Economy Update

– in the House of Commons at 2:11 pm on 16th June 2021.

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Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury 2:11 pm, 16th June 2021

Before I make my statement, I add my appreciation to that of colleagues for Sir Roy Stone and the contribution he has made during his time in the House.

There is little doubt that the four-week extension to restrictions announced on Monday will present additional challenges to thousands of people and businesses across the country. That is why at the Budget we went long and erred on the side of additional support. The package of support from my right hon. Friend the Chancellor was designed to accommodate short delays such as this. Indeed, he told the House at that time that we were

“extending our support well beyond the end of the road map to accommodate even the most cautious view about the time that it might take to exit the restrictions.”—[Official Report, 3 March 2021; Vol. 690, c. 255.]

Most of our economic support schemes do not end until September or after, providing crucial continuity and certainty for businesses and families—something that was welcomed by business leaders and sector leaders when it was announced. They praised the reassurance provided for the long term.

Let me remind the House of the scale of support we have announced for British households and businesses over the past 15 months: £352 billion. We have protected jobs, with 11.5 million unique jobs supported by the furlough scheme, which will be in place until the end of September. At the Budget, we also extended the self-employment income support scheme, supporting nearly 3 million self-employed people and taking the total expected support offered through the scheme to nearly £3 billion.

Businesses have been supported, too, with tax cuts, deferrals, loan schemes and cash grants worth over £100 billion. Our restart grants, worth up to £18,000 from April, have helped Britain’s businesses to get going, at a cost of £5 billion. Some £2.1 billion of discretionary grant funding has been provided for councils to help their local businesses. Last financial year, we provided an unprecedented 100% business rates holiday for all eligible businesses in the retail, hospitality and leisure centres—a tax cut worth £10 billion. This financial year, over 90% of these businesses will receive a 75% cut in their business rates bill across the year to March 2022, and we have extended the 5% reduced rate of VAT for a further six months. The loan guarantee schemes, including the bounce back loan scheme, have provided £70 billion of loans to 1.5 million companies.

We have provided targeted sectoral support, too. At the Budget, for instance, we provided an additional £700 million to support local and national arts, culture and sports institutions as they reopen. That is on top of the £1.57 billion culture recovery fund, bringing our total support for sports and culture to more than £2 billion, with about £600 million yet to be distributed. It is businesses that will create jobs and grow the economy, and we have stood behind them since day one of this crisis.

Just as we have supported jobs and businesses, so have we supported livelihoods too: the temporary £20 uplift to universal credit will continue until the end of September; we increased the national living wage to £8.91 from April and extended it to those over 23; we have increased the local housing allowance for housing benefit, meaning that more than 1.5 million households have benefited from an additional £600 a year, on average; and we provided a £670 million hardship fund to help more than 3 million people keep up with their council bills. This comprehensive package has helped to protect millions of jobs, businesses and livelihoods, and our plan is working. GDP is outperforming expectations: unemployment is forecast to be much lower than previously feared; consumer confidence has returned to pre-crisis levels; businesses insolvencies in 2020 were actually lower than in 2019; and signs in the labour market are encouraging, with 5.5 million fewer people on the furlough than in April 2020. In fact, figures released by Her Majesty’s Revenue and Customs just yesterday showed that the number of people employed has risen by more than 400,000 since November. Of course, covid has impacted different sectors in very different ways, and some particularly acutely, but it should be welcome news to everyone in this House that the early signs are of a recovery in our labour market.

This plan has come at a cost, albeit one that has reduced economic scarring that would have been inflicted otherwise by covid. Last year saw the highest peacetime level of borrowing on record—£300 billion. We are forecast to borrow a further £234 billion this year and a further £107 billion next year, and at a higher level of debt the public finances are more vulnerable to changes in inflation and interest rates. Indeed, a sustained increase in inflation and interest rates of just 1% would increase debt interest level spending by more than £25 billion in 2025-26. As a result, at the next spending review, we will keep the public finances on a sustainable medium-term path, maintaining the trajectory established at the Budget, so that we have the resilience we need to respond to any future challenges.

