Covid-19 Economic Support Package

Rishi Sunak Excerpts

Wednesday 14th October 2020 Commons Chamber

[The Chancellor of the Exchequer (Rishi Sunak)]

I beg to move an amendment, to leave out from “House” to end and add:

“welcomes the Government’s package of support worth over £200 billion to help protect jobs and businesses through the coronavirus pandemic, including the eight-month long Coronavirus Job Retention Scheme, Self-Employment Income Support Scheme, £1,000 Job Retention Bonus, unprecedented loan schemes, business grants and tax cuts; further welcomes the pledge to protect, create and support jobs through measures in the £30 billion Plan for Jobs such as Eat Out to Help Out, VAT and stamp duty cuts and the £2 billion Kickstart Scheme; acknowledges the further support for jobs with increased cash grants and the expanded Job Support Scheme to support those businesses legally required to close due to national or local lockdowns; and further acknowledges that this is one of the most comprehensive and generous packages of support anywhere in the world.”

I very much welcome the opportunity to update Parliament and the country on the economic challenges we face and our plan to tackle them. My message to hon. Members in all parts of the House is simply this: we must not shy away from the burden of responsibility to take decisions and to lead. We must do this with honesty and co-operation. We cannot allow the virus to take hold. We must prevent the strain on our NHS from becoming unbearable, but we must also acknowledge the stark reality of the economic and social impacts of another national lockdown. The costs of doing that are not abstract—they are real: they can be counted in jobs lost, businesses closed and children’s educations harmed; they can be measured in the permanent damage done to our economy, which will undermine our long-term ability to fund our NHS and our valued public services; and they can be measured in the increase in long-term health conditions that unemployment causes.

This is not about choosing one side or the other. It is not about taking decisions because they are popular. It is not about health versus wealth, or any other simplistic lens we choose to view this moment through. The Prime Minister was absolutely right when he set out our desire for a balanced approach, taking the difficult decisions to save lives and keep the R rate down, while doing everything in our power to protect the jobs and livelihoods of the British people. The evidence shows that a regional tiered approach is right, because it prevents rushing to another lockdown the entire country would suffer rather than targeting that support and preventing a lockdown in parts of the country where the virus rates are low.

This is an imperfect solution. We have been consistently honest about the difficulties and hard choices that this moment presents. We have heard a lot about the SAGE advice. The SAGE minutes themselves say that Ministers must consider the

“associated costs in terms of health and wellbeing”

and the economic impacts alongside any epidemiological assessment. It seems like the only people not prepared to confront that reality are in the Labour party, which is surprising given that just days ago the shadow Health Secretary said a new national lockdown would be “disastrous” for society and

“would cause unimaginable damage to our economy and…wellbeing.”

[Mr Perkins]

The Chancellor’s response would have more credibility if he was not stood there following month after month of failure by a Government whose testing and tracing regime—whose entire approach—got us to this point in the first place. We all recognise how expensive this is going to be, but it has happened because of the failure that he and his party have facilitated.

[Rishi Sunak]

The debate following this will address test and trace. It is worth bearing in mind that more than £12 billion has been invested in our test and trace capacity. Testing capacity has increased from simply 10,000 a day at the start of this crisis to close to 300,000 today, on its way up to half a million, and ours now ranks as one of the most comprehensive testing regimes anywhere in Europe.

[Andrew Griffith]

Does my right hon. Friend agree that, faced with a choice between a national blunt instrument that would wreak enormous economic damage, and something that is more finely calibrated region by region based on the science, there is no choice to make?

[Rishi Sunak]

My hon. Friend is absolutely right: it is a blunt instrument. It would cause needless damage to parts of our country where virus rates are low.

[Several hon. Members rose—]

[Rishi Sunak]

Having spent weeks indulging themselves with political attacks on this Government’s efforts to protect jobs, Labour have now flipped and support a blunt national lockdown. They will not say how much damage that will do to jobs or livelihoods, they will not say how they plan to support businesses through it, and they do not seem to care about the long-term stability of the public finances. If they did—[Interruption.]

[Mr Speaker]

Order. I am sorry, Chancellor. Please, I cannot hear the Chancellor. I want to hear him, and I am sure people outside the House want to hear him, so please, if he is going to give way—the Chancellor is a generous man—he will give way. In the meantime, I do not need people shouting.

[Rishi Sunak]

Thank you, Mr Speaker. If they did care, we would hear from the shadow Chancellor how many jobs Labour’s lockdown would cost.

[Alex Cunningham (Stockton North) (Lab)]

I am grateful to the generous Chancellor for giving way. Today, the North East Child Poverty Commission said that 35% of children in the north-east region are living in poverty. As a direct result of Conservative policies, we are going to see that number increase. What is he going to do about those children?

