The Economy

Rishi Sunak Excerpts

Monday 27th April 2020 Commons Chamber

[The Chancellor of the Exchequer (Rishi Sunak)]

Thank you, Mr Speaker, for giving me the opportunity to update the House on our economic response to the coronavirus. Let me say at the outset that I am grateful to Members from all parts of this House, including the hon. Member for Oxford East (Anneliese Dodds), the new shadow Chancellor, for their contributions to this debate.

We should be in no doubt about the seriousness of the economic situation. The Office for Budget Responsibility has published a scenario showing that the coronavirus will have very significant impacts, both at home and in the global economy. More than 1.5 million new claims have been made to universal credit, over 4 million jobs have now been furloughed, and survey evidence suggests that a quarter of businesses have stopped trading. These are already tough times and there will be more to come.

Although our interventions have saved millions of jobs and businesses, we cannot save every job and every business. I understand and share people’s anxiety, but right now the most important thing that we can do to protect our economy is to protect the health of our people. As my right hon. Friend the Prime Minister said this morning, we are making progress. We are beginning to turn the tide but, if we lose control of the virus again, we risk seeing a second spike, which we all want to avoid. The goal of our economic strategy is to provide a bridge over what will be a sharp and significant crisis by keeping as many people as possible in their existing jobs, supporting viable businesses to stay afloat and protecting the incomes of the most vulnerable. In other words, it is to maintain the productive capacity of the British economy, so that, once we are able to refine the public health restrictions, we can as quickly as possible get people back to work, businesses reopening and the self-employed trading again.

The Office for Budget Responsibility has been clear that, if we had not taken the actions that we have, the situation would be much worse. The International Monetary Fund has said that our approach has been “aggressive” and “right”. Taken together, I believe our response has been one of the most comprehensive of any country anywhere in the world. Working closely with the Bank of England, business groups, trades unions, banks, charities and many others around the country, we have developed a plan to protect public services, people and businesses.

Let me address each of those areas in turn. Public services such as the NHS are on the frontline of the fight against coronavirus. I repeat today that, whatever resources our NHS needs, it will get. At the Budget in March, I announced a coronavirus emergency response fund, initially allocating £5 billion. We have now provided more than three times that initial amount, with the NHS and public services receiving £16 billion so far.

We are also providing extensive support for people’s jobs and incomes. Our most important and far-reaching policy is the coronavirus jobs retention scheme to keep people in employment. The scheme launched on schedule last week, and I am pleased to report that the first grants have just been paid. Around half a million employers have already applied for help to pay the wages of over 4 million furloughed jobs—jobs that might otherwise have been lost.

Her Majesty’s Revenue and Customs is also on track to deliver the self-employed income support scheme, as promised in early June, and we will publish detailed guidance this week. Alongside those new interventions, we have strengthened our existing safety net with increases to universal credit, the local housing allowance and statutory sick pay. We have reinforced our social fabric, too, with £750 million for the charity sector.

Of course, the best way to support people is to protect their jobs, and that means supporting the businesses that employ them. Our plan to help businesses means the following: almost half of all business properties in England will pay no business rates this year; almost 1 million business premises can now receive cash grants of up to £10,000 or £25,000; and more than 2 million businesses have been offered a VAT deferral, saving them an average of £30,000.

Another 2.7 million people will be able to defer their self-assessment payments; almost 60,000 people and businesses have put “time to pay” arrangements in place with HMRC; up to 2 million employers will be able to access the statutory sick pay rebate, up to £48,000 per firm; more than £14 billion of lending has been issued through the Bank of England’s financing facility and more than 20,000 coronavirus business interruption loans have now been approved. Of course, all that is on top of our furlough scheme, with payments now arriving.

Taken together, our plans are protecting millions of people and businesses across our country, through a set of interventions in the economy on a scale that we have never attempted before, and they are working. However, I know that some small businesses are still struggling to gain access to credit. They are, in many ways, the businesses most exposed to the impact of the coronavirus, and often find it harder to access credit in the first place. If we want to benefit from their dynamism and entrepreneurial spirit as we recover our economy, they will need extra support to get through this crisis. Some businesses will not want to take on more debt, which is why our focus has been on cash grants, tax cuts and tax deferrals, but for others, loans will be part of the answer.

Today we are announcing a new micro-loans scheme, providing a simple, quick, easy solution for those in need of smaller loans. Businesses will be able to apply for new bounce-back loans, for 25% of their turnover, up to a maximum of £50,000, with the Government paying the interest for the first 12 months. I and the Economic Secretary to the Treasury have been in close talks with the banks, and I am pleased to say that those loans will be available from 9 am next Monday.

There will be no forward-looking test of business liability, and no complex eligibility criteria; there will be just a simple, quick, standard form for businesses to fill in. For most firms, loans should arrive within 24 hours of approval. I have decided that, for this specific scheme, the Government will support lending by guaranteeing to the lender 100% of the loan.

Let me address that point directly. I have heard calls for the Government to underwrite all our loan schemes with 100% guarantees, but I remain unconvinced by the case for doing that universally. We should not ask ordinary taxpayers of today and tomorrow to bear the entire risk of lending almost unlimited sums to businesses that in some cases may have very little prospect of paying those loans back, and not necessarily because of the impact of the coronavirus. I do not think it is appropriate to provide 100% guarantees on all of our schemes. Instead, these new bounce-back loans carefully target that extraordinary level of state support at those who need it most. The £50,000 cap balances the risk to the taxpayer with the need to support our smallest businesses.