A huge and comprehensive economic shock has been met with a huge and comprehensive response—one that is working. I am pleased, however, to be able to make one further announcement today. Many businesses have accrued debts to landlords during the pandemic. Because of the threat that posed to jobs, we introduced protections to prevent the eviction of commercial tenants due to non-payment of rent. It is the Government’s firm position that landlords and their tenants should continue to resolve those debts through negotiations, and I welcome the various industry-led schemes already in place, and those being developed, to provide resolutions through arbitration. But in recognition of the importance of jobs in the many affected businesses at the heart of local communities, we launched a call for evidence in April on further actions to take to resolve those debts. As a result of that call for evidence, the Government now plan to introduce legislation to support the orderly resolution of these debts that have resulted from covid-19 business closures. We will introduce legislation in this parliamentary Session to establish a backstop so that where commercial negotiations between tenants and landlords are not successful, tenants and landlords go into binding arbitration. Until that legislation is on the statute book, existing measures will remain in place, including extending the current moratorium to protect commercial tenants from eviction to 25 March 2022.

To be clear, all tenants should start to pay rent again in accordance with the terms of their lease, or as otherwise agreed with their landlord, as soon as restrictions are removed on their sector if they are not already doing so. We believe that that strikes the right balance between protecting landlords and supporting the businesses that are most in need. Based on the successful Australian approach, it sets out a long-term solution to the resolution of covid-19 rent, ensuring that many variable businesses can continue to operate and that debts accrued as a result of the pandemic are quickly resolved to mutual benefit. I thank those on both sides of the issue for their constructive engagement.

Striking the right balance, just as we are doing with commercial rents, has been the key to our approach all along, and it will continue to shape our approach in the weeks ahead.

Photo of Rachel Reeves Rachel Reeves Shadow Chancellor of the Exchequer 2:20 pm, 16th June 2021

Five years ago, my friend and colleague Jo Cox was murdered. There is not a day goes by when I do not think of her, and I know that on both sides of the House she is missed dearly.

All the way through this pandemic we have said that the economic and health responses must go together. That means keeping support in place for as long as the public health measures demand it. When the public health restrictions are extended, as they were by the Prime Minister on Monday, the economic support should be extended too; otherwise we risk falling at the final hurdle. Having spent billions of pounds supporting the economy, it would be tragic to see thousands of businesses go to the wall just because the Government withdrew support a few weeks too soon. We are not calling for forever support, but for economic support that matches the timetable for opening up that the Government have set. That is the right thing for business, for workers, and for our economy too.

Let us be clear about why we are here today: the Government’s delay in putting India on to the red list has allowed a dangerous new variant to enter our country. That is why we have the highest covid infection rate per person across the whole of Europe—all because the Prime Minister wanted his VIP trip to India. It was vain and short-sighted and has been devastating for public health. As well as the health impact, our assessment, using Office for National Statistics data, tells us that the delay in reopening will cost the UK economy £4.7 billion. That is money that is not being spent in British businesses at a crucial time in our recovery. That £4.7 billion would have been used by businesses to pay commercial rents, to pay people’s wages, to invest, to take on new staff, and to pay taxes into the Treasury as well.

Of course I welcome what the Chief Secretary has to say today on commercial evictions, but the truth is that if the Chancellor believed that this economic package was enough, he would be here announcing it himself. Whatever this is, it is not doing “whatever it takes” to support British businesses and our economy. Given that the Government have moved the goalposts, let me ask the Chief Secretary why Ministers have not delayed the employer contributions to furlough, due to start on 1 July. Employers are being asked to pay more when they cannot even properly open for business.

