Covid-19 Economic Support Package

Neil O'Brien Excerpts

Wednesday 14th October 2020 Commons Chamber

[Anneliese Dodds]

I am very pleased and grateful that she has. She will then understand SAGE’s prediction that the infection is rising across the country, including in rural areas and coastal areas. Unless we take action and deal with that now, the problems that we are experiencing around business confidence, which are costing jobs and forcing businesses to the wall, will only continue. We need to give ourselves a fighting chance that we can approach Christmas, which is so important for businesses in this country, without the current rising levels of infection. I am concerned about the future of this economy, and I want a Government who have that long-sighted approach, rather than one who lurch from crisis to crisis.

We should have had a back-to-work Budget in July, but, instead, we got a summer statement, including a last-minute bonus scheme that will see £2.6 billion of public money handed over to firms that do not need it. In September, Labour set out three steps for a better, more secure economic future to recover jobs, retrain workers and rebuild business. Instead, after we summoned him to the House, we got the Chancellor’s winter economy plan and a wage support scheme that does not meet the core test of incentivising employers to keep staff on part-time rather than let them go. Two weeks later, the Chancellor was back trying to fix problems with that scheme, as it became rapidly apparent that the health crisis was careering away from the Government and economic support was not keeping pace. Last Friday and this Monday, we had yet more announcements, which create as many questions as the answer.

I regret that these issues were not faced up to largely yesterday during the urgent question that I brought to the House, so I will try again. This time I can ask the Chancellor directly. Why have the Government adopted such an inconsistent approach to financial support for businesses in affected areas? Leicester, Oadby and Wigston had to wait a month to get the £7.30 per head in support that they were belatedly provided with. The initial funding for Liverpool City Region, Warrington, Hartlepool and Middlesbrough was, in contrast, £3.49 a head, but not for businesses; that was for covid-related action.

Last Friday, the Chancellor rebranded £100 million of funding for local councils as surge funding, with no details of how it would be allocated and the admission that £20 million had already been spent. On Monday, the Prime Minister spoke of more funding to local authorities, but again without details of how that money would be allocated—although apparently not to support local businesses. This situation is a mess. When local leaders are crying out for certainty, they need to know that if additional restrictions are coming, there is a clear and agreed formula for how much economic support they receive and how it will be deployed.

[Neil O’Brien (Harborough) (Con)]

The hon. Lady mentioned Oadby and Wigston in my constituency; the Chancellor moved incredibly quickly to provide extra business support to my constituency. We had a different lockdown from that everywhere else and it worked: we have brought cases down from 160 to 25 per 100,000. That is an example of why the local approach is the right one and why her colleague the shadow Secretary of State for Health and Social Care, the hon. Member for Leicester South (Jonathan Ashworth), was right to say yesterday that what the hon. Lady is now suggesting would be disastrous.

[Anneliese Dodds]

I regret to say that the hon. Member, for whom I have a lot of respect, is sadly confused. It would have been useful if he had listened to the point that I just made, which was to provide contrast to the support that was provided to the Leicester area, specifically focused on businesses. I believe that negotiation occurred through the local business improvement district, the local enterprise partnership and local authorities, to ensure that that support was there for businesses—for his area, yes. Can he please intervene on me now to say which other areas of the country subject to additional restrictions have received funding specifically focused on businesses of that type? No, he cannot, because that support has not been provided to other places in the same manner as it was provided to Leicester. This lack of consistency is causing enormous problems for local authorities.

[Neil O’Brien]

rose—

[Anneliese Dodds]

Perhaps the hon. Member has discovered another area; I am happy to take his intervention.

[Neil O’Brien]

The hon. Lady invited an intervention; I thought it would be unchivalrous not to provide one. Money was provided for my constituency because pubs had been shut. Yesterday, the Labour party voted against shutting pubs at 10 pm, but in favour of shutting down the entire economy instead. The idea that that is a proportionate response is absurd.

[Anneliese Dodds]

I regret that the hon. Member did not answer the question that I asked him, which was whether he knew of any other area of the country that had been treated in the same way as his constituency by being provided with business-related support. He could not answer that question; the reason why is that it appears that no other area has been. A radically different approach is being taken to different parts of the country, so local leaders and local businesses cannot plan because they do not know whether or not support will be there.

--- Later in debate ---

[Neil O’Brien (Harborough) (Con)]

It is a pleasure to follow such a good and impassioned speech.

Let me start with two important bits of context. The first is that this country and this Government are providing much more support to the economy and to preserve jobs and livelihoods than comparable countries. According to a report by the Institute for Fiscal Studies earlier this week, while France, Germany and the US are spending about 7% of GDP to support jobs, the UK is spending about 12% of GDP, so it is a much more powerful intervention to help people and preserve livelihoods. That is quite right, because, of course, we want to avoid the scarring effects of unemployment and to keep businesses that are viable together.

The second bit of context leads on from that, which is that, according to the IFS, we will borrow £350 billion this year, or 17% of GDP. It is the case not only that we have never borrowed so much before in our entire peacetime history, but that it is more than we have often borrowed in wartime—more than we borrowed in the first year of the second world war. Although the vigorous action that the Chancellor and his Ministers are taking is quite right, we would be wrong to think that this is consequence free. We must spend on a grand scale and we must spend quickly, but we must also spend wisely.  

Although many Members may suggest different things we could do additionally, it is important to take stock of what we have done so far. We have had the furlough scheme and its equivalent for the self-employed, which have helped 18,300 people keep their jobs in my constituency alone. That is an amazing achievement: a huge public sector IT project delivered by civil servants without any problems. We should be thankful to them for that fantastic achievement. We now have the job support scheme, which is more generous than the equivalents in France and Germany. Unlike in the US, where no such scheme exists and people are just on their own, we are going to help people to keep their jobs. In addition, there are all the other things we are doing to keep jobs: the £57 billion-worth of loans across the different schemes, with £51 million handed out in my constituency alone; the VAT cut for hospitality and the deferment of VAT across the board, which has put £30 billion into businesses’ cash flow; the grants of up to £25,000 for businesses, and £20 million going to businesses in my constituency in hospitality alone; the business rates holiday; and the eat out to help out scheme, which has pumped half a million pounds into cafés in my constituency alone.

As well as protecting jobs, we have also protected incomes. We have boosted universal credit by £1,000 a year; we have spent £8 billion in total on extra welfare and a hardship fund; we have introduced a mortgage holiday that has helped one in six people with a mortgage in this country; and, most importantly of all, we are taking steps to create new jobs, with £2 billion for the kickstart scheme and a £1,000 bonus to take on new trainees. We are also abolishing stamp duty to get the housing market moving and creating new green jobs with home insulation schemes. We have the brilliant, visionary policy of giving every adult over the age of 23 the opportunity to get an A-level qualification wherever they are in their life course and not writing anybody off any more. That is a huge levelling up policy that we can be proud of.

A recent report for the think tank Onward pointed out that schemes such as the coronavirus business interruption loan scheme and the job retention scheme had helped to keep one in eight businesses in this country going and avoided a rise in unemployment of 5 million people. The Treasury can be rightly proud of averting that disaster, and I encourage the Chancellor, who has been so unorthodox in response to this unorthodox situation, to keep being unorthodox and keep thinking about ways in which we can create jobs. A lot of young people have lost out on their education and a lot of young people are looking for jobs, and perhaps we could bring the two of those things together. There is still more we can do to create employment and new opportunities.

The last thing I wish to say is about the big picture. Local lockdowns do work. Leicester’s did work, as we brought the cases down from 160 per 100,000 to 25 per 100,000. If we can make that work, it is much the best way for this country to go in order to avoid real hardship. There have to be real lockdowns. We have to crack on with it and act quickly, and I am frustrated that some leaders in the north are not doing that. If we can make a targeted approach work, that is must the best way to go and that is the best future for this country.