[Rishi Sunak]

The most vulnerable have been at the forefront of our mind throughout this crisis, which is why it is clear from the distributional impact of our interventions, which was published over the summer, that they have benefited those on the lowest incomes the most. It is there in black and white: a Conservative Government making sure the most vulnerable are protected through this crisis.

Any responsible party of government would acknowledge the economic cost of a blunt national lockdown. The Labour party may say it has a plan, but be under no illusion: a plan blind to the hard choices we face—a plan blind to and detached from reality—is no plan at all.

[Ms Angela Eagle]

In the Liverpool city region, which contains my constituency of Wallasey, there is £40 million of unspent support for business that the Chancellor generously granted in the first wave of the pandemic. Given that we are in tier 3, will he say today at the Dispatch Box that he will release that £40 million so that the local authorities in the Liverpool city region can apply that money to help their local businesses during this highest level of lockdown that we are suffering at the moment?

[Rishi Sunak]

I know what a difficult time this is for the hon. Lady and her constituents. With regard to underspends—I will come on to this later—I think it is wrong to think of them in that way. That was the Government giving an advance to local authorities to make payments to businesses. That was done on the basis that every local authority will have a wildly different degree of overspend or underspend, which we true up at the end of the process. We could equally have asked local authorities to make payments themselves and reimbursed them afterwards. There is significant financial support both for her local authority and the businesses in her area that have closed down. That was announced by the Prime Minister and I will come on to address that in detail later. It is right that that support is there.

Let me reiterate our plan. The House will be well aware of the gravity of our economic situation. The latest figures show that our economy grew by 6% in July and 2% in August, but it remains almost 10% smaller than it was before coronavirus hit. Business investment suffered a record fall in the second quarter of this year. Consumer sentiment remains well below its long-run average. Despite the significant support we have provided, the data is beginning to reveal the true extent of the damage that coronavirus has caused our labour market. The latest statistics published just yesterday show employment falling, unemployment rising and welfare claims rising. The revisions that the Office for National Statistics has made to its previous estimates show that unemployment was higher than it thought over the summer.

I have talked about facing up to the difficult truths clearly, and we are facing an economic emergency, but we are acting on a scale commensurate with this emergency as we address my single biggest priority: to protect people’s jobs and their livelihoods. We have put in place a comprehensive plan to protect, support and create jobs in every region and nation of the United Kingdom. Through more than £200 billion of support since March, we are: protecting more than 9.5 million jobs through the job retention schemes; strengthening our welfare safety net with an extra £9 billion for the lowest paid and most vulnerable; granting more than £13.5 billion to those who are self-employed, with further grants to come; and protecting over 1 million small and medium-sized businesses through £100 billion of tax cuts, tax deferrals, direct grants and Government-backed loans.

[Kevin Hollinrake]

Does my right hon. Friend agree that the best way to protect jobs is to keep the economy open wherever possible? Most other nations are using a local-restrictions approach to deal with this situation, including Germany, which is using lockdowns at a district level, not even at a state or county level. Does he agree that that is the best way forward?

[Rishi Sunak]

My hon. Friend is absolutely right. The only sustainable way to protect jobs in the long run is to have an economy that is open and functioning. No amount of support can make up for that.

There are other things we have done: eased repayment terms on those loans through pay as you grow; delivered on our promise to give the NHS what it needs; backed hundreds of thousands of young people to find good jobs through the kickstart scheme and new investment in training and apprenticeships; created green jobs through the £2 billion green grant programme; showed that we are here for our cultural sector, with the cultural recovery fund and a further support package for charities; and invested hundreds of billions of pounds in the largest, most sustained programme of infrastructure investment the UK has seen in decades. That is comprehensive action to protect the jobs and livelihoods of the British people. It undermines the credibility of the Labour party that, in the face of all that support, it continues to pretend that insufficient action is being taken.

[Rachael Maskell (York Central) (Lab/Co-op)]

Will the Chancellor give way?

[Rishi Sunak]

I will make some progress.

As the crisis evolves, our economic response will also evolve. What we will see over the winter is a complex picture of some businesses able to open safely and others being ordered to close to control the spread of the virus. Our winter economy plan provides a toolkit to protect jobs and businesses over the difficult weeks and months to come. The plan has three parts.

First, the job support scheme will protect jobs in businesses that are open or closed. If businesses can open safely, but with reduced or uncertain demand, the Government will directly subsidise people’s wages over the winter, giving those employers the option to bring people back to work on shorter hours rather than making them redundant. We are expanding the job support scheme to give more support to businesses that are ordered to close. For people unable to work for one week or more, their employer will still be able to pay them two thirds of their normal salary and the UK Government will cover the cost. This national programme will benefit people the same wherever they live and whatever job they do.

[Mr Perkins]

There seems to be a basic dishonesty at the heart of these tier 2 plans. There is no support for pubs. They are being told that they are allowed to stay open, but the measures being brought in are making them unviable. At least with our approach what we would see is a short-term hit, but then a reduction in the rate and more of a chance for us to return to normality. Will he at least admit that those pubs in tier 2 areas are not going to have viable businesses and say something about what he will do to support them?

[Rishi Sunak]

I am glad that there has finally been some acknowledgment that there will be a hit to businesses and jobs from what the Labour party is suggesting. It is right that there is support provided for hospitality, which is why the Government have provided a VAT reduction, a business rates holiday, direct cash grants, eat out to help out and now the job support scheme that is directly there to support those businesses that are open and operating but not at the same levels that they were previously. To give those businesses and their employees certainty, rather than the weeks that I heard about from the hon. Member for Oxford East, this scheme will run for six months through to the spring. This job support scheme is in line with those in most other European countries and, to support the lowest paid through this crisis, we have made our welfare system more generous and responsive too.

[Rachael Maskell]

The Chancellor will know from York’s economic base and the complexity of our economy that unemployment may rise to 27% in our city. What additional measures will he put in place to build the bridge to get us through this really difficult period? The job support scheme will just not deliver for my constituents.

[Rishi Sunak]

The job support scheme was widely welcomed not just by businesses groups such as the CBI and the Federation of Small Businesses but by the TUC, which I was happy to work closely with to design the scheme. However, she is right. That is not the only thing that we will do to support jobs, which is why we have put in place the £2 billion kickstart scheme to provide fully funded job placements for those young people most affected by this crisis and most at risk of unemployment. Thousands of those young kickstarters will be starting their new jobs this autumn.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

Does my right hon. Friend agree that, while we all want simple solutions to this crisis—whether that is the Opposition suggesting full lockdown or an unlimited extension to furlough—there are no simple solutions. This is a highly complex problem. Every intervention and every support scheme will be nuanced and will have to be regionally effective There are no simple solutions. We should not be looking for simple solutions; we should be looking for the right ones.

[Rishi Sunak]

As ever, my hon. Friend is spot on. It is not leadership to shy away from the hard choices and real trade-offs that these decisions take. She is absolutely right.

The second part of our winter plan is to support businesses that are legally required to close, and we heard about that previously. Those businesses will now be able to claim a cash grant of up to £3,000 per month depending on the value of their property. Those grants can be used for any business cost and will not need to be repaid. I have also guaranteed £1.3 billion of funding for the Scottish, Welsh and Northern Ireland Administrations so that they can choose to do something similar. The hon. Member for Oxford East asked whether other areas had received that support, and was under the impression that none other had. I can correct the facts. Bolton is the only other area that has faced hospitality restrictions in that way and Bolton Council has received, at the last count, I believe almost £200,000 of support to compensate its businesses because they have been closed in a similar way.

[Anneliese Dodds]

I fear that the Chancellor is confused. I was not talking about the much-trumpeted local restriction support grant. He is right; it has been applied so far only to that one area of Bolton. I was talking about the business support that was delivered to Leicester, Oadby and Wigston, which I believe has not been provided to any other part of the country.

[Rishi Sunak]

It is the same type of support—support provided to the local authority to help their businesses. That was the question the hon. Lady asked my hon. Friend the Member for Harborough (Neil O’Brien), and I am happy to answer it.

The third part of our plan is to provide additional funding for local authorities. Again, I am happy to correct what may be a misunderstanding of the situation for the hon. Member for Oxford East. It is not the case that that support is only for local authorities in tier 3. There is a scaled structure. All local authorities placed into different tiers will receive extra financial support on a per capita basis, using the funding formula that my right hon. Friend the Chief Secretary is implementing. That funding will be worth up to almost half a billion pounds on a national basis, to support local areas and their public health teams with their local response, whether that is more enforcement, compliance or contact tracing. That comes on top of the almost £1 billion announced by my right hon. Friend the Prime Minister that we will provide to all local authorities, as we talk to them about their needs over this difficult period, to ensure that they can provide the services they need to. That also comes on top of the £3.7 billion already provided to local authorities.

This Government are dealing with the world as it is. While the hon. Member for Oxford East may not wish to confront that reality, I do not have that luxury. We cannot just let the virus take hold, but nor can we blithely fall into another national spring-style lockdown, as the Labour party wants to, rather than following our regional, tiered and localised approach. We are dealing with a once-in-a-century event, and I can assure Members on both sides of the House that the Government are doing all they can to support the country through this crisis.