Right now, the most important thing for the health of our economy is the health of our people. We are making progress in our fight against the virus, but we are not there yet. Our strategy is to protect people and businesses through this crisis, by backing our public services and NHS with increased funding, strengthening our safety net to support those most in need, and supporting people to stay in work and keep their businesses going. Our response is comprehensive, coherent and co-ordinated. It is, I believe, the right approach. I hope I can continue to rely on the support and advice of all right hon. and hon. Members as I commend this statement to the House.

[Mr Speaker]

I now welcome the new shadow Chancellor, Anneliese Dodds, who has five minutes to respond.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

I am grateful to the Chancellor for advance sight of his statement, and to all the Treasury civil servants, and those in HMRC and the Department for Work and Pensions, who have been working incredibly hard to get these schemes running. I fully appreciate that the Chancellor’s job has not been an easy one, but it is our job as a constructive Opposition to point to problems that we are hearing from the frontline, and to indicate solutions. It appears that at least some of those problems are more acute in our country than in many others.

The Purchasing Managers’ Index figures that came out last week indicated a sharp fall in business confidence. Sadly, that was not a surprise. It has been clear for some time that the economic slowdown we are currently experiencing is sharp and deep. It was, however, unsettling that those figures suggested that business confidence has taken a stronger hit in the UK than across the eurozone. I have heard from small business owners who put their life and soul into their firms, but have less than two weeks of cashflow left, and they are devastated. We all need to work together to get the different support schemes working for our country. We must fix this.

I am well aware that many of the conditions for shifting out of lockdown are not within the Chancellor’s grasp. However, his Government need to be open about blocks on progress and how they will remove them. That applies to the test, track and trace regime, which must be in place before key sectors can open again. It also applies to the creation of a national tripartite system to ensure that workers and employers have confidence that they can return to work safely when the right time comes.





The Chancellor is directly responsible for the economic package, and he knows that we supported him in creating the furlough scheme; indeed, we called for it. But the evidence is that some other key elements of the economic package are failing, so, in a constructive spirit, I want to ask the Chancellor whether he would countenance solutions in three areas—first, on CBILS. It is a relief to hear from the Chancellor that he has listened to calls from the Opposition, business and others that we need a full guarantee for at least some loans—he has stated those of up to £50,000—but we need to be clear that the UK has an enormous mountain to climb. Switzerland has a population of under 9 million, yet it approved four times as many loans in its first week as the UK has done in a month. We are running out of time, so how will the Chancellor ensure that the bounce-back loans get to the businesses that need them? How will they get out of the door, and what plans does he have to ensure that the banks will have the capacity to provide those loans?

Secondly, recent figures suggest that one in 10 in our workforce looks set to be unemployed as a result of this crisis, with all that that entails for people’s future prospects, incomes, and their and their families’ health. Again, I say to the Chancellor that we will work with him. We have indicated many of the gaps in existing schemes to protect incomes, and will continue to push for them to be filled. However, we must be clear: the reason that those gaps are such an income-crushing, insecurity-producing crisis for so many is that, in most cases, the only alternative to coverage by these schemes is universal credit, which pushes people right down to an average of 10% of the income of the rest of the workforce. The DWP has made some welcome changes, but failure to change the initial loan into a grant threatens to create even more of a debt crisis among households. Apparently the Government are sympathetic to changing the loan into a grant, but we are told that the computer system just will not allow it, so my second question is: will the Chancellor knock heads together and get the computers to say yes to switching UC loans into grants?

Finally, as the Chancellor knows, before this crisis we had an economy that simply did not work for so many. Around a quarter of all families lacked just £100 in savings, even before the crisis began. The UK is the most regionally unequal country in Europe, and we have just had the longest squeeze on living standards—not just in a generation, but in eight generations. The recovery from this crisis must be faster and wider to ensure that as many people as possible have a job to come back to. We need a flexible furlough scheme. The Chancellor told me previously that it cannot currently be made more flexible, but other countries have done so. Will he work to amend the furlough scheme to allow workers to come back on a part-time basis, and will he do as so many other countries are doing, from Germany to New Zealand, and talk about how those hit hard by the crisis can be supported not just now, but in the future, with employment-boosting redeploying retraining schemes? The aftermath of the pit closures tells us that an approach where the Government shrug their shoulders will scar our economy for generations to come, so my last question is: will the Chancellor work together with me, trade unions, businesses and local authorities to develop a plan to offer the hope of work to those who have already become unemployed, and get our economy moving again?

[Rishi Sunak]

May I welcome the shadow Chancellor to her place, and thank her for the constructive dialogue that I have had with her over the past two or so weeks? Let me address her questions directly and swiftly. First, I turn to her question about the loan guarantee programme and the banks’ operational capacity. Obviously, this is something that the Economic Secretary and I, working with the banks, have spent a lot of time on over the past few weeks. I am grateful to the banks for re-engineering their entire systems to offer this brand new bounce-back loan. I am assured that it will be available from next Monday morning. There will be a very simple application process, and the banks will not have to conduct more than the customary fraud and anti-money laundering checks, which of course would be reduced for their existing customers. If someone has an existing business account with a bank, the process should prove incredibly rapid, and they should have the cash in their bank account within a day or two. The banks are readying their systems for that launch date as we speak.