The vast majority of the 1.8 million people still on furlough are in the very sectors most affected by the ongoing restrictions: hospitality, live events and travel. On 1 July, loans to those businesses start having to be repaid. The self-employed and those excluded from financial support will be worried about their futures. Grants are ending, business rate bills are arriving and furlough is tapering off—all immediately after the Government have announced an extension to restrictions. How on earth can the Treasury justify turning off support and sending businesses new tax bills when the Government are saying that those businesses cannot even open?

On Monday, the Prime Minister told the country that we need to learn to live with the virus. Where is the much-needed plan that would enable us to do that? Where is the plan for greater ventilation in workplaces, including public buildings and schools? Where is the plan to shift contact tracing to a local level, where we know it works best—not in a centralised, Serco-led call centre? Where is the proper support for people needing to self-isolate? Those are all essential measures to save lives and livelihoods, and to avoid the stop-start approach that has characterised the Government’s response to the pandemic.

Given the WhatsApp messages from the Prime Minister about his own Health Secretary that have been revealed today—Madam Deputy Speaker, I will use more diplomatic language than the Prime Minister could manage—how can we have confidence in Government Ministers when the Prime Minister thinks that the person in charge of the pandemic response is “hopeless”?

Photo of Rachel Reeves Rachel Reeves Shadow Chancellor of the Exchequer

Not just “hopeless”. People have given up so much over the last year. We have pulled together and shown the best of our country. People have done everything that was asked of them and much, much more. We should not be in this position today. Businesses and workers do not deserve to have the rug pulled from under their feet at the eleventh hour. We want to see businesses make it through the pandemic and thrive again, because they are an important part of what makes our country so great and they are essential for our economic recovery. We need them and they need us today. That is why the economic support we have should match the health restrictions that are still in place, and that is what the Government have failed to deliver today.

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

May I first echo the remembrance by the hon. Lady and colleagues across the House of Jo Cox? I also pay tribute to the hon. Lady for the work that she has done, including with my friend Seema Kennedy, through the loneliness commission.

Let me turn to the various points raised by the hon. Lady. She said that she is not calling for support forever, but suggested that the Government were withdrawing support. The package announced by my right hon. Friend the Chancellor was designed deliberately to go long, until September. Measures such as furlough were extended to anticipate the fact that there were no guarantees on the covid road map. That was very much designed into the support, so there is no question of withdrawing support; it was in the very plan announced by the Chancellor.

The hon. Lady’s question about the delta variant was addressed comprehensively by the Prime Minister during Prime Minister’s questions, where he pointed out the timing. One can look back with hindsight now, but the issue was the timing of the delta variant becoming a variant of concern. I will not repeat the points made by my right hon. Friend the Prime Minister.

I am grateful to the hon. Lady for recognising the announcement regarding commercial rents. I hope that that is appreciated across the House. I know that it speaks to a very real concern that many Members will have seen through their constituency emails and post bags, and that it will provide some extended support.

The hon. Lady questioned whether the Government are doing whatever it takes. Again, I remind the House that the Government have spent £352 billion to date. By any definition, I think that is a comprehensive package. More to the point, the plan is working. We see that in the plan for jobs, in the fact that the unemployment projections have improved and in the number of jobs there have been since November. My right hon. Friend the Chancellor’s plan is working. He has done whatever it takes to protect our NHS and public services, putting a further £63 billion into the NHS for covid support measures last year. The plan is having clear benefits.

The hon. Lady asked specifically about the furlough taper. Labour market conditions have improved substantially since the turn of the year and will continue to do so. Indeed, demand for staff has increased at the quickest rate for more than two decades. With unemployment falling in the last four releases, there is clear evidence that the labour market is beginning to recover, but we went long in the first place to anticipate any slippage in the covid road map.

The hon. Lady had a query on business rates. Again, it is worth reminding the House just how comprehensive the support on business rates has been, with 100% business rates relief last year for many businesses, and those businesses now paying 75% over the course of this year. There is a comprehensive package of support for businesses. There is no question but that many businesses will feel strain as result of the further extension, and it is not a decision that my right hon. Friend the Prime Minister took lightly, but the package of support announced by the Chancellor anticipated this scenario. It went long in order to provide support and it continues to do so in a way that the evidence and the data shows is working.

