Coronavirus Job Retention Scheme

Stuart C McDonald Excerpts

Thursday 17th September 2020 Commons Chamber

[Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)]

I congratulate my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) on securing the debate, and on her robust and eloquent speech. Like her, I want to again give a warm welcome to the job retention scheme, which has indeed operated like a lifeboat for many of my constituents and for people across the United Kingdom. I think that welcome is pretty much unanimous, but what I think Members are saying today, certainly on the Opposition Benches, is that, first, we believe there was and is room for some more people on that lifeboat, and that too many have been unfairly excluded from it. Secondly, having provided that life raft, it would be utterly nonsensical, a monumental mistake, to suddenly sink it or kick everybody off it at the end of October while we are still in very deep and dangerous waters, and a long way from safety.

The Government say that the scheme cannot last for ever—I do not think anybody in this House says that it should—but that is not a reason or justification for stopping it on 31 October. That is an arbitrary date. It bears no relation to where we are in the pandemic, or where we are in terms of opening up again and recovery taking hold. It means that an avalanche of viable jobs are just going to be destroyed. So it is disastrous for workers, bad for employers and bad news for the economic recovery. As my hon. Friend made clear, it is also bad for the Government’s balance sheet. We know that a quarter of the job retention scheme costs are recouped by the Exchequer straight away through social security savings and from tax paid by furloughed staff. As she pointed out, the analysis shows that, by extending the scheme by eight months, debt as a percentage of GDP would fall rather than increase, because of the impact it would have on growth in our economy.

[Andy Carter]

The hon. Gentleman talks about an arbitrary date of 31 October for ending the scheme. Does he have in mind a date when he would like it to end, or should it continue for ever?

[Stuart C. McDonald]

I said specifically that the scheme would not continue for ever and it cannot continue for ever, but that should be based on an analysis of the economy, where we are at and the number of jobs available. Conservative Members keep telling us that people should be looking to move into employment, but any analysis by any major think-tank says that those job opportunities are just not there at the moment, so we have to wait for a time when the economy is on a more even keel, which will not, on any indication, be by 31 October.

[Christine Jardine (Edinburgh West) (LD)]

As the hon. Gentleman possibly knows, the Liberal Democrats agree that the scheme should be kept going. We have specifically looked at June next year as a minimum, which would cost £10 billion. That is not much more than withdrawing the scheme would cost, as the Chancellor is proposing at the moment, and is a drop in the ocean compared with the eventual cost if we do not support the economy.

[Stuart C. McDonald]

I agree wholeheartedly. I do not want to put a date on it today, but the costed proposal from the Scottish Government, which has been looked at by the National Institute of Economic and Social Research, is for an eight-month extension. That would save tens of thousands of jobs in Scotland, and even more across the United Kingdom, and pay for itself, because debt as a percentage of GDP would fall rather than rise. It makes perfect sense from every single point of view. It has to be about analysis rather than just picking a date in the calendar, which is essentially what the Government have done.

All in all, the scheme is a great investment, and a better one, as hon. Members have said, than the deadweight job retention bonus scheme. As we have heard, many countries are extending their similar schemes, and we should not be the outlier in that regard. There is an urgency about the situation, because employers are deciding right now what they are going to do with furloughed employees at the end of October, so we cannot wait. We need a commitment from the Government today.

The scheme does not require to be completely unchanged. We have heard about some of the flexibilities and the changes that were made as we went along, and more changes could be made as we go ahead. It could be targeted by sector, as some have suggested. There must be a focus on areas where there are local lockdowns or other restrictions. We could look at the other models that have been implemented by countries such as France and Germany, which involve short time and wage subsidies.

I join hon. Members in highlighting the desperate plight of those who have been left off the lifeboat altogether for totally unjust reasons. That includes a huge number of people who simply changed jobs at the wrong time; those who work only a small number of hours for a particular employer, which puts them below the minimum salary threshold; those paid in the form of dividends; and those working as PAYE freelancers, especially in industries such as TV and the arts, who have been hung out to dry.

Many came close to qualifying under the job retention scheme or the self-employment income support scheme, and it is heartbreaking that they were left qualifying for neither. The reality is that many have been left with nothing, or next to nothing, because they are not entitled to other support. Essentially, the Government response appears to be that it would be too hard to fix for everybody, but that is as nothing compared with the hardship that has been inflicted on my constituents.

In the context of the Government being happy to invest £10 billion in a job retention bonus scheme that is likely to have little impact, investing in support for those excluded people could be transformational for them. That may well be more labour-intensive for HMRC, rather than relying on real-time information submissions, but it can be done. As the Minister knows full well, there is a tax office in Cumbernauld that is set to close, possibly in the next few months. If he wants to keep that tax office open, I am sure that the employees there would be happy to do the work required to extend the scheme. At the end of the day, my constituents and the excluded across the UK are not asking for anything more than fairness. I hope that the Treasury will think again and offer those people a hand on to that lifeboat.

[Several hon. Members rose—]

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

I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on introducing the motion and I thank the Backbench Business Committee for granting the debate. I thank other hon. Members for their contributions to an energetic, well-attended, engaged and interesting debate. As the hon. Lady will know—as we are all aware—we in this House continue to face an enormous challenge.

As has been widely recognised across the Chamber, since March, the Government have acted with great determination to protect people’s livelihoods. Indeed, I think it is recognised that our response has been one of the most comprehensive and generous anywhere in the world. The Office for Budget Responsibility and the Bank of England agree that the Government’s actions in the face of the pandemic have helped to safeguard millions of jobs and businesses.

The job retention scheme—the furlough scheme, as it has been described—has been central to that response. I will talk a little about that and then come on to some of the very interesting points made by colleagues from across the House. As the House will be aware, the furlough scheme was designed and implemented at extraordinary speed, and launched on 20 April, just a month after its announcement. Its purpose has been to help those who would otherwise have been made unemployed and to support businesses as quickly as we could. I do not think that anyone has questioned its success, as I have mentioned. According to the latest figures available, the CJRS has helped 1.2 million employers across the UK to furlough 9.6 million jobs, at a value of some £35.4 billion.

The hon. Member for Ilford North (Wes Streeting) will not often hear me say this, but how right he was to describe this as one of the Government’s most effective schemes. It is a hotly contested area, and there are many schemes that he could have chosen, but I think I heard him say—I wait to be corrected—that this was one of the most effective. He is absolutely right about that: it was, and it is. Detailed figures show that, up to 30 June, the CJRS had supported nearly 800,000 jobs furloughed in Scotland, more than 400,000 in Wales and almost 250,000 in Northern Ireland. The hon. Member for North Ayrshire and Arran was right to say that it would be churlish not to recognise the CJRS as a laudable scheme. It has had an enormous impact on every single constituency represented in this Chamber.

Opposition Members have pointed to other countries that they would like the furlough scheme to emulate. Of course, they are welcome to do that. They might, for example, want us to contribute at the same wage rate as in Spain, but in fact our furlough scheme does more than that. They might want us to support the same range of businesses as the furlough scheme in New Zealand does, but in fact we are supporting a much wider range of businesses. They might want our scheme to run for as long as that originally proposed in Denmark, but in fact our scheme runs for twice as long. In a majority of sectors in France, which has been mentioned on several occasions, businesses have had to make an employer contribution of 40%, which is significantly higher than in the UK. Why should we imitate that scheme? Why should we have a 40% contribution rate? I think that would be wrong.

At its conclusion in October, the furlough scheme will have been open for eight months from start to finish. Of course, it is understandable in that context that Opposition Members should be calling for an extension, but the Government’s view is that it is in nobody’s interests for the scheme to continue forever—I am not suggesting that that has been widely promoted as a policy option by Opposition Members—and, if it does not, it has to be brought to an end at some point. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) mentioned that it was important to do that on the basis of analysis. Let me reassure him that no one does more analysis than the Treasury does. We look at these issues every which way. We draw on an extremely wide spread of data sources across a number of different areas of behaviour, in both the consumer sector and the wider productive economy. Our view, which has been expressed separately and independently by Andy Haldane, who has been mentioned in this debate, is that it would be irresponsible to trap people in jobs that can exist only because of Government subsidy.

My hon. Friend the Member for Sevenoaks (Laura Trott) was absolutely right to point to the importance of energising the possibilities for new work, new opportunities and new scope in the labour market, particularly for women. However, the onus must be on us to provide fresh work opportunities for those who need them across the UK, and the Government have been doing just that through the Chancellor’s plan for jobs.

As the House will know, we are thoroughly committed to the responsible management of the public finances, in part because no one can say how long this pandemic will last for. As has been recognised by none other than the OECD, the work of the last 10 years has given us relatively strong public finances, which we have achieved by bringing borrowing and public debt under control. That is what we are needing to draw on in tackling the challenges posed by covid-19. With Government debt now exceeding the size of UK economy for the first time in more than 50 years, we must continue to balance the needs of the present moment with the need to maintain the country on a sustainable financial footing.

[Stuart C. McDonald]

The Minister will have heard a couple of folk refer to analysis that shows that by extending the scheme for eight months, debt as a percentage of GDP will fall rather than rise because of the positive impact that it would have on growth and total GDP.

[Jesse Norman]

I have not seen the National Institute of Economic and Social Research analysis that the hon. Gentleman talks about, which is somewhat embarrassing, since I am a governor of the national institute—I shall ask it to forward that to me. I am pleased to say that it is independent of its governors and rightly so. I will certainly look at that.

The point I would make is that although the scheme as such is winding down, Government support is very much not. It continues across a very wide range of packages and includes, as colleagues rightly mentioned, the bonus. I think that that is much underestimated by colleagues—it is a very important element. That guarantees a one-off payment of £1,000 to employers for each furloughed employee they bring back to do meaningful work and earn an average of £520 a month between November and January, and who continues to be employed by the same employer as at 31 January 2021.