Economy Update

Rachel Reeves Excerpts

Wednesday 16th June 2021 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

Five years ago, my friend and colleague Jo Cox was murdered. There is not a day goes by when I do not think of her, and I know that on both sides of the House she is missed dearly.

All the way through this pandemic we have said that the economic and health responses must go together. That means keeping support in place for as long as the public health measures demand it. When the public health restrictions are extended, as they were by the Prime Minister on Monday, the economic support should be extended too; otherwise we risk falling at the final hurdle. Having spent billions of pounds supporting the economy, it would be tragic to see thousands of businesses go to the wall just because the Government withdrew support a few weeks too soon. We are not calling for forever support, but for economic support that matches the timetable for opening up that the Government have set. That is the right thing for business, for workers, and for our economy too.

Let us be clear about why we are here today: the Government’s delay in putting India on to the red list has allowed a dangerous new variant to enter our country. That is why we have the highest covid infection rate per person across the whole of Europe—all because the Prime Minister wanted his VIP trip to India. It was vain and short-sighted and has been devastating for public health. As well as the health impact, our assessment, using Office for National Statistics data, tells us that the delay in reopening will cost the UK economy £4.7 billion. That is money that is not being spent in British businesses at a crucial time in our recovery. That £4.7 billion would have been used by businesses to pay commercial rents, to pay people’s wages, to invest, to take on new staff, and to pay taxes into the Treasury as well.

Of course I welcome what the Chief Secretary has to say today on commercial evictions, but the truth is that if the Chancellor believed that this economic package was enough, he would be here announcing it himself. Whatever this is, it is not doing “whatever it takes” to support British businesses and our economy. Given that the Government have moved the goalposts, let me ask the Chief Secretary why Ministers have not delayed the employer contributions to furlough, due to start on 1 July. Employers are being asked to pay more when they cannot even properly open for business.

The vast majority of the 1.8 million people still on furlough are in the very sectors most affected by the ongoing restrictions: hospitality, live events and travel. On 1 July, loans to those businesses start having to be repaid. The self-employed and those excluded from financial support will be worried about their futures. Grants are ending, business rate bills are arriving and furlough is tapering off—all immediately after the Government have announced an extension to restrictions. How on earth can the Treasury justify turning off support and sending businesses new tax bills when the Government are saying that those businesses cannot even open?

On Monday, the Prime Minister told the country that we need to learn to live with the virus. Where is the much-needed plan that would enable us to do that? Where is the plan for greater ventilation in workplaces, including public buildings and schools? Where is the plan to shift contact tracing to a local level, where we know it works best—not in a centralised, Serco-led call centre? Where is the proper support for people needing to self-isolate? Those are all essential measures to save lives and livelihoods, and to avoid the stop-start approach that has characterised the Government’s response to the pandemic.

Given the WhatsApp messages from the Prime Minister about his own Health Secretary that have been revealed today—Madam Deputy Speaker, I will use more diplomatic language than the Prime Minister could manage—how can we have confidence in Government Ministers when the Prime Minister thinks that the person in charge of the pandemic response is “hopeless”?

[Mr Toby Perkins (Chesterfield) (Lab)]

Not just “hopeless”.

[Rachel Reeves]

Not just “hopeless”. People have given up so much over the last year. We have pulled together and shown the best of our country. People have done everything that was asked of them and much, much more. We should not be in this position today. Businesses and workers do not deserve to have the rug pulled from under their feet at the eleventh hour. We want to see businesses make it through the pandemic and thrive again, because they are an important part of what makes our country so great and they are essential for our economic recovery. We need them and they need us today. That is why the economic support we have should match the health restrictions that are still in place, and that is what the Government have failed to deliver today.

[Steve Barclay]

May I first echo the remembrance by the hon. Lady and colleagues across the House of Jo Cox? I also pay tribute to the hon. Lady for the work that she has done, including with my friend Seema Kennedy, through the loneliness commission.

Let me turn to the various points raised by the hon. Lady. She said that she is not calling for support forever, but suggested that the Government were withdrawing support. The package announced by my right hon. Friend the Chancellor was designed deliberately to go long, until September. Measures such as furlough were extended to anticipate the fact that there were no guarantees on the covid road map. That was very much designed into the support, so there is no question of withdrawing support; it was in the very plan announced by the Chancellor.

The hon. Lady’s question about the delta variant was addressed comprehensively by the Prime Minister during Prime Minister’s questions, where he pointed out the timing. One can look back with hindsight now, but the issue was the timing of the delta variant becoming a variant of concern. I will not repeat the points made by my right hon. Friend the Prime Minister.

I am grateful to the hon. Lady for recognising the announcement regarding commercial rents. I hope that that is appreciated across the House. I know that it speaks to a very real concern that many Members will have seen through their constituency emails and post bags, and that it will provide some extended support.

The hon. Lady questioned whether the Government are doing whatever it takes. Again, I remind the House that the Government have spent £352 billion to date. By any definition, I think that is a comprehensive package. More to the point, the plan is working. We see that in the plan for jobs, in the fact that the unemployment projections have improved and in the number of jobs there have been since November. My right hon. Friend the Chancellor’s plan is working. He has done whatever it takes to protect our NHS and public services, putting a further £63 billion into the NHS for covid support measures last year. The plan is having clear benefits.

The hon. Lady asked specifically about the furlough taper. Labour market conditions have improved substantially since the turn of the year and will continue to do so. Indeed, demand for staff has increased at the quickest rate for more than two decades. With unemployment falling in the last four releases, there is clear evidence that the labour market is beginning to recover, but we went long in the first place to anticipate any slippage in the covid road map.



The hon. Lady had a query on business rates. Again, it is worth reminding the House just how comprehensive the support on business rates has been, with 100% business rates relief last year for many businesses, and those businesses now paying 75% over the course of this year. There is a comprehensive package of support for businesses. There is no question but that many businesses will feel strain as result of the further extension, and it is not a decision that my right hon. Friend the Prime Minister took lightly, but the package of support announced by the Chancellor anticipated this scenario. It went long in order to provide support and it continues to do so in a way that the evidence and the data shows is working.