We need a balanced approach, we need a consistent approach, and—as you will have seen, Mr Speaker—we also want a co-operative approach. But any responsible party calling for a shutdown of our entire country should be honest about the potential economic and social costs of such a dramatic measure. At the very least, they should have the integrity to acknowledge that what they are proposing will cause significant damage to people’s lives and livelihoods. I have never said that there are easy choices or cost-free answers. This is the reality we face, and it would be dishonest to ignore that truth. So no more political games and cheap shots from the sidelines. The Labour party can either be part of this solution or part of the problem. It is called leadership, but from them, I am not holding my breath.

[Mr Speaker]

There will be a four-minute limit on speeches after the SNP spokesperson. I call David Linden.

--- Later in debate ---

[David Linden]

I am not sure that the official Opposition are proposing multiple circuit breaks, to be fair to them, but it is not my job to defend the policy of the Labour party. However, what I will defend is the approach of the SNP Scottish Government, who are trying to do this in a balanced way, but we would like to see a lot more financial flexibility to do that. It would help if the UK Government gave us those financial powers. That is what I would say to the hon. Gentleman on that.

I want to come on to that very point, and highlight the work that the Scottish Government have done in supporting business during the second wave of the pandemic. The Scottish Government’s total package for businesses is over £2.3 billion. That is more than the consequentials received from the UK Government. As I mentioned to the hon. Member for Totnes (Anthony Mangnall), the Scottish Government are making an additional £40 million available to support businesses that will be affected by the new measures, and will work with affected sectors in the coming days. I am in no doubt of that. My city of Glasgow is one of those that have been under local lockdown restrictions, and the restaurants and bars in my constituency have had to shut down, but we have recognised when we have asked them to shut down, which is a way of trying to reduce the spread of the virus, that support must be coming.

The Scottish Government will continue to discuss with businesses how the support package we have offered can mitigate some or all of the employer’s contribution to the UK job retention scheme. We have put in place a £230 million “restart the economy” capital stimulus package to help stimulate the economy following the pandemic. We have announced details of a £38 million package of support for innovative early stage businesses. We have committed £2.2 million of funding to the Music Venue Trust, which will provide stability to grassroots music venues over the coming months.

What all this should highlight is that the UK Government’s financial plans have been and continue to be inadequate—excluding the self-employed, freelancers and artists; prematurely ending the furlough scheme; and refusing to make permanent the £20 increase in universal credit. Where we have had the power, the Scottish Government have spent £6.5 billion on tackling covid—above the Barnett consequentials—and they are doing all they can and all within their powers to support businesses across Scotland.

That is the issue at hand. There is only so much that the Scottish Government can do when the vast majority of Scotland’s tax and spending decisions are taken here in Westminster. The fact is that the Government cancelling the UK Budget simply demonstrates that Scotland remains an afterthought for the Tories. I would be more than happy to give way to the Chancellor if he can stand up and give some sort of clarity to Scotland’s Cabinet Secretary for Finance about what budget we are supposed to set when the Government have just gone ahead in this way.

[Rishi Sunak]

I have addressed this previously, in this place and others. There is absolutely no bar on the Scottish Government setting a Budget in advance of the UK Budget. The fiscal framework itself allows for that very possibility. That is exactly what happened at the start of this year, so there is simply no reason why that cannot happen. The OBR forecasts were provided as normal this autumn. Those forecasts are used by officials to make all the necessary calculations. It is simply wrong to suggest that the Scottish Government are unable to set a Budget until the UK Government have.

[David Linden]

Conservative Governments used to be really good on upholding the rule of law, and Conservative Governments used to be really good when it came to managing the economy, but we now have a Chancellor who appears to want the Scottish Government to set a completely blind Budget. For somebody who tries to advocate the idea of fiscal responsibility, that strikes me as rather bizarre.

People in Scotland are increasingly aware that the only way to move forward in terms of protecting our economy, managing our own finances and standing on our own two feet is with the powers of independence. With the United Kingdom Internal Market Bill destroying their hard-fought devolution, more and more Scots are supporting the SNP in calling for independence.

An Ipsos MORI poll revealed yesterday that 65% of people in Scotland think Britain is heading in the “wrong direction” compared with just 12% who think Britain is heading in the “right direction”. If we want to continue looking at polling, and I know the UK Government are doing quite a lot of polling on this issue at the moment—they are being a bit coy about releasing it—Ipsos MORI released a poll today showing that 58% of Scots now support Scottish independence.

I suggest to the Chancellor of the Exchequer that that backs up the point that people in Scotland can see this UK Government are not doing enough, and therefore they want to see these powers being transferred to Scotland so we can take our own decisions on these issues.