Photo of Stephen Crabb Stephen Crabb Chair, Welsh Affairs Committee, Chair, Welsh Affairs Committee

I welcome the Minister’s statement. He is right: the latest employment and job vacancy figures do demonstrate that the UK economy is now rebounding strongly. I cannot recall a time when so many businesses in my constituency were telling me that they are struggling to hire staff, right across all sectors. Does he agree that we need to take a sober and clear-sighted look at the furlough scheme, because it is the view of a great many employers out there that there are still far too many people being paid to do nothing, which is distorting the efficient functioning of the labour market as well as costing the country tens of billions of pounds?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

My right hon. Friend draws attention to exactly why the attack from the Opposition is misplaced and why the furlough taper is justified—because there is demand for labour from businesses. He also knows that it is part of the wider package of support. As a former Secretary of State, he has done a huge amount to champion the need to support people looking for work. That is what the doubling of the number of work coaches is doing. We announced a further £2.6 billion of additional support for the Department for Work and Pensions in the spending review, alongside further specific measures such as the restart scheme, to tackle the situation of those who have been unemployed for over a year. Over 1 million unemployed people on universal credit will have access to that scheme.

This is about a combination of the furlough, which is providing much-needed support but needs to taper, and a wider plan for jobs, including the restart scheme, the kickstart scheme, the tripling of traineeships, and the increase in the apprenticeships incentive to £3,000—a whole package alongside the doubling of the number of work coaches.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Treasury)

My thoughts are also with the family and friends of Jo Cox.

Over the past 15 months, companies in sectors such as tourism, travel, hospitality, events, the arts, the night-time economy and weddings—and their supply chains—have been building up debts and have not even gotten close yet to breaking even. It is shameful that not an extra penny of support is being announced for them today. The debt incurred by businesses could take a decade to pay back and will be a drag on recovery. The Treasury Committee was told last week by the British Retail Consortium and UKHospitality that their estimate of commercial rent arrears alone stands at over £5 billion. The Minister has extended the moratorium today and spoken of legislation, but what is his plan to deal with this debt? He asks businesses to start paying back, but with what?

Under the Treasury’s furlough scheme, businesses must pay an additional 10% of their employees’ wages on 1 July, rising to 20% in August, before the scheme is due to end in September. When this happened last year, businesses could not cope with the costs and people lost their jobs. Kate Nicholls of UKHospitality has called this situation unsustainable, and the Federation of Small Businesses has called for urgent additional support.

So will the Minister delay the furlough increase, and will he now extend furlough and the self-employment income support scheme for as long as they are required? Will he act to support those like the Blue Dog employees in Glasgow, whose employer’s behaviour has meant that they have not received the payments they were entitled to? Will he finally—finally—put things right for the millions unjustifiably excluded from UK Government support schemes, such as those on short-term pay-as-you-earn contracts? Many have faced absolute financial ruin through no fault of their own, and it is high time they got support, and an apology from the Minister. Will he make the VAT cut to 5% permanent to give hospitality, tourism and events a much-needed boost into next year, and extend it to the hair, beauty and personal services sector? Will he keep the universal credit uplift and make an increase to sick pay?

The UK currently has the lowest stimulus package of any G7 country despite suffering the worst economic slump. We now need to boost it like Biden with a major fiscal stimulus of at least £100 billion. There is so much more that Scotland would do with the economic levers if we had access to them—so if the Minister will not act, will he give Scotland the power to do so?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

The Scottish Government are still not using all the powers available to them on tax and welfare, and I always feel that before they seek further powers it would be useful for them to use fully the ones they already have. I found it slightly odd that the hon. Lady said that not a penny of support had been announced, because the whole point of the package that was announced was the extensive support going on until the end of September. She seems to be ignoring that and suggesting that everything should start afresh from today.

The hon. Lady mentioned business rates, which I picked up on earlier. This financial year, over 90% of businesses in the retail, hospitality and leisure sector that benefited from the 100% business rates holiday last year will receive a 75% cut in their business rates for the full year to March 2022. Let me just put that in context. In that last year, that tax cut cost £10 billion. This year, it is an additional £6 billion. The hon. Lady says that not a penny has been announced, but there is a further £6 billion of tax cuts on business relief this year in addition to last year. I think it is worth remembering the wider picture of the £352 billion of support.

The hon. Lady mentioned universal credit. We have been very clear from the start that it was a temporary uplift; my right hon. Friend the Chancellor set that out at the time. She also mentioned delaying furlough. As my right hon. Friend Stephen Crabb mentioned earlier, there are good reasons why it is not in people’s interests to be on furlough for extended periods of time if their job has disappeared and is not going to come back and if there are other businesses that want to employ that labour. The furlough has achieved its main purpose in retaining the link between labour and business and allowed businesses to bounce back better as a result. So before asking for new powers, the Scottish Government should be focusing on the delivery of their response to covid and recognising the fact that we have been able to respond in this way because we have the strength of one United Kingdom. It is through this wider resilience that we have been able to put together a package of the size that the Chancellor has done.

Photo of Virginia Crosbie Virginia Crosbie Conservative, Ynys Môn

Thanks to decisions made by this Government, recent ONS data shows that UK unemployment is among the lowest in Europe at 4.7%, with almost 200,000 more people in work since April. My families on Ynys Môn desperately need more jobs, and a freeport on Anglesey would create thousands of high-skilled job opportunities. Can the Minister please update the House on what discussions he has had with the Welsh Government about the creation of at least one new freeport in Wales?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

We want to ensure that the whole of the UK can benefit from freeports, and that is why we remain committed to establishing at least one freeport in Scotland, Wales and Northern Ireland as soon as possible. As in England, a Welsh freeport will be chosen according to a fair, open and transparent allocation process.

Photo of Christine Jardine Christine Jardine Liberal Democrat Spokesperson (International Trade), Liberal Democrat Spokesperson (Exiting the European Union), Liberal Democrat Spokesperson (Treasury)

My thoughts and sympathies are with the family of Jo Cox on what must be a very difficult day for them.

The Chief Secretary to the Treasury has just been patting the Government on the back for what he calls “going long”, but does he appreciate that it does not feel that way for all the businesses facing another month of restrictions, during which time many will have to find 10% of salaries for furloughed staff, face increased VAT in hospitality, retail and leisure, and think about repaying bounce back loans without being able to trade again? When exactly will the Government abandon this piecemeal approach and reveal the long-term strategy for recovery and the extension of furlough and VAT holidays on which so many businesses, communities and families in this country depend for their future?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

No one is saying that next month those businesses have to repay their bounce back loans. We have already extended the furlough and we have provided a huge amount of support to the businesses concerned. I have addressed some of the questions in relation to the business relief, VAT, the extension of the furlough scheme, the restart grants of up to £18,000 and the £2 billion of discretionary grant funding to local authorities. A comprehensive package of support has been offered, and it is simply not the case that these loans must be immediately paid back or that support has not been extended in line with the road map.

Photo of Simon Fell Simon Fell Conservative, Barrow and Furness

Visiting businesses across Barrow and Furness last weekend, I had one clear message from both those who run the businesses and the staff: they are incredibly grateful for the support they have had from the Government, especially the furlough scheme, but they asked for continuity and certainty that these schemes will continue through the delay in the road map. With that in mind, can my right hon. Friend confirm that the schemes will continue through this time and that, if the high street faces future shocks, the Treasury will look sympathetically at what measures it can put in place to support businesses there?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

One thing my right hon. Friend the Chancellor has shown throughout the challenges of the pandemic is his nimbleness and willingness to respