Covid-19: Support for UK Industries

Richard Thomson Excerpts
Thursday 25th June 2020

(10 months, 2 weeks ago)

Commons Chamber

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Department for Digital, Culture, Media and Sport
Sarah Olney Portrait Sarah Olney (Richmond Park) (LD)
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Thank you, Madam Deputy Speaker; I appreciate you giving me time to speak in this really important debate. My constituents have been in touch with me about this issue more than any other during the crisis. The crisis has revealed the complexity of the UK economy. It is a feature of our country’s creativity, energy and innovativeness that we host such a vast array of industries and businesses within our island nation. That is reflected in the myriad ways that people earn a living.

I am a member of the Public Accounts Committee, and we were taken aback at a recent hearing to find that the Government’s preparation for a pandemic did not include preparation for its economic impact. That left the Treasury with the huge task of devising and delivering its economic rescue plans when the lockdown started, and I pay tribute to it for what it was able to achieve in such a short period. As many Members on both sides of the House have pointed out, the job retention scheme—the furlough scheme—has been invaluable in supporting household incomes during this extremely difficult time. But it is clear that support was focused on those who earn salaries and pay mortgages, and, tragically, many sectors and workers were missed out. I urge the Minister to consider the lessons for future lockdown planning, although we all hope that this will not be necessary in the immediate future. The biggest tragedy is that many of those who missed out are the ones who will be most instrumental in rebuilding the economy in the months to come—our small businesses, our entrepreneurs, our freelancers, those who have taken a risk on a new business idea or taken on a new job. The Government must focus their investment on our key industries and those that will take the longest to recover.

I spoke earlier today in this place about the necessity of supporting theatres, and I extend that to the whole creative sector. Not only are they a huge earner for us abroad, but they reflect British values across the globe and are instrumental in so many ways. Beyond that, for all of us who have spent months staring at our laptop screens, it will be essential to enjoy live music and live theatre again. I spoke earlier about the necessity of using education programmes, which theatre companies and other parts of the creative sector are so good at, to engage our young people once again.

My hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) spoke passionately about the tourism and hospitality sector, and it is essential that we support all these industries through the next few months. We do not just need to support our workers in these industries; we need to plot out a strategy for their survival and recovery. If the right people get the right help now, they will be ready to revive the economy as soon as they are able to.

Richard Thomson Portrait Richard Thomson (Gordon) (SNP)
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This is a timely debate that has not just highlighted the concerns of those who have put their names to these petitions but will have widespread resonance far beyond them. We have heard many excellent contributions this afternoon, with concerns raised covering a wide spectrum of sectors, including arts, tourism, childcare, events, aviation and steel—a full sweep of the economy—and enterprises of all sizes.

The UK Government package, as the hon. Member for South Cambridgeshire (Anthony Browne) said, was put together at speed, and as we have heard, many significant gaps have been identified. On the furlough scheme, for example, I need not dwell on the pivotal date of 19 March, which has left far too many people reliant on the good will of former employers if they are to benefit from it. The self-employed support scheme, which was unveiled after this House had broken up for the Easter recess, missed out those who were newly self-employed. Directors also missed out if they were remunerated through dividends. This makes the case, I think, for a universal basic income in that we know who everyone is, and if we give them the money to get through, then nobody, by definition, will have fallen through the cracks.

Much of the support has been based on the rateable values of business enterprises, and I can understand exactly why that is. It is clear and it is simple for local authorities to administer, but it has still left too many businesses missing out, because they were outside the relevant rateable value bands or they were not in the relevant sector, or because they were small businesses operating out of people’s homes and were therefore not on the business valuation roll.

The Scottish Government have certainly done all they can to try to plug those gaps in support with a £2.3 billion package of support. That has meant relief to the fish processing sector and to airports, support for the creative sector, plugging that gap in support for the newly self-employed, £78 million for construction and £51 million to support early-stage, high-potential companies. In all, the response amounts to over £4 billion for tackling this, when we have had £3.8 billion coming through the normal Treasury route.

However, it is important to note that the Scottish Government cannot do everything, and in trying to do more, they are finding themselves seriously constrained not only by the resource available, but by the constitutional limits placed on devolution, which have been particularly exposed in this crisis, and no more so than over borrowing powers. The borrowing powers that the Scottish Parliament has are designed to deal with cash-flow mismatches from year to year; they are not there to deal with serious amounts of investment for the future. I understand that the Finance Secretary in Scotland, Kate Forbes, has written today to the Chancellor to ask for greater flexibility around that. I hope she gets a reply that is not only swift but favourable.