I hear a lot from many commentators that we should copy what was done in Switzerland. Now, Switzerland does have 100% guaranteed loans—I absolutely agree that it does—but it is worth bearing in mind that it does not provide very much else in the way of direct fiscal support for their businesses. Indeed, after extensive dialogue with the Swiss Government, it is very clear that, for them, the loan guarantee scheme is the primacy of their direct fiscal support to businesses. In this country, we have provided tens of billions of pounds in direct cash support—in tax cuts through reducing business rates, in cash grants of £10,000 or £25,000, and by paying people’s statutory sick pay bill. These very direct cash impacts, I believe, are more generous than asking companies to take on a loan, which is why I believe that the Switzerland comparison is not analogous. Secondly, the Switzerland furlough scheme requires employers to contribute a fifth of the payment to the scheme, whereas in this country, our furlough scheme removes that very considerable cash burden from businesses.

As I always say when I am at this Dispatch Box or answering questions elsewhere, it is important to look at the totality of all our economic interventions. When measured as a percentage of GDP, it is very clear to me, as has been empirically shown by others, that the sum total of our fiscal intervention to support businesses and people through this crisis is one of the most comprehensive and generous, in terms of scope and scale, anywhere in the world.

Turning to the next question—on universal credit and support for the most vulnerable—I firmly agree that during this crisis, we must of course look after the most vulnerable in our society, and from the Budget onwards, I have strived to do exactly that. We have invested extra funds into tax credits and into universal credit, improved eligibility for statutory sick pay, improved employment support allowance, improved how these schemes work for the self-employed, improved the local housing allowance and, indeed, created a brand new hardship fund for local authorities to help people with their council tax bills. All these investments have a sum total of over £7 billion of investment by this Government to strengthen the safety net to help the most vulnerable in our society through this difficult period.

Lastly, with regard to the future, I wholeheartedly believe that the best way out of this is to ensure that as many people as possible can return to the job that they had. That is the best way to protect people and to protect their livelihoods, their families and their household incomes, which is why all our support has been conducted with that aim in mind—how can we help to support businesses? How can we help them to keep their employees attached to that business? I believe that our furlough scheme stands at the centre of that. All the other interventions will help to support that aim so that as we emerge from this crisis, we can bounce back as quickly as possible to the life that we once knew.

[Theresa Villiers (Chipping Barnet) (Con) [V]]

The Government’s support package for jobs and wages is providing a vital lifeline for millions of families, but every day that the full lockdown continues, further damage is done to the economy, so can I ask the Government to publish a road map to release from the lockdown so that businesses can start to prepare for a phased modification and a safe exit from the current emergency measures?

[Rishi Sunak]

I agree with my right hon. Friend that, of course, the economic damage that is happening at the moment is severe, which is why we have taken the unprecedented measures that we have to try to mitigate as much of that as we can. Of course, I share with her—and indeed, the Prime Minister shares with her, as he said this morning—a sense of urgency to want to restart our economy, not least so that we can get people back into work and start creating the tax revenues that we need to pay for our public services, but we are not there yet. That is why we must remain disciplined and united around our aims and meet the tests that we have set to emerge from this phase of the crisis, but the Prime Minister also said this morning that we are making considerable preparations, and have been for a while, for phase two. In phase two, as he said, we will be able to gradually “refine” our

“economic and social restrictions and one by one…fire up the engines of”

our “vast UK economy”. I can assure my right hon. Friend that that work is ongoing. I remain committed to it and, as the Prime Minister said, the Government will be saying much more about this in the coming days.

[Alison Thewliss (Glasgow Central) (SNP) [V]]

I thank the Chancellor for advance sight of his statement. The SNP welcomes the money that he has committed, but we acknowledge the gaps and the limitations, and we constructively ask for actions in a number of areas: assistance for those waiting for confirmation of a universal credit claim; the ending of the five-week wait and the two-child limit; additional support for carers who may be forced to stop work; support for those caught in the new starter furlough gap; support, as the Scottish Government have already put in place, for the newly self-employed; support for limited company directors, who particularly feel as though they have been left out; removing the “no recourse to public funds” conditions, which leave people without support in many cases; helping asylum seekers whose support networks may have fallen apart; and ensuring that pregnant women who were wrongly sent home on statutory sick pay and unpaid leave in March get access to the furlough scheme.

The Chancellor talks about supporting viable businesses to stay afloat, but that viability is very much in the hands of the banks, who are making decisions on tight criteria. What is he doing to ensure fairness in that assessment? The bounce-back loan scheme that he announces is good and deferring can be useful, but many small businesses feel that it will just mean storing up more debt for the future. It is understandable that they may not want to take on more debt. Will he look at more grants, CBILS overdrafts and revolving credit to help those businesses through the current difficulties?

Will the Chancellor also look at assistance for food wholesalers who are keeping care homes and small shops supplied, and who are suffering because of the downturn in hospitality? He made no mention in his statement of the many businesses that shut their doors on public health advice and now find that their insurers refuse to pay out on business interruption claims. Will the Government step in to cover disputed claims? Businesses just do not have the time or the money to go through the Financial Ombudsman Service or the courts.

[Rishi Sunak]

I thank the hon. Lady for her constructive engagement with me and others as we go through this difficult time. With regard to helping the most vulnerable, we have put several measures in place that will help many of the people she mentioned—not least strengthening universal credit, as we have done by £1,000 over this year, and associated changes and tax cuts, as well as providing local authorities with discretionary funds to help those in their communities who, as they know better than any of us sitting here, are in most need of support. That will cover many of the groups that she talked about.

With regard to the banks and viability tests, the new bounce-back loan scheme will not ask for any forward-looking information from companies. There will be a very simple form for companies to fill in. It will be done on the basis of self-certification, and the banks will be doing customary fraud, money laundering and identity checks rather than any credit checks, given our 100% guarantee. That problem should, therefore, be solved.

