Covid-19: Support for UK Industries

Part of the debate – in the House of Commons at 4:40 pm on 25th June 2020.

Alert me about debates like this

Photo of Matthew Pennycook Matthew Pennycook Shadow Minister (Business, Energy and Industrial Strategy) 4:40 pm, 25th June 2020

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

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

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

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

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

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

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

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

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

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

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

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

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

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