This has also shown the limitations of the so-called Barnett consequentials. Too often, colleagues in Edinburgh have been left waiting to find out exactly how much is going to come through from spending decisions that have been taken in this place, occasionally finding that the money they thought was coming through was then not. It would be much better if the devolved Governments were able to decide what response they wanted to make and muster the resources at their disposal in the shortest possible time by simply having the powers to do so without reference to anywhere else.

I appreciate that we are short of time this afternoon, but I will say that borrowing powers were one of the key items identified in the report created by the Scottish Government’s advisory group on economic recovery, led by Benny Higgins. Borrowing powers were part of that, as was a series of 25 recommendations including a full review of the fiscal framework, jobs guarantees for the under-25s, prioritising a green recovery and a revised partnership between business and Government. These are all important structural changes in the economy that we absolutely need to have if we are going to make sure that the new normal is better than the old normal.

In the time remaining, let me just make a plea for the energy sector. Oil, gas and energy are absolutely crucial not just for jobs in the north-east of Scotland, but right across the UK. They are crucial if we are to maintain our energy security and effect the transition to net zero, but it is an industry on the brink of thousands upon thousands of job losses. The Scottish Government have invested £62 million to do what they can to assist in that. We desperately need a sector deal. Together with my hon. Friends the Members for Aberdeen North (Kirsty Blackman) and for Aberdeen South (Stephen Flynn), I have made a plea to the Chancellor for just such a sector deal. Again, we hope for a swift and favourable response.

In conclusion, the support to date from the UK Government has been very welcome where it has landed, but desperately missed where it has not. All too often, it has failed to land. The economic challenges we face as the crisis evolves give us a new landscape. The challenges change, but are no less urgent and much remains to be done. I say to the Minister that if the UK Government are not willing to use the powers they have to address those shortcomings and to tackle the additional issues that need to be tackled, they should devolve those powers to Governments elsewhere in these islands who will use them.

Matthew Pennycook Portrait Matthew Pennycook (Greenwich and Woolwich) (Lab)
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25 Jun 2020, midnight

It is a pleasure to respond to this wide-ranging and well-subscribed debate on behalf of the Opposition. I start by thanking all right hon. and hon. Members who have taken part in the debate today, and the right hon. Member for Chipping Barnet (Theresa Villiers) for opening it. I also pay tribute to the initiators of each of the petitions under consideration and, by my calculation, the nearly three quarters of a million people who collectively signed them for making today’s debate possible.

As numerous right hon. and hon. Members referred to in their remarks, the debate takes place in the midst of a pandemic that is taking a severe toll on our economy. Barring a second wave of the virus, the worst may now be behind us, but the fiscal impact wrought, the dramatic rise in the unemployment rate and the prospect of many sectors continuing to operate at reduced capacity for some time point to the trials that lie ahead.

Let me underline for the record that the Opposition welcomed the unprecedented measures that the Government took, in essence, to put our economy on life support in the face of a near total shutdown. The fact that we are here today debating urgent petitions signed by hundreds of thousands of people working in a range of industries is testament to the need to further refine those measures and build on them where necessary to protect as many people’s incomes, jobs and businesses as we can.

In the time available to me, I will pick up on three points that have been prominent during the debate. The first is the need for further improvements to the measures already introduced to support businesses and individuals. The second is the need for support packages for certain UK industries, tailored to their needs. The third is the need for a more strategic approach to the recovery than that which defined the rescue.

On the first of those points, the House needs no reminding that it is people who are the bedrock of the productive capacity that firms, and thereby industries, will need to bounce back now that the immediate crisis is subsiding. That is why we must continue to do what is necessary to protect their livelihoods, their jobs and their businesses through this difficult period. That is why we continue to press the Government to fix the gaps and deficiencies in the various financial support schemes that have already been established. There is still time to do so.

There is still time for the Government to revise the job retention scheme to cover employees currently shut out from it, and still time to revise the self-employment income support scheme to help those it currently excludes. There is still time to further reform the coronavirus business interruption loan scheme, so that more companies can access finance and liquidity easily to make it through the crisis, as well as access more patient capital.

There is still time—this brings me to my second point—to revisit the one-size-fits-all approach that has underpinned the design of many of those schemes and appears to be dictating the Government’s approach to sectors and industries across the board. The various case studies raised by right hon. and hon. Members from all parts of the House are a vivid illustration that the pandemic’s economic impact has not been felt uniformly across different sectors, but also that the rate at which sectors can reopen and restart will differ markedly. If we are to successfully navigate the next phase of this crisis, logic dictates that a more differentiated approach is needed.

Such an approach will undoubtedly pose challenges for the Government, but if Ministers do not concede that established schemes will have to be redesigned so that they can enable a flexible sector-by-sector response, and if they do not concede that targeted support packages will be needed for the industries most in need, we risk many more firms going under and many more jobs being lost. There is, however, no real sense that the Government have accepted as much.

Taking three of the industries whose plight is the focus of the petitions we are considering today, the early years sector is under huge pressure, with many providers on the verge of ruin. As a report released this morning by the Early Years Alliance and Ceeda makes clear, the impact of collapsing relevant revenues from significantly reduced demand and the increased costs that come with making establishments covid-safe are falling on a sector that was already struggling financially before the pandemic took hold. It looks set to lead to significant funding shortfalls and mass closures. The industry needs more help.

As many hon. Members referred to in their speeches, not least my hon. Friend the Member for Manchester, Withington (Jeff Smith) and the hon. Member for Brighton, Pavilion (Caroline Lucas), the arts and creative industries, as well as the sectors heavily dependent on them, have been hit particularly hard. That sector will be one of the last to reopen because of the difficulty—in many cases, the impossibility—of operating theatres, live music, festivals and other events and performance in line with social distancing measures. The Culture Secretary told the Evening Standard on 8 June that a package of support was “imminent”, yet weeks later nothing has materialised. That industry desperately needs more help.

In powerful contributions, my right hon. Friend the Member for Alyn and Deeside (Mark Tami) and my hon. Friends the Members for Newcastle upon Tyne North (Catherine McKinnell) and for Luton South (Rachel Hopkins) highlighted the fact that the aviation sector stands on the brink of devastation as a result of the pandemic, and several airlines have already announced plans for significant redundancies. Research from the New Economics Foundation and the TUC earlier this month warned that at least 70,000 jobs in the wider aviation industry are at risk before the end of the summer alone. The Opposition recognise that aviation must change to tackle runaway global heating, but current developments are chaotic and suggest the absence of any long-term strategy for the industry. It needs more help, as do so many others.

When the Minister stands up, I hope that he can give the House and all those watching our proceedings an indication of when sector-specific support packages, including access to emergency funding, will be forthcoming for these industries and others that are crying out for help, including hospitality, aerospace, the motor industry and, as my hon. Friend the Member for Aberavon (Stephen Kinnock) pointed out powerfully, steel. If the Minister is unable to do that, will he at least provide some reassurance that the Government recognise the urgency with which such tailored packages are required by the industries in question and that Ministers accept the need to make changes to existing schemes, such as the furlough, so that their phasing out mirrors the pace at which industry is able to return to some semblance of normality?

That brings me to my final point—I will be brief in making it, Madam Deputy Speaker. As we look to ensure that our industries get the ongoing support that they need, we must plan strategically for the future. That means support, yes, to ensure that our industries do not fall behind their international competitors in the years ahead, but also support that is designed to achieve other important national objectives, not least responding to the environment and climate emergency. Our European neighbours are using this crisis as an opportunity to do just that, and the Government should look to match and even surpass their ambition by coming forward with support that will retain and create jobs, accelerate the transition to a low-carbon economy and address a range of regional and wider inequalities—a point made very powerfully by my right hon. Friend the Member for North Durham (Mr Jones) and my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali).

In conclusion, the Opposition recognise the scale of the challenge that the Government have had to confront, as well as the speed with which the current schemes had to be designed and implemented, but, as the OECD made clear, our country is on course to suffer the largest economic hit from the pandemic among major nations this year. In the face of such an emergency, we on this side of the House and the three quarters of a million people who signed these petitions are not demanding the impossible. We are simply asking the Government to act decisively and spend smartly to protect industries that contribute so much to our economy and our society, and on whom so many people rely.