I have also spent time talking to the banks, as has the Economic Secretary, tirelessly on a daily basis about the other forms of credit that they are extending to small businesses. The hon. Lady is right to point out that some businesses would prefer to have things such as overdrafts. In that vein, I am pleased to tell her that according to the last numbers I had, about 20,000 new overdrafts have been extended, together with about 60,000 capital repayment holidays. Of course, general SME lending happens outside CBILS or, indeed, our new bounce-back scheme. I can assure her that the Economic Secretary and I remain alive to that and will keep up all necessary pressure on banks to make sure that credit flows to where it needs to get to. Today, I am happy to put on record my thanks to them and their teams for helping us to work at pace to get the bounce-back loan scheme up and running for next Monday morning.

Lastly, the hon. Lady asked about insurance companies, and I think she is right to highlight this. I would point insurance companies and their policyholders to the very strong guidance set out in a letter by the FCA, which urged insurance companies to behave responsibly and flexibly in the interpretation of their policies. We have previously made it very clear: where there was a question about whether a policy should pay out, depending on whether we had closed the business as result of Government action, that was cleared up. Of course, very few people have policies that would cover them for this, but where it is clear that they should have a reasonable expectation of coverage, it is right that the insurance companies pay out. We will keep a close eye on the situation.

[Andrea Leadsom (South Northamptonshire) (Con) [V]]

I congratulate my right hon. Friend very sincerely on the bounce-back loans, which I think will make a huge difference to small businesses. I must also say how great it was to see the Prime Minister back on good form today.

Of course we need to keep the lockdown in place until it can be safely lifted, but will the Chancellor today give employers and entrepreneurs, who are the lifeblood of our economy, reassurance that when restrictions can be lifted, they will be given some notice and some clear guidelines so that they can restart their supply chains with confidence?

[Rishi Sunak]

I thank my right hon. Friend for her comments; having held the positions that she has had in government, she knows better than most the importance of business to our economy and to driving our economy. She is absolutely right that businesses will need time to prepare. As I have alluded to, work is already under way in government, through engaging with businesses, unions and others, to ensure that when we are in a position to get to phase 2 and refine the social and economic restrictions, work has already taken place to prepare everyone and give them suitable notice, so that they can kick-start the engines of our economy.

[Sir Edward Davey (Kingston and Surbiton) (LD) [V]]

I welcome the micro-loans scheme, but may I press the Chancellor to do more for the self-employed—in particular the self-employed who are not in his scheme, many of whom have only modest incomes, such as cleaners, builders, taxi drivers and musicians? Such self-employed people often work through limited companies, relying on dividends for income, and are getting little or no help, with devastating consequences. I know that the Treasury is worried about fraud, but I wrote to the Chancellor on 8 April with a Liberal Democrat proposal to help those self-employed people and protect the taxpayer. Will he please now help self-employed people who are dependent on dividends, before it is too late?

[Rishi Sunak]

The right hon. Gentleman mentioned groups that I engaged with specifically in the design of the self-employed scheme, and who I am fairly certain released reasonably positive comments on the day it was released, notably the Licensed Taxi Drivers Association and, I believe, one of the musicians’ federations. I spoke to them both personally as we developed the scheme, and I believe that they were very supportive at the time.

We have designed these schemes at pace to get support to as many people as we can in the time available, and the decisions that we have taken enable that. At this point, complicated changes to the schemes would just mean delay in getting support to millions of people who are either already in receipt of it or very shortly about to receive it.

[Steve Brine (Winchester) (Con)]

The package of help for the self-employed is welcome and helps the vast majority of workers. However, there are those—not the super-rich—who have been left out, either because they earn over the £50,000 cut-off, because they are new to self-employment or because they are company directors who are not earning the majority of their income by this route. In the spirit of doing whatever it takes, while appreciating that it could well involve some element of “pay now, claw back later”, can the Chancellor give those workers some hope that he does not view the self-employment support scheme as a done deal and that, as Scotland has shown in recent days, he is still open to new ideas?

[Rishi Sunak]

As I hope I have demonstrated over the past six to eight weeks, I am always open to new ideas, whether at home or abroad. I have constantly sought to refine, to improve, to iterate and to respond to circumstances on the ground to make sure that our economic response is as comprehensive and effective as it can be. I can give my hon. Friend an assurance that I will continue to do just that.

[Matt Western (Warwick and Leamington) (Lab)]

Businesses in Warwick and Leamington, much like those across the country, have been burning through cash in recent weeks and have been desperate for a cash injection. I welcome the Chancellor’s announcement today, but does he accept the view of Neel Kashkari, who ran the US federal bail-out programme in 2008-09, that what is critical is getting the money out as quickly and as simply as possible—like the French, who have lent seven times more than the UK, or the Germans, who have lent three times more? Does he accept that we have been too slow and too deliberative?

[Rishi Sunak]

Different countries have done things in very different ways. The hon. Gentleman talked about the US; the US has no equivalent of our furlough scheme, which is probably the most significant economic intervention that we have put in place—it was up and running four weeks after I announced it and is already, as we speak, getting money to businesses to pay wages. He talked about other European countries; there is a range. We have now issued more CBILS loans than the equivalent scheme in Germany.

[Sir Graham Brady (Altrincham and Sale West) (Con)]

As we look ahead to a gradual lifting of restrictions on business in the coming weeks, will my right hon. Friend look for common-sense opportunities, such as allowing open-air markets to trade in the same way as supermarkets? Will he also look at changes to the furlough scheme to help it accommodate a gradual return to work?

[Rishi Sunak]

I thank my hon. Friend for his thoughtful comments. I know he has put a lot of personal time and energy into thinking about these things, and I welcome his engagement with me. He makes very interesting suggestions. As the Prime Minister said this morning, there will be gradual refinements to the social and economic restrictions, and my hon. Friend is right to highlight that that is exactly how the process will work, whether that is the restrictions or, indeed, how we remove some of the economic interventions that we have put in place.

[Ms Angela Eagle (Wallasey) (Lab) [V]]

The whole House will welcome the Chancellor’s announcement of his micro-loans scheme—the bounce-back loans—that he just made in his statement, but will he admit that the CBILS loans that he announced are still proving slow, overly complex and bureaucratic? Will he look again to see what he can do to simplify that scheme so that more of the £330 billion of potential loans that he set out in his first announcements can actually get to where they need to be to save huge swathes of our economy?

[Rishi Sunak]

The hon. Member is absolutely right. I am striving to make the process as seamless and as quick as possible. We made some improvements a couple of weeks ago—removing guarantees and changing some things on the back end—which have already made a difference. More than 20,000 CBILS loans have now been issued and there are 40,000 applications that the banks are working through. The acceptance rate remains high at over 80%, but there are further tweaks that we have been putting in place over the past week. Information on that will be outlined later. It is largely technical, administrative and regulatory, but I believe those changes will continue to accelerate the pace of CBILS loans and, like the hon. Member, I think we all share that aspiration.

[Mr Steve Baker (Wycombe) (Con)]

I congratulate my right hon. Friend on the wisdom and skill with which he is adopting policies that I am confident are not naturally his territory. Well done to the Government. Will he reassure me that he is conscious that we need to take early, safe opportunities to open up the economy if we are to get back to a path to sustainable prosperity? Can he reassure me that he knows how to unwind this major set of interventions, so that we can get back to sound economic principles?

[Rishi Sunak]

As ever, my hon. Friend makes excellent and informed points on economic policy. I thank him for his support as well. He is absolutely right. I share with him, as does the Prime Minister, a sense of urgency about wanting to reopen our economy so that we can start driving growth, providing people with employment and paying for our public services. He is right to acknowledge that that must be done safely. Although we have made progress, we are not there yet, but I can reassure him that extensive work is under way to plan for phase 2 of the crisis so that we can get back to the economy that he and I both want to see.

[Peter Kyle (Hove) (Lab)]

In the past 10 years, there has been a very active debate about those relatively few companies that have so aggressively avoided paying tax in this country. Many of those same companies are now relying on the largesse and generosity of taxpayers to remain solvent in these difficult times. As the Chancellor and his Department start to plan for the recovery economy, will he take this opportunity to have conversations with those companies to make sure that when we do recover, they play a much fuller part in our economy going forward? Let us not aim for business as normal when we get back after this crisis; let us aim for business as better.

[Rishi Sunak]

I thank the hon. Member for that comment, and I like his phrase at the end—we will see whether it shows up in a future speech. He is absolutely right that we are all in this together. We have gone through this as a collective endeavour as a country, whether as business, Government or individuals, and it is right that people act responsibly during this process. That is something I have urged all businesses to do, and I hope they continue to do that. He is correct: as we emerge from this, it is right to look at things in the round. As we went through this together, we must repair the economy all together.

[Anthony Browne (South Cambridgeshire) (Con)]

I congratulate my right hon. Friend on the bounce-back loans, which I am confident will provide much relief to a lot of small businesses in my constituency. I also congratulate him on the strong support measures across the range, which have helped a lot of people in South Cambridgeshire. Will he confirm that he will keep the package of measures under review, both to identify any other groups that we can help, but also to make sure that as we transition out of lockdown, we do so successfully? In particular, the job retention scheme, which, as he said, now employs 4 million people, has been very successful in protecting jobs. We need to make sure that when it does come to an end, it does so in a way that minimises redundancies.

[Rishi Sunak]

My hon. Friend is well informed on these issues. I know he has put a lot of specific thought into this topic, and I welcome further engagement with him. He is right. We must think carefully about exiting these schemes to provide maximum support to the labour market and businesses, and to ensure that we do not inadvertently distort things and hamper our recovery by stopping people going to work and businesses re-employing them, which is the outcome we all want to see.

[Hywel Williams (Arfon) (PC) [V]]

On Friday, the Government announced support for ferry services between Northern Ireland, Scotland and England. The Holyhead-Dublin route was ignored. A great deal of Holyhead-Dublin traffic is in fact between Northern Ireland and Great Britain, including the transport of time-sensitive goods such as food and medicine. It is also vital to the economy of north Wales. Is the Chancellor just standing back and waiting for Holyhead, the UK’s second-busiest roll-on roll-off ferry port, to fail before stepping in?

[Rishi Sunak]

As we have demonstrated, we are prepared to support critical transportation services in this country, with huge economic intervention in rail, in buses and, as the hon. Gentleman acknowledged, in ferries. I know my right hon. Friend the Transport Secretary is well on top of that and he will bring to me any issues that he thinks need my consideration.

[Harriett Baldwin (West Worcestershire) (Con)]

I thank the Chancellor and his teams for the speed with which they have managed to get so much money to help so many of my constituents. As he thinks about how he is going to balance the black hole that is his budget at the end of this, may I suggest that he consider not only ending the fair fuel stabiliser now that fuel prices have fallen by so much, but putting a windfall tax on hedge fund managers who are currently selling short the very businesses he is trying to support?

