis.