Support for SMEs: Covid-19

Owen Thompson Excerpts

Tuesday 10th November 2020 Westminster Hall

[Owen Thompson (Midlothian) (SNP)]

Sir Edward, it is a pleasure to serve under your chairmanship. I echo the congratulations to the hon. Member for Carshalton and Wallington (Elliot Colburn) for securing this debate, and also pay tribute to those petitioners who have contributed towards the petitions included in this.

After enduring so many months of hardship, it is good to be able to rise having heard some positive news yesterday about the possibility of a breakthrough in finding a vaccine. It is very early days, of course. If it meets its promises, it will still be a long time before the impact gives a much-needed shot in the arm to the beleaguered high streets around the country; to the shops, hotels, pubs, restaurants, warehouses, theatres, stadiums, offices and businesses of all shapes and sizes across the UK. The crisis drags on,and battle-weary SMEs that would normally be driving our economy have been almost driven into the ground, but at least we have this glimmer of light in the winter gloom; that there may be a solution on the horizon that will keep many of them from giving up the ghost altogether.

There are plenty of reasons for the Government not to give up on those businesses: the skilled and dedicated SMEs will turbocharge the UK’s recovery if we can get them through to the other side of the crisis. The first, crucial step was in extending the furlough scheme and the self-employment income support scheme for five months—albeit belatedly. That was certainly welcome. It would have been helpful if that announcement had not been made so late in the day, as it might have prevented some of the job losses that we have seen but, as with the Brexit negotiations, we have seen that the Government has a habit of sometimes leaving these things to last-minute chaos.

Prior to the announcement, the devolved Governments, and the local administrations in the north of England, had been crying out for the expansion of the levels of support that were so desperately needed to protect jobs. I still cannot understand why those calls fell on deaf ears, yet, when a lockdown was announced for the south of England, a far more generous 80% furlough package was suddenly made available again. I am sure that that was just a coincidence—I am absolutely sure of that—but while it is definitely better late than never, the Scottish Government’s public health policies should not have to be hindered in this way. While furlough extension is essential, the second wave will hit far harder than the first, and it is only a part of the solution. Many SMEs are so heavily reliant on this golden quarter to balance the books that lockdown is crippling cash flow, and that will be felt well into next year.

The need for tough pandemic restrictions is particularly devastating to the hospitality sector and its employers, as was so well outlined by the hon. Member for Strangford (Jim Shannon). It is necessary, but that does not make it any easier for those businesses. Prior to the second lockdown, Q2 GDP data showed a 20% decline in the UK economy; for the hospitality sector, this was around 85%. In September, only 7% of businesses surveyed by UKHospitality were feeling in any way confident about the next 12 months.

Many SMEs have had very few good trading days over the last eight months. In events, some businesses are operating at only 5% of turnover or less. SMEs have already used up their rainy-day resources and have built up debt from the Government-backed loans, where they could get one—and we have already heard some of the issues around that this afternoon. They are now worried about how to pay non-staff costs, and how much of the big-ticket grants announcements will actually reach them once they are spread out across all other businesses.

It was good to see the live events sector get a specific mention in the £1.1 billion additional support package allocated to councils in England to support businesses, and the Barnett consequentials associated with that for devolved Governments. However, it is a widely-shared pot, allocated at £20 per head, and the devil will be in the detail of its distribution.

I also welcome the £2.38 billion provided by the Scottish Government to support businesses, including the £48 million fund for employers and businesses impacted by recent restrictions; a monthly grant support coming back, with the ongoing five-level tier framework; and the £11 million contingency fund recently announced for businesses, including nightclubs and soft play areas, which had missed out on other supports. I realise that this will not make up for lost revenue at this time, but the Scottish Government lack the big economic levers and borrowing powers that they need, and are making the best of the resources at their disposal.

I look forward to the day when we do not need to have this debate any more—when bad karaoke is back in the pubs and live gatherings can get going again with all the disparate jobs that they support, from lighting technicians, musicians and planners to caterers and technology manufacturers. Events support about 1 million jobs. When able to run, they contribute billions of pounds to the economy every year. Perhaps because those jobs do not fit neatly into the existing characterisations, the sector has missed out on so much targeted support so far.

The #WeMakeEvents campaign has very helpfully suggested sector-specific measures to help the industry survive, such as a government-backed insurance scheme to ensure organisers can recover costs if lockdowns happen. During a previous debate I led on this topic, the Minister agreed that the UK Government were willing to engage with the campaign, although no meeting has yet been arranged. I invite the Minister again today to see what can be done to move that forward.

We also need to look at the replacements for the coronavirus business interruption loan scheme. We had a lengthy debate on that in the main Chamber last week. To avoid going over old ground again, I will not repeat too many of those points, but I think it is very clear that Members from all sides of the Chamber recognise the need to look in a level of detail at a number of issues associated with those loans. From my point of view, we would far rather see these as grants. Again, I suggest it would be far more sensible to write off these debts for struggling SMEs and look at more innovative grant and equity-based solutions to stimulate the economy as we go forward.

[Kevin Hollinrake]

We agree on a lot, but we differ on this point. How would it be fair to write off that kind of debt and make grants when some businesses have not taken a loan and other businesses will pay back those loans? How fair would it be to those businesses and to the taxpayers who have funded those loans?

[Owen Thompson]

I hear the point that the hon. Gentleman makes. We had an exchange on this on Thursday. We are in a situation where the current system is not fair for millions of people who get no support whatever. We need to do whatever we can to make sure that our high streets are not utterly decimated when we get to the end of this pandemic. I suggest that is one measure that could be taken that would absolutely guarantee the future of those businesses.

I turn to consider those running small businesses from their homes—swimming instructors or travel agents whose activities are not currently available to the extent that they were before, or those who rely on large gatherings. Here, I draw attention to the Showmen’s Guild, which has effectively been closed down for a year, but because their members operate from home, they have not qualified for any support so far. Vast numbers of individuals in households and businesses have seen their income falling perhaps by 100% in some situations. They are at risk of losing their homes and cannot get the support they need. Why are the Government not wrapping their arms around them? Why is their plight still ignored? It is an unedifying consequence of this virus that the privileged members of our Government can determine which businesses are viable, what cultural events are important to save, and who gets support through a crisis or who should simply retrain in cyber.

This is an emergency, and we need to make sure that a lifeline is available to all those who need it, not just those who fit the mould of support schemes that were created hastily. I look forward to the day when SMEs can just get on with it again and think of their business, rather than what support is available, but that is a long way off. As we focus our collective efforts on following guidance to drive down the virus, the Government must make sure the measures are in place to protect jobs and businesses while we all seek to save lives.

Covid-19 Economic Support Package

Owen Thompson Excerpts

Wednesday 14th October 2020 Commons Chamber

[Owen Thompson (Midlothian) (SNP)]

It is a pleasure to follow the hon. Member for Coventry North West (Taiwo Owatemi).

It is with something of a sense of déjà vu that I rise to speak with the Economic Secretary to the Treasury sat on the Front Bench, having had exchanges with him yesterday in a Westminster Hall debate on financial support for the events industry. I do not intend to go over the same ground today—I am sure that he will be glad to hear that—but, as with so many issues, the lack of support for those in the events industry extends much further. As I said, though, we covered much of that yesterday.

These are businesses that we just cannot abandon—businesses that are successful and will be successful again very soon. If support could be made available, it could see them over the hill. We cannot pretend that 22% of the wage bill will be even close to enough for employers to keep on staff when many are in a worse position than they were in March and when restrictions are still preventing them from carrying out their main business.

Many fantastic high-turnover businesses, such as Saltire Hospitality in my constituency, have seen the major events that they normally supply cancelled—they simply have not been able to take place during the covid pandemic. Saltire Hospitality has changed its business—it has pivoted and tried different ideas—again and again to adapt to changing circumstances, and it will have a full diary when events and conferences get up and running again. But where is the support from the Government to get it there? Such successful and viable businesses are put at real risk if the Government fail to listen.

I welcome the recognition that some extension of support was needed for wages, although it came late in the day, and I welcome the continuation of the 5% VAT rate for hospitality until 31 March, although, as my hon. Friend the Member for Glasgow East (David Linden) suggested, we would like to see that extended far more. Sadly, this support is simply not enough to halt the frightening tsunami of job losses that we can all see on the horizon.

The self-employed have all been abandoned, with the 70% profit replacement reduced to just 20%, and there is still nothing for the 3 million excluded from any support at all. The financial support available is half-hearted at a time when we need the Government to stay fully committed to doing “whatever it takes”, as the Chancellor said.

The Labour party is today asking the Government to go further, and I support that. The Scottish Government are already taking action to plug the gaps in support where they can, providing tailored packages above and beyond the Barnett consequentials, including the new £40 million fund for firms that are having to close. They are finding resources from a very limited budget and spending them wisely, something that this Government are not best known for; they could do much to learn from the Scottish Government. One wonders how many businesses could have been comfortably supported with the botched billions that have been blown on dodgy private contracts with Tory cronies and the unnecessary costs of building the Brexit border.

However welcome Scottish Government action is, without serious rethinking of the job support scheme, they are papering over cracks in a sea wall just before the tsunami hits. If this Government will not act, they should provide the Scottish Government with the fiscal levers that Scotland needs to take the right decisions to protect jobs and lives wherever necessary. Decisions on available support are not carved in stone; they are made by a small group of people with big responsibilities on their shoulders. It is a political choice, and based on the actions this Government are not taking at the moment, it is a short-sighted one. The Scottish Government calculate that extending furlough would save 61,000 jobs in Scotland. The good news is that these are decisions that can be rethought, and I urge the Government to do so for the sake of all our futures.

Fiscal Support for Events Industry: Covid-19

Owen Thompson Excerpts

Tuesday 13th October 2020 Westminster Hall

[Owen Thompson (Midlothian) (SNP)]

I beg to move,

That this House has considered fiscal support for the events industry during the covid-19 outbreak.

It is a pleasure to serve under your chairmanship, Mr Davies. There are plenty of events happening these days, but unfortunately they are not the kind of events that we want. Ever-changing political events related to the global pandemic have devastatingly disrupted our ability to take part in the more fun kind of events and our ability to mix and gather safely. Usually, the UK has a truly world-beating, year-round programme of cultural activities: music, theatre, arts and outdoor festivals, as well as conferences, ceremonies and shows—events that happen thanks to the collective efforts of a diverse, trained and skilled workforce that employs around 1 million people. Those events bring us together, inspire us and lift our spirits. Sadly, since March 2020, the cultural map of events has been all but wiped out, and those events have been held only via computer screens. This vibrant sector has been brought to its knees.

I support the need to take action to tackle the increasing spread of the virus. Balancing public health against economic damage is clearly very tricky, although there is no single step more important than controlling the virus when it comes to getting things running again properly in the events sector. Not only are professionals in the events industry keen to follow the rules, but they could help to frame future solutions. The British Events Industry Coalition has members who have expertise in planning and running safe events of all shapes and sizes. They would be delighted to lend their health and safety knowledge and industry experience to help frame future regulation. They have innovative ideas, such as a formal BEIC safety kitemark system, by means of which events could demonstrate adherence to standards, boosting public confidence and getting people back through the gates when guidance allows. I hope that the Minister will be willing to work with industry on that, and I look forward to his response.

Last month, I asked the Prime Minister what to tell constituents in successful, viable businesses whose jobs rely on live events, and he said that it was better that they “get back into work”. I am sure that they would all agree; everyone in the events industry is itching to get back to doing what they are so brilliant at doing, and to pursue careers that they worked so hard to achieve. However, I have to say that the Prime Minister’s response was somewhat puzzling, given that my constituents still cannot do what they want under the Government’s restrictions, which either prevent events from running altogether or allow them merely to limp along in a financially unviable way.

Recently, the Chancellor made it clear what the Prime Minister meant by getting back into work: that people from all walks of life should retrain. To press that message, a Government-backed poster is doing the rounds featuring a young ballet dancer and rather gloomy text, which says that her next job could be in cyber but she does not know it yet. Forget the dedication, blood, sweat and tears and years of professional training for a career in the arts, and forget following passions—get stuck behind a computer. It is a worthy job, no doubt, but is that really the message we want to send to our aspiring young talent? Having tried unsuccessfully to get clarity from the Prime Minister on what he meant by “get back into work”, I hope the Minister can perhaps shed some light on this conundrum.

For those who are not sure what to retrain to do, the UK Government provided a handy quiz to help people find a suitable new career. It is a bit like one of those personality quizzes in glossy magazines that might be found in a dentist’s waiting room, and the results are equally ridiculous. On social media, I saw a choir conductor who was not too happy when advised to consider colon hydrotherapy as an alternative career. I had a go myself, and it suggested that I could perhaps be a football referee, although taking a second job that has something to do with football is clearly not something that a serious politician would consider—except, of course, the leader of the Scottish Conservatives, the hon. Member for Moray (Douglas Ross), who clearly has too much time on his hands. My hon. Friend the Member for Gordon (Richard Thomson) suggested to me yesterday that if the Prime Minister were to take the quiz, it might suggest that he retrain as a Prime Minister.

The UK Government’s response to the crisis faced by the events industry has been crass, to say the least. They showed a real lack of understanding of the value of the sector and the far-reaching consequences of letting these jobs simply vanish. These are skilled professionals in viable careers that form the backbone of the UK’s cultural and economic life. Why on earth would the Government give up on them?

[Jim Shannon (Strangford) (DUP)]

In my constituency, and in my council area of Ards and North Down, culture and the arts are vital. It is a core issue for the council, to promote jobs and help things go forward. Does the hon. Gentleman agree that, when it comes to events, whether in partnership with the National Trust or events companies, the council has a key role to play?

[Owen Thompson]

I absolutely agree. Local government across the islands plays a critical role in making sure events can take place, and in supporting events—particularly community events, which I will come to later.

It may be that, as some have suggested—I could never be so cruel as to do so—those in the Treasury do not actually value the arts, but they must surely respect the billions of pounds the arts bring into the coffers. If they do not understand the value of that income, perhaps they need to take the retraining website quiz themselves. Let us consider outdoor events alone. I thank the incredible volunteers at the “We Make Events” campaign for compiling the figures. Across the UK, 141.5 million people attended outdoor events in 2018, spending £39.5 billion and supporting 589,000 jobs, with a gross value added of £30.4 billion.

We are very good at running events. In these challenging times, we need to look at what we are good at, to support, encourage and protect those jobs. The great thing about this massive economic generator is that it is the opposite of London-centric. It meets the Government’s proclaimed levelling-up agenda and it provides jobs right across these isles, no more so than in my Midlothian constituency, which not only has a proud tradition of community events and gala days, but is home to many businesses and freelancers who work in the world’s most fabulous and famous global events right on our doorstep in Edinburgh.

In Scotland, prior to the pandemic, the creative industry was among the fastest growing sectors, supporting around £9 billion worth of activity in the Scottish economy. With its contribution growing by 62% from 2008 to 2017, across the UK the creative industries were growing at five times the rate of the economy as a whole, contributing £111.7 billion in gross value added, and creating jobs at three times the rate of the UK average in all parts of the country.

These businesses are not just viable; they are essential to the UK’s growth and recovery from the crisis. Culture and events are not frivolous add-ons, or optional luxuries when other more serious jobs are taken care of. They are central to our heritage, happiness and mental health—part of what it means to be a human being. This crisis has surely shown us just how valuable the arts are in creating resilient communities. Hard times have been eased by music, art and creativity, as people look for ways to come together virtually, while we cannot do it face to face.

Nobody in the sector is simply sitting back holding out for handouts. They want to work. Businesses are innovating and finding ways to adapt, and people are taking jobs wherever they can find them to survive. Performers are looking for platforms to share their talent in innovative ways, such as “Stars in their Homes”—run by a constituent of mine—in which performers take to Facebook at the weekend to bring a bit of joy into homes across the country. The fact remains, however, that all sorts of skilled professionals dependent on live events have been left in the cold with very little support: people in staging, lighting, security, audio-visual technology, sound engineers, promoters, planners, hospitality suppliers, photographers, florists, technology manufacturers—the list goes on. All of that is before we get into the associated hospitality links and benefits, but given the time constraints, that is perhaps one for another day.

The decision on what is viable seems to me utterly misguided. There are so many examples of successful businesses, such as the audio-visual technology specialists in my constituency, VisionEvents, which were operating a booming business at the top of their game internationally before covid-19 cut their legs out from under them. These are creative, self-sufficient companies doing fantastic work to adapt to virtual events, but there are limits and constraints on the income gap that can be covered virtually in the absence of live events.

There is and always will be a demand for events, but if we allow these jobs to be lost now, it will be very difficult to pick up again where we left off and we will lose the competitive advantage that the UK currently enjoys. The Minister will no doubt draw attention to the job support scheme extension, albeit limited, and the fiscal support for the arts. That is welcome; I make no bones about that. There are clearly details still to come, but the question remains whether that goes far enough to protect the industry and support those on the brink. These funds may help venues and organisations to plan and adapt, but huge networks of individuals and support services, such as those in the hire and supply sector, are making huge losses every day.

Sadly, so far the announcement does not look like it will stave off mass redundancies. Crucially, it still misses all those freelancers who fell through the gaps in the job retention and self-employed support schemes. An estimated 3 million people have been excluded, many in the arts, in jobs that do not quite fit the spreadsheets—Excel or not. Individuals who lost their income overnight could lose their home or be left to struggle in poverty if they are not given support until the sector can get back on its feet.

No doubt the Minister will point to the £1.5 billion culture recovery fund. That is essential and will be crucial for much of the infrastructure and keeping many venues alive, but a comparison with the billions that the arts generates each year really puts it into perspective. Also, it does little for boots on the ground. As the We Make Events survey that was published today shows, the vast majority in the live events sector do not benefit from the fund. I understand it is not fully allocated yet, so I hope the Government will consider extending its remit to cover the full range of the live events supply chain.

Like the furlough replacement, the fund appears to be targeted at regional lockdowns. Sadly, it will not reach many of the businesses that we have discussed today. The Chancellor famously said he will do whatever it takes, but he is falling short when it comes to the live events sector and the specific challenges that need to be addressed. I invite the Minister to commit to a meeting with industry representatives from the We Make Events campaign, which would be more than happy to work with him to find a solution to help the industry move forward. It has set out its asks that are vital to the sector in a way that will work, and it has a realistic financial plan supported by the CBI. Its campaign, like the industry itself, is a global leader, having spread to 28 countries around the world. Are we going to let such expertise wither as other countries recognise the need for support, or can we actually recognise the benefits that the arts and culture bring to society?

Covid-19: Future UK-EU Relationship

Owen Thompson Excerpts

Wednesday 15th July 2020 Commons Chamber

[Owen Thompson (Midlothian) (SNP)]

Mr Deputy Speaker, you would think it would be a no-brainer for the Government to extend the timetable for our Brexit transition. Given the global crisis that has engulfed all of our lives, to do anything else would be ludicrous—it would be like someone driving 30 miles to test their eyesight.

Trade agreements are long and complex processes, and the transition period was already tight before the covid crisis put a spanner in the works. Now any decent deal is looking beyond reach and there is not enough parliamentary time to properly scrutinise whatever might be agreed. Yet we have a Government who do not care about doing decent deals in the full light of day and have set their face against the scrutiny of their actions. Nailing the detail on even far easier questions is not a strength of this Administration. On the covid-19 strategy, for example, you would have thought that they would have had an angle on what they actually wanted to achieve by now. Yet when I asked the Government whether elimination was part of their plan, I received a holding reply on 6 July, telling me that the Government could not answer the question within the normal timeframe. How can we trust them with the timeframe for Brexit when they still do not even know what they expect to achieve from this situation?

This is not a principled Government, but a reckless one. We know that they were reckless with public health advice: Dominic Cummings’ hazy drive to Durham during lockdown is testimony to that. Public anger over the hypocrisy was brushed off and we were told to move on. It was another case of, “Do as we say, not as we do”.

The signs do not look good for post-Brexit decision either. Refusal to negotiate sensibly with our European partners has locked the UK out of the successful Galileo satellite programme. The Government have recently gambled £500 million in a share of a bankrupt satellite company, OneWeb, hoping that they can tack navigation capabilities on to the wrong type of satellites. I say £500 million, because that is what has been reported in the media, but when I asked the question formally, I was told that the figure could not be disclosed as it was commercially sensitive. There is no public scrutiny, no business plan and no risk assessment published for this decision, which, by all accounts, goes against the better judgment of experts such as those in the UK Space Agency. With activities such as these, is it any wonder that many people question whether this Government can even tell their arse from their elbow?

In 1995, George Robertson, the then shadow Secretary of State for Scotland, famously said:

“Devolution will kill Scottish nationalism stone dead.”

Here we are 25 years later, and the Scottish independence cause is very much alive and stronger than ever. Meanwhile, the uncompromising actions of British Brexiteers look like the actual move that will kill the Union stone dead. Devolution, albeit in its limited present form, has allowed the people of Scotland, Wales and Northern Ireland to develop their own solutions, rather than toeing the line from the Tories. It has let people across these isles know that their voices matter and that we can aspire to more, instead of just simply taking what we are given.

With Scotland’s modern, transparent Parliament in Holyrood, people have elected a Government who better reflect their views, respect evidence, listen to experts and care about the poor, but this current Tory Administration cannot allow such a thing. They seek to put us back in our box. They will dismantle the democratic structures, which were so hard won by the people of Scotland. Lord Robertson may not have had the most honourable intentions in backing a Scottish Parliament, but there were many in the Labour party who recognised and cherished its role. We, in the SNP, were together with Labour at that time, and we must stand together again now as the institutions are disgracefully disrespected by the actions of this Government.

As recently as 2015, Gordon Brown was promising greater devolution and home rule. It is unfortunate, therefore, that the party of home rule has apparently forgotten its roots, and that is certainly shown by the fact that there are so few of them here today, which is a pity.

[Jacob Young]

One.

[Owen Thompson]

Well, few.

This is a Government who have torn up the respect agenda, which was at least given lip service by their predecessors. The growing culture of disrespect has been brought into sharp focus with Brexit. Scotland voted to stay in the European Union by a strong majority in every constituent part. The hostility displayed towards Europe by Brexiteers—there was a thinly veiled xenophobia from some—was as abhorrent to those on these Benches as it was to the people whom we represent.

After the Brexit vote, the Scottish Government tried to find the least damaging compromise, yet it was rejected. On devolved competences, this Government have seen no need to negotiate and reach agreement with the Scottish Parliament and they just press ahead regardless. Their actions have not gone unnoticed. Now is the time for Scotland to rejoin our European cousins as an equal independent nation.

The Economy

Owen Thompson Excerpts

Wednesday 8th July 2020 Commons Chamber

[Owen Thompson (Midlothian) (SNP)]

There were lots of bribes and a lot of bluster in today’s statement, but very little on what will actually tackle the issues at the heart of society and expose those issues exaggerated by covid-19: the deep poverty and inequality endemic in society. The virus itself may not discriminate, but we know that the economic as well as the health impacts have been far more acutely suffered by those in poverty.

A recent Social Metrics Commission report found that 65% of those in work and in deep poverty have seen reduced hours or earnings, have been furloughed or have lost their jobs, compared with 35% of those who are comfortably above the poverty line. Families who are already struggling with in-work poverty and who cannot afford to lose their household income are those who are being most badly hit. They need hope. They do not need a meal deal; they need a new deal—no matter how much the Chancellor might like a cheeky Nando’s.

Covid-19 has caused a surge in the need for the UK’s welfare safety net, but that has been brutishly decimated over years by the UK Government’s austerity policies, described by a UN report as causing a

“systematic immiseration of a significant part of the British population”.

Covid-19 has made millions more reliant on that broken system. Recognising the impact of poverty, and taking steps to eradicate it for all, should be at the forefront of any response.

We also need to look again at the coronavirus business interruption loan scheme, and get the money flowing through to the businesses that need it. Uptake at the start was pitiful, and although some effort was made to improve the scheme—and some effort to massage the figures, some would say—too many companies are still being left without any support. Many are just surviving and cannot take on the weight of crippling additional debt, especially with the sky-high interest rates that some companies are offering for loans, with full Government accreditation. Instead of a hand up, many smaller businesses are being left to be hocked by unscrupulous lenders. The Government need to commit to turning those loans into grants instead of debt, to protect jobs and to ensure the survival of those businesses.

I want to give credit where credit is due. I certainly welcome the 5% VAT cut for hospitality. The Scottish Government have also called for a youth jobs guarantee, so I very much welcome today’s recognition of the need to centre on young people in the economic response. Young people from Midlothian’s youth platform recently met virtually with me to discuss the findings of a survey that they undertook to share the experiences that young people have faced through lockdown. It was worrying—I will be honest about that—and it showed the deep level of anxiety that young people felt about their futures, about jobs, about apprenticeships, and about their education. Many are in households where parents have lost their jobs and were struggling just to pay their bills, so it is hard to feel positive about their prospects. Action to help young people to see opportunities instead of struggles is certainly much needed.

Those who are excluded from the support so far have also been missed yet again today. There was an opportunity perhaps to recognise those who have been forgotten, although I accept that the Financial Secretary to the Treasury said yesterday that they had not been forgotten. I can only conclude that, if they have not been forgotten, it is an intentional act to exclude them.

I would have thought that this was an opportunity for working together respectfully, and for the four nations approach; yet a support measure that could have genuinely helped a lot of these people was universal basic income. When I asked the Department for Work and Pensions what intention it had of considering the findings of a study on that, it simply said that it was not even going to look at it. Inequalities need to be tackled. This was a chance for the Government to do that, and unfortunately I think it has been missed.

Coronavirus: Job-Support Schemes

Owen Thompson Excerpts

Tuesday 7th July 2020 Commons Chamber

[Owen Thompson (Midlothian) (SNP)]

A few months ago, the Chancellor spoke directly to those who had lost their livelihoods overnight. He said:

“To all those at home right now, anxious about the days ahead, I say this: you will not face this alone.”

Those were reassuring words, and they were backed up by a Government promise to do “whatever it takes” to keep the people of these isles healthy and financially secure. I heard no caveat at that time that included, “unless you are director of your own company”, “unless you are a freelancer” or “unless you are a contractor”.

The warm words do not ring true for those still struggling to keep their head above water. The Trussell Trust reported a staggering 89% rise in the need for emergency food parcels in April, so “whatever it takes” is clearly a lot more than what is being provided. It is not just a few on the periphery of the Chancellor’s vision who are missing out on this vital support. There is a roll call of people who have been forgotten that it would take a pair of blinkers to avoid seeing. Excluded UK estimates that around 3 million are missing out—some 10% of the workforce. Every constituency across the UK will have its own heartbreaking examples of hard-working people who somehow did not qualify for the schemes. These are individuals whose lives have been devastated. They are being let down by a Government who are not meeting their commitment to them. They include the newly self-employed, some of whom left good jobs over a year ago to invest and build their own businesses, but whose income collapsed when covid-19 took root; small limited companies that pay themselves partly through dividends; and freelancers who work multiple jobs.

When someone’s income is the wrong mix of self-employment or short PAYE contracts, neither scheme will help and the computer simply says no. That is the fate of many freelancers in the creative sector, which is so crucial to the economy around the Lothians. Those people do not always make a lot for themselves, but they contribute massively to the communities, our culture and the wider economy.

At the time of the launch of the self-employment income support scheme, the Chancellor said that 95% of those who were majority self-employed would be covered, and that most of those who would not be covered were high earners, but the evidence from countless cases suggests that simply is not the case. There are employees struggling who are not included in the furlough schemes because they picked the wrong time to change their jobs and seasonal workers whose bosses simply did not get the paperwork done in time. UKHospitality told the Treasury Committee that somewhere between 350,000 and 500,000 people in that sector were potentially missing out because they had not had their first payslip before the end of March.

There is growing unease among those who were furloughed that support will start to be tapered before they can build some earnings again and that their job will be on the line, too. We cannot simply shrug our shoulders and say “Too bad, mate”, to all those issues, blaming the complexities of the rules and saying that there are some who may try to bend them. Yes, there are challenges to making the system work, but in an emergency such as this it is the role of Government to put the people first. There is no excuse for missing anyone out.

Now is the time to finesse, improve and extend support for small and medium-sized businesses and freelancers, who will be more than willing to repay the Government’s efforts in their taxes over future years. Withdrawing support at a crucial time would be an economic disaster.

Fairness and equal treatment should be at the heart of action from HMRC, which is why I must mention my great disappointment that the Government refused to review the unfair application of the loan charge and to stop the IR35 tax law changes from pressing ahead. IR35 introduces yet another group of zero-hours employees. The Chancellor has listened to many of these concerns, and I know he has taken steps to resolve some of the issues in the past. I commend him for those efforts, but I urge him not only to keep listening, but to take action.

Economic Outlook and Furlough Scheme Changes

Owen Thompson Excerpts

Tuesday 16th June 2020 Commons Chamber

[Jesse Norman]

No, the rules are as laid out in the guidance on gov.uk. They have a start date at the end of the month and we are in the final three-week coronavirus job retention scheme period, but as my hon. Friend says, we are very much hoping for and working towards a much wider reopening after or around the first week of July. That will potentially be a critical move forward for the country in its response to the pandemic.

[Owen Thompson (Midlothian) (SNP)]

The Chancellor stated that his priority was

“to support people, protect jobs and businesses through this crisis”,

yet businesses are on a financial cliff edge. Given today’s employment and vacancy rates, and the OECD prediction that the UK is likely to suffer one of the worst slumps in the developed world, does the Minister share my concern that ending support schemes too early will simply push many off a precipice?

[Jesse Norman]

Of course we want to ensure that there is a phased return to normality. That is what the delay and the extension of the two schemes is designed to do, so we do recognise that concern. I remind the hon. Gentleman that the OECD has predicted the strongest bounce back for this country. That may well be because of our extremely flexible labour markets, from which I hope we continue to benefit as we come out of this dreadful situation.

Self-employed Persons: Financial Support

Owen Thompson Excerpts

Tuesday 24th March 2020 Commons Chamber

[Steve Barclay]

They are good points, and again they draw attention to the conflict between simplicity and addressing the various specific issues that Members have raised. One of those is seasonality, which obviously has an impact. That is why the design of the scheme is more complex than perhaps meets the eye, but we are looking at the issues and we intend to bring forward proposals in the coming days.

[Owen Thompson (Midlothian) (SNP)]

Like many other Members, I have been contacted by many self-employed people in my constituency who are welcoming of the support already offered, but in need of the absolute guarantee about what is still to come and quickly. Going into the shop to buy essential groceries for feeding their family and telling the checkout supervisor that the Chancellor says that they can pay for it soon is not going to get them their shopping, so how soon can we give that certainty?

[Steve Barclay]

We hope to bring forward proposals in the coming days. I absolutely appreciate the concern that the hon. Gentleman is quite rightly raising for his constituents. This does not address his specific question but, in part, that is why we have been strengthening the safety net of the welfare system, and why the main measures we have taken are to support the economy as a whole. That is the best way to get viable businesses, including the self-employed, back and earning money once we have dealt with the health emergency. We are looking at the specific issue of the self-employed, and we intend to bring forward proposals in the coming days.

Oral Answers to Questions

Owen Thompson Excerpts

Tuesday 24th March 2020 Commons Chamber

[Steve Barclay]

The hon. Lady will know from the statements made by my right hon. Friend the Secretary of State for Health and Social Care that significant efforts have been made on this, working with domestic manufacturers and procuring additional resource and stock internationally. On funding, we have been very clear with the Department of Health and Social Care that it will have whatever funding it needs, and that has been the case to date.

[Owen Thompson (Midlothian) (SNP)]

11. Whether he plans to reduce VAT for businesses affected by the covid-19 outbreak.

[The Financial Secretary to the Treasury (Jesse Norman)]

Last Friday, the Government announced that they were deferring VAT payments for the next quarter, so that UK VAT-registered businesses will not need to pay any VAT, alongside their normal VAT returns, until the end of June. That deferral is worth more than £30 billion, or 1.5% of GDP. Her Majesty’s Revenue and Customs already offers help to businesses struggling to meet their VAT payments, with arrangements such as Time to Pay. In the light of the covid-19 outbreak, the Chancellor has outlined a range of measures to help businesses through the crisis, including grants, loans and relief from business rates worth more than £330 billion. The Treasury will continue to review this and make further announcements as events unfold.

[Owen Thompson]

Scottish National party Members welcome the actions that have been announced so far by the Chancellor to support the economy during this outbreak. Given the particular strain felt by sectors such as hospitality, will the Minister consider reducing the VAT rate they are charged, in addition to the deferrals already announced?

[Jesse Norman]

I thank the hon. Gentleman for his question. He will be aware that those businesses will fall under the VAT announcements that have already been made for the next quarter and that they are also already the beneficiaries of grants of £10,000 for the smallest businesses and of £25,000 for larger ones in the hospitality, leisure and retail sectors.

Bank Branch Closures

Owen Thompson Excerpts

Wednesday 18th March 2020 Westminster Hall

[Owen Thompson (Midlothian) (SNP)]

I beg to move,

That this House has considered bank branch closures.

It is a great pleasure to serve under your chairmanship, Sir David. I will start my comments with a bit of nuancing. This debate was applied for and considered at a time before much of the current advice was put in place encouraging many of those in our communities who would be the natural users of a local bank branch to stay at home. Many of my comments calling for banks to remain open are therefore very much inclined towards the time when we get past the current situation and are returning to something of a more normal environment.

The debate is clearly taking place against the backdrop of an unprecedented public health crisis and grim news. One positive I already see emerging from that, though, is the mobilisation of communities to protect the most vulnerable among them. I hear tales of shops delivering groceries to older customers, of dog walkers dropping off prescriptions and of people sending kind messages to neighbours in isolation just to let them know that they matter. These are all hugely important to keep our communities functioning and working together through challenging times. It would be good to see the banks exhibit that same sense of public spiritedness, show a sense of responsibility to the communities they serve and at the very least call a halt to their closure programmes until we are through the current situation rather than quietly closing down branches never to open them again. I wrote to the Bank of Scotland urging it to consider that action.

The latest tranche of closures announced by Lloyds/Bank of Scotland comes after years of watching the vital network being decimated. Between 2012 and 2019, the UK lost 22% of its bank and building society branches. In 2017, about 10% of the rural population lived at least 10 miles away from their nearest branch. Scotland, with its highly rural population and more challenging demographics, saw a third of branches close in just nine years, with 610 closures between 2010 and 2018. The announcement in January from Lloyds Banking Group of 56 branch closures was still a little surprising as it came just a month after Bank of Scotland managing director Tara Foley was reported to have said at the opening of a hub in Glasgow that the bank was committed to its branch network and that branches were “not going anywhere.” Tell that to my constituents in Loanhead.

For hundreds of years, the Bank of Scotland was a respectable stalwart of the Edinburgh establishment, ahead of the field in finance and in finding innovative solutions to meet customer needs. Founded in July 1695 by an Act of the original Scottish Parliament, the independent one, the bank started opening branches back in 1774. It was the first bank in Europe to offer paper currency and, in 1826, fought a spirited campaign against attempts by the Westminster Parliament to outlaw its notes below £5. The campaign was much aided by the fantastic writer Walter Scott, whose head now adorns the bank’s modern notes, in tribute to that popular and successful campaign. I hope this campaign will be equally successful.

It is therefore disappointing to see the modern incarnation of this once proud brand making life so much harder for those who work with paper notes, wielding the axe so brutally against the communities that helped to build the bank. When the banks crashed in 2008, Lloyds Banking Group was one of the major recipients of the Government bail-out, to the tune of £20.3 billion and a 43% public stake. Now, public shares are paid back, profits are high and big bonuses have made a bit of a comeback. In 2018, Lloyds unveiled a £4 billion pay-out to shareholders, statutory profit before tax was up 13% and £464.5 million was given out in bonuses. Payment protection insurance pay-outs took its toll last year, with pre-tax profits down from £6 billion to a meagre £4.4 billion, so chief executive António Horta-Osório took one for the team, pocketing only £4.7 million, compared with £6.5 million the previous year. That is meagre, and it must be difficult to survive on such limited earnings. The idea that the bank cannot afford to maintain the existing branch network is therefore clearly nonsense.

My particular concern, as the MP for Midlothian, is the looming closure of the last bank in Loanhead. In fact, it affects not just Loanhead; that bank represents the only one in the communities of Loanhead, Bilston, Roslin, Rosewell, Straiton and Damhead. Many of my constituents beyond the town itself are clearly concerned about how they will access banking. The decision is staggering, with dire economic and social consequences for a town with a population of about 7,000 now, but set to rise rapidly with significant new housing developments. The Bank of Scotland has not taken that into account in coming to its conclusion.

Future growth will rely on start-ups and microbusinesses setting up in the area, so access to a banking service remains vital. About 20% of small businesses with turnover below £2 million use branches as their primary source of banking. Being able to get into the bank at a time suitable for them will clearly be critical. The sheer geography of Midlothian does not lend itself to a bank being even two or three miles away—the physical journey might not always be a straight or simple one.

The Select Committee on Scottish Affairs, in its 2019 report on access to financial services, stated:

“The impact of losing a bank is particularly is acute when it is the last bank in town”—

as in this situation. Statistics tell the same story. Research mapping branch closures against the British Bankers Association postcode lending data found that growth in lending to small and medium-sized enterprises was dampened by 63% on average in postcodes that lost a bank branch. When it was the last bank in town, that figure shot up to 104%. On average, postcodes that lose their last bank receive almost £1.6 million less in lending over the course of a year.

The Loanhead branch closing will without doubt damage this historic town economically, as it will the nearby communities of Bilston, Damhead and Roslin, all of which rely on that bank.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

I congratulate the hon. Gentleman on securing this debate. I recognise that he is talking about the Royal Bank of Scotland and Bank of Scotland groups, but the issue is truly UK-wide. I particularly noted his points about the last bank in town closing, because I am seeing that in Knaresborough, in my constituency. Does he agree that access to financial services and advice, alongside the banking services that he described, is particularly important at a time of great financial uncertainty, when people are anxious about their financial futures because of the coronavirus emergency?

[Owen Thompson]

I absolutely agree with the hon. Gentleman. It is absolutely critical that people have access to the best possible advice, especially now, where none of us really knows what situation we will be facing in a month or two months, never mind next week. It is critical that there is access to information and advice, and that that is easily accessible for all our communities across the country, wherever they happen to be.

Losing the last bank in town will increase the financial exclusion of our older and less mobile residents. Being able to go to the high street to do their finances is an important part of staying independent for many people. It is a lifeline. It is fair to say that banking habits have changed and the Loanhead branch, like most, is certainly less busy than it historically was. The figures in the bank’s own closing branch review found a 4% drop in counter transactions from personal customers over one year and an 8% drop when businesses are included. To me, that appears to be a fairly manageable figure, especially when we consider the town is set to expand significantly in the coming years.

It is also true that the majority of the population will be able to do much more of their business online. I am not denying that, but we do not always want to do business online, and certainly there are a number of people in our communities who cannot do their business online. Most of us appreciate being able to check balances and do transactions whenever we want, although we do not necessarily like it when the IT breaks down or we stumble over the pass codes. Even with that change in behaviour, a significant number of bank customers completely rely on the local branch; they do not even have a digital option.

The bank’s review found that 76% of customers sometimes use other branches, internet or telephone banking. That leaves almost a quarter of their customers who never use those other methods and are solely reliant on the branch. Many of them are in older age groups—44% of customers were over 55, 26% over 65 and 13% over 75. It is quite clearly the older population who will face the worst disruption from the proposed changes. According to Age Scotland, 67% of people over 75 do not use the internet at all. Many older people expressed frustration with phone banking and lack of trust in digital options, and said that the cost of accessing the technology is in itself inhibitive. In some areas, fast enough connections are not even available.

I know that work has been done to improve banking services in our post offices and I welcome that. The post office network is a fantastic resource for our communities and it does whatever it can to pick up the pieces when a bank abandons a town. We are particularly lucky in Loanhead to have a very accommodating postmaster, who I have no doubt at all will do everything in their power to ease the transition for customers seeking another local place to perform day-to-day transactions, but the post office network is under pressure too. As great a job as it does, it does not have the resources, financial expertise or facilities needed to deliver the full range of bank services when the bank leaves town, nor should it be expected to do so.

Concerns were expressed to the Treasury Committee last year about the way the agreement with banks was operating, and that the Post Office would be put under added pressure, as it did not make a profit from those services. More than half of adults were unaware that they could even use it and said when asked that they would prefer to deal directly with their bank. There is a long way to go before that gap can be filled. We must protect for the future both the post offices and the branch networks. That is not just for the vulnerable, although that is a good enough reason to call a halt to this ruthless cull of face-to-face banking. Those who predict the relentless rise of automation sometimes forget another key factor—human nature. Digital banking has convenience on its side but will never replace the human interaction. It was predicted that e-readers, such as the Kindle, would kill off printed books. That did not happen. We see vinyl record sales booming for the younger generation, despite the ridiculous price tags and the simplicity of streaming. Digital and physical formats are finding a happy co-existence in the modern world; they complement each other, as they both have advantages and disadvantages.

The same goes for banking. There are many individuals who sometimes use a branch and sometimes use other means. We need both branch and online banking to thrive in a flexible, inclusive, modern society and we lose them at our peril. When IT goes wrong, as it does, we all return to the bricks and mortar of a branch. We need to protect those branches so that they are there for the future. The Treasury Committee in the previous Parliament warned that

“if no action is taken, the UK risks inadvertently becoming a cashless society. For a large portion of society, including some of the most vulnerable, this would have stark consequences.”

We have seen a rapid drop in free ATMs, as the reduced interchange fee made the business model less viable. Latest figures from LINK, the UK’s largest cash machine network, revealed that 1,300 ATMs were lost between the end of January and the beginning of July 2018. The consumer organisation Which? predicted that free cash machines would become a thing of the past, after it emerged that 1,700 ATMs switched to charging in the first three months of the year alone. We are being pushed towards a cashless society that we are not prepared for and do not want. That is not solely through consumer demand but financial incentives to go cashless, the creation of a cashless deserts and the continued running down of the branch network.

We are asking people to wash their hands a lot more these days, but it is no longer good enough for the UK Government to wash their hands of this serious issue. Like the politics of austerity, the decision to let things slide is a choice, not necessity. The current access to banking standard does not go far enough to protect customers from branch losses, and the alternatives just do not plug the gap. They will show customers how to sign into mobile banking or where to get a bus to the next town, but the loss of a branch is already a done deal.

Where the financial services markets fail, we need the Government to step up to the plate. We could introduce a public service obligation to protect the last branch in town, for example, and ensure that people have a right to a physical bank branch. The Treasury Committee agreed, saying that

“intervention by Government or the FCA may be necessary to force banks to provide a physical network for consumers.”

It suggested they could

“make changes to competition law to allow banks to share facilities”.

I would be keen to see that. For the Government to keep brushing this off as a commercial decision is to neglect their responsibility. There are options to intervene; in fact, they have a duty to do so, for the wellbeing of millions of citizens.

I look forward to the Minister’s response. I hope that we will see some action, and that the Bank of Scotland will reverse the decision to close so many branches.

--- Later in debate ---

[Owen Thompson]

I thank all hon. Members for their contributions. The sense of déjà vu among many, most or all Members regarding the situation with banks is certainly of note. It is frustrating that banks’ consultations are so flawed—they are simply box-ticking exercises—and I welcome the innovative thinking that the Minister has outlined. Hopefully, we can press that thinking on banks, but more needs to be done to make sure we maintain that face-to-face connection with our communities.