[Rishi Sunak]

I thank my hon. Friend for her support. I cannot comment on future Budgets, but I certainly hear what she has to say. I echo what I said earlier to the hon. Member for Hove (Peter Kyle). We are all in this together. As we look to repair public finances and get our economy going after we exit this crisis, it is important that everybody, from every part of society, plays their part in that.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP) [V]]

Thank you very much, Mr Speaker. I am here virtually, but at a distance.

I thank the Chancellor for all he has done, is doing and will do in the future. Some in the hospitality sector, in particular private bus companies, do not have premises and fall just outside the present small business support scheme. Will the Chancellor agree to extend the scheme? Similarly, the coronavirus bank loan scheme has had 36,000 applications, but only 16,000 have been approved. Will the Chancellor ramp up underwriting cover from 80% to 100%, as other countries have been doing?

[Rishi Sunak]

What I would say to the hon. Member is that the new bounce-back loan scheme announced today does come with a 100% guarantee for loans of 25% of turnover up to £50,000. Given the structure of the Northern Irish economy that he knows so well, which is full of microbusinesses, I believe that that in particular will be a very significant intervention that will help the Northern Ireland economy.

[Felicity Buchan (Kensington) (Con)]

I congratulate my right hon. Friend on the scale, breadth and speed of the various packages, and thank him for them. Does he agree that what is important at the moment is getting cash and liquidity to businesses and individuals, hence why the micro-loans scheme is so important? Does he also agree that over time a lot of companies are taking on additional debt, so we may have to think about debt equity recapitalisation?

[Rishi Sunak]

My hon. Friend is absolutely right. I know she has spent a lot of time with businesses in her constituency to understand what is on their minds. Cash and liquidity is king, which is why the VAT deferral in particular that we put in place and which took effect some time ago—worth over £30 billion or 1.5% of GDP—is so vital in providing that breathing room. The new bounce-back loans will be available to businesses hopefully within a day or two of applying, which will also speed up cash. The furlough scheme is now up and running, and people are getting that cash in their bank accounts as we speak.

[Alan Brown (Kilmarnock and Loudoun) (SNP) [V]]

Many workers on low basic pay rely on commission to make up their wages, but if they are furloughed, they get 80% of their basic pay only, which causes real hardship. In response to my question in the Select Committee, the Secretary of State for Business, Energy and Industrial Strategy said that he is considering that matter. Will the Chancellor write jointly with him to confirm a solution that will give those workers access to 80% of their typical earnings?

[Rishi Sunak]

At this point, it is very difficult to make changes to the operation of these schemes; that would just delay further payment. For those workers who have fluctuating wages—for example, those on zero-hours contracts—we have provided employers and employees with the ability to take either the most recent time period and look at that over a year before, if they were seasonal, or to take an average of their earnings over a period, to ensure that they are not inadvertently penalised by a shorter period of lower earnings. I think that that does provide flexibility and generosity to those who do not have fixed amounts of work.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con) [V]]

I thank the Chancellor for all he is doing to protect jobs and income at this really difficult time, and especially the introduction of the job retention scheme. However, he will be aware that many companies do not initiate a payroll run until the end of the month. This means that new starters in early March were paid for work they did in March but were then laid off because they are unable to access the furlough scheme. Will he review that and consider other evidence of employment?

[Rishi Sunak]

When we announced the job retention scheme, I said that it would apply to those who were known to HMRC on 28 February. That was how the scheme was designed and set up. Over the last few weeks, we have moved that date to 19 March, which brings an extra few hundred thousand people into it and means that overall, just shy of 30 million people in employment are able to benefit from the furlough scheme. It is an extraordinary achievement for the team in HMRC to have conceived that in this short space of time.

[Daisy Cooper (St Albans) (LD) [V]]

Pubs and restaurants have been hit particularly badly by covid-19. Those with a rateable value of more than £51,000 do not qualify for the retail, hospitality and leisure grant fund. Six of the big pubcos are still charging their tenants rent, and now pubs are being told that they will be some of the last to reopen once restrictions start to lift. Will the Government commit to extend the retail, hospitality and leisure grant fund to properties with a rateable value of up to £150,000, instruct the big pubcos to stop charging their pubs rent, and commit to extend the furlough scheme for as long as pubs and restaurants have to remain closed or for as long as their income is affected by social distancing measures?

[Rishi Sunak]

The hon. Member is absolutely right that companies in the retail, leisure and hospitality sector are the hardest hit during this crisis. Of course, they can avail themselves of all the various interventions we have put in place more generally, but they also have one specific benefit: for most of these businesses, rent is a significant part of their cost structure, which is why we have given them a complete business rates holiday for this entire year.

[Julie Marson (Hertford and Stortford) (Con) [V]]

The economic package that my right hon. Friend has put in place is historic in its scope and ambition and has been an absolute lifeline to so many people and businesses in Hertford and Stortford. The bounce-back loans will help still more. Some—mainly larger—businesses are entitled to taxpayers’ support but do not need it, so they have not taken it. Does he agree that we should applaud the lead they have taken and encourage others that do not need it to do the same in the national interest?

[Rishi Sunak]

I thank my hon. Friend for her kind comments. I agree with her that they should be applauded. As I said earlier, as we go through this crisis, everyone has their own role to play, and they should play that role responsibly. Whether it is individuals, Government or businesses, I am glad to see everybody taking that advice to heart. She is right that the businesses that have done that deserve our praise. More generally, we are trying to support workers remaining attached to their jobs, and I will try to do that in as broad and comprehensive a way as I can, but she is right that those businesses deserve our praise.

[Stephen Farry (North Down) (Alliance) [V]]

Like others, I am sceptical that we will see a V-shaped recession with a sharp recovery. Some sectors and some regions will struggle more than others. Does the Chancellor accept the need for some form of future economic stimulus to restart the economy? Surely it is not simply a case of restarting the engines of the economy; the economy may need a bit of a push.

[Rishi Sunak]

The most important economic policy at the moment is to maintain the productive capacity of the UK economy during a period of shutdown. Our interventions are designed to preserve as many businesses, jobs and connections as possible. That is the best way to ensure that the recovery can be as strong as we would all like it to be. For the moment, that is where we will focus our attention.

[Andrew Selous (South West Bedfordshire) (Con) [V]]

I am grateful to the Treasury for the work it has done to keep the economy going. However, I have a tourism business and a leisure business that have been turned down by their banks, even though they are both viable, and they will need more than the £50,000 from the bounce-back scheme announced by the Chancellor today. These are excellent businesses that we must not lose. Will he continue to look further at such cases and consider grants for where there are very difficult situations?

[Rishi Sunak]

Without knowing the particular details of those businesses, I can say that many businesses in the retail, leisure and hospitality trade will be eligible for cash grants of £25,000. Also, all businesses can use the furlough scheme, which is significant, and there will be business rates holidays for those businesses. Furthermore, the statutory sick pay rebate scheme I announced earlier will be up and running next month, which will allow businesses to apply for a rebate on their statutory sick pay bill for up to 14 days per employee. That could benefit businesses by up to £48,000 as well. I hope that all those packages put together provide some relief to my hon. Friend’s business and many others.

[Andrew Gwynne (Denton and Reddish) (Lab) [V]]

The Chancellor rightly stepped in to do the right thing by many of our businesses as covid-19 hit our economy, but is he aware that there is a small group of people who took on pub tenancies between the last eligible date he set in the grant rules and the lockdown? I have three in my constituency. It is a sizeable financial commitment, and even more so when they then cannot trade for the foreseeable future. Will he look again at the rules and assist this small number of people now in limbo with no access to help?

[Rishi Sunak]

I am happy to look at the specific situation the hon. Gentleman raises, although I would caution that it is difficult to make changes to these schemes. As many Members have said, the important thing is now getting cash out to people, and the only way to do that is to let these systems run as designed, but I am happy to look at the issue he raised.

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con) [V]]

I congratulate the Chancellor and his team at the Treasury on everything they are doing to support the country through this very challenging time. On Scotland and the Barnett consequentials, how much extra funding has flowed to Scotland as a consequence of his announcement, particularly the business support? How much extra money has come to Scotland as a consequence of that?

[Rishi Sunak]

My hon. Friend is right. When I say that we are all in this together, I mean every part of our Union. The Government are steadfast in their support and are determined to get through this crisis by supporting and working very closely with all members of our Union. I can tell him that from the Budget onwards £4 billion in Barnett consequentials have been provided to Scotland, £3.5 billion of which relates specifically to the range of announcements in response to the coronavirus. Those numbers are in addition to the UK-wide measures that support business, such as the jobs retention scheme.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP) [V]]

I hope you are all doing well overseas in London.

Last week, a member of the Bank of England Monetary Policy Committee said that monetary financing for financial fiscal spend with central bank money rather than Government bonds is something that central banks are always doing. Direct funding of Governments by their own central banks is therefore a fact. Can we remember the words of the late American economist J. K. Galbraith, who said that the process by which money is created is so simple, the mind is repelled? Will the Chancellor take this opportunity not to repeat the socially divisive policy of austerity? Coming out of this crisis, the last thing any of us needs is another round of austerity.

[Rishi Sunak]

Rather than commenting on monetary policy, which it is obviously not my place to do, I can tell the hon. Gentleman that we are determined, as I have said, to preserve as much of the productive capacity of the UK economy as we can throughout this crisis. Such interventions will ensure that we can bounce back as strongly as possible and recover as much of our potential output as possible. Hopefully, that will put us in a strong position to carry on delivering on the agenda that we set out at the Budget: spreading opportunity to every part of the country and levelling up through investments in education, infrastructure and ideas.

[Steve Double (St Austell and Newquay) (Con) [V]]

As has already been highlighted, the tourism and hospitality sector will be hardest hit through this lockdown. As we are unlikely to come out of lockdown soon, the sector will need further support. Will the Chancellor reassure the sector that he will consider further support for tourism and hospitality? Will he reflect in particular on the seasonal nature of the sector? If we cannot reopen fully ahead of the peak summer season, many businesses will in effect lose a whole year’s worth of revenue.

[Rishi Sunak]

For as long as I have known my hon. Friend he has been an incredible advocate for the small tourism businesses in his constituency, which are a big driver of his local economy. I assure him that I will continue to keep a very close eye on the situation. As we think about exiting from the economic and social restrictions, I will look at the right interventions for every sector.

[Stephanie Peacock (Barnsley East) (Lab) [V]]

New research conducted by the Centre For Towns has found that one in three ex-industrial towns are among the most economically at risk from covid-19. Worsbrough in my constituency is the 10th most at-risk town. What plans does the Treasury have to help areas like mine in Barnsley to cope with this crisis and then recover from it?

[Rishi Sunak]

The significant economic interventions that we have put in place will help every part of the country, whether north or south, rural or urban—that is what they are designed to do. Businesses in the hon. Lady’s constituency will benefit from all the schemes. More broadly, the Budget set out an ambitious programme of investment in our regions to ensure that opportunity is felt wherever in this country someone happens to live. We remain incredibly committed to that agenda.

[Robin Millar (Aberconwy) (Con) [V]]

At least one forecast has predicted that coastal communities will be hit the hardest by any economic downturn following the covid-19 crisis. Here in Aberconwy, our queen of resorts, Llandudno, has been singled out as one of those communities that may well be hardest hit in the UK. The situation is further exaggerated by the fact that we are still approaching the peak of the crisis in north Wales. What measures has my right hon. Friend put in place to ensure that he will reach that balance between stimulating our economy, particularly the hospitality trade, and making sure that that stimulus does not come too soon with the result that we get hit by a second wave here in north Wales?

[Rishi Sunak]

This is why it is so vital that we get the timing absolutely right. We are not there yet, as the Prime Minister said. We have made good progress but we are all concerned about the risk of a second peak, which is why we must meet the five tests that the First Secretary of State set out a little while ago so that we can restore our economy gradually but with confidence.

[Stewart Hosie (Dundee East) (SNP) [V]]

I agree with the Chancellor that covid-19 is causing significant local and global economic problems, and I am sure he would agree with me that trade will be a vital ingredient in recovery. Is it not the case that—he should take this on board very seriously—notwithstanding the need to ensure security of supply for things such as medicine and medical equipment, he and the Government should resist any move or any siren voices that would push the UK towards general protectionism in trade?

[Rishi Sunak]

The Prime Minister has been completely clear in his commitment to free trade; it is an important part of what we believe. It is also right, especially during this time, that we can ensure the security of supply that the hon. Gentleman mentioned. That is what the Government are doing, but it requires working with our international partners as well as focusing on domestic sourcing. We can continue to do both things, especially to ensure that our workers get all the equipment and supplies that they need at this time.

[Dr Andrew Murrison (South West Wiltshire) (Con) [V]]

I very much welcome the statement, particularly the news about the bounce-back loans, which will be very helpful for small businesses in my constituency. Selling milk and meat into the non-domestic market has largely stopped, as have farm diversification schemes that were necessary to cross-subsidise land-based businesses. What more can the Chancellor do, beyond that which he has announced today, to assist agricultural businesses—land-based businesses—across the country?

[Rishi Sunak]

Representing a rural constituency myself, I understand very well the comments that my right hon. Friend has made. I am in constant dialogue with the Secretary of State for Environment, Food and Rural Affairs on these issues. We are making sure that all the economic interventions that we have put in place can benefit not just the agriculture sector but as many sectors as possible.

[Margaret Ferrier (Rutherglen and Hamilton West) (SNP) [V]]

Fairs and shows are on the back burner for the summer. That means that the livelihoods of show families in my constituency are on the line. They purchased rides and equipment through asset finance companies and they need to cover the repayment costs, which have not stopped amid this pandemic. What assurances can the Chancellor give me that the coronavirus business interruption loan scheme is offering the funding needed to support travelling funfairs?

[Rishi Sunak]

If I understood the hon. Lady’s question correctly, I can assure her that the coronavirus business interruption loans apply to meeting asset-related costs already, so it is perfectly possible to use that scheme for a finance arrangement like that. But if that was not her specific question, I would be happy to answer in writing.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

May I first declare my business interests, and, from a business perspective, thank the Chancellor for the excellent work that he is doing—a view shared widely across the business community? On the business interruption loans, I welcome the removal in the new micro loan scheme of the forward viability test, which is one of the complexities that slows down the current scheme. Will he commit to looking at removing that from the main scheme as well, which would help to get money out of the door much more quickly?

[Rishi Sunak]

My hon. Friend has been not, I would say, a thorn in my side but a doughty champion of those who would like to have access to these loans. He has made this point forcefully and repeatedly to the Economic Secretary and to me. I am pleased to tell my hon. Friend that we have been working with the banks over the past week or so and we have been able to make, on his recommendation, several changes to the scheme, including from the regulatory side through the Prudential Regulation Authority and the Financial Conduct Authority, to give banks the comfort they need, as well as reassurances from the Government. A statement will be issued shortly by UK Finance confirming that banks will not require from businesses the provision of forward-looking financial information or business plans. I hope that that gives him the reassurance he needs. It will give comfort to many businesses. I congratulate him on making this point so forcefully and effectively over the past week or two.

[Mr Alistair Carmichael (Orkney and Shetland) (LD) [V]]

I think we all understand that, as the Chancellor said, these schemes were designed at pace, but I have to tell him that here in the northern isles our economy is predominantly based on small businesses, where every day it becomes more apparent that there are too many people falling through the gaps, especially the self-employed, people working from home, and those relying on directors’ dividends for their income. If it is just too difficult to design a scheme to help all these people, will the Treasury now look seriously at the idea of a universal basic income? Yes, it might risk handing cash to people who do not actually need it now, but that can be clawed back through the tax system, and it will give help to people who are feeling desperate for it now.

[Rishi Sunak]

As I have said previously, I do not agree with a universal basic income. I do believe, though, that our schemes will benefit many, many millions of people, particularly the self-employed scheme, which will benefit over 3.5 million people who need it, and, indeed, the new bounce-back loan I announced today, which will also be available to those in self-employment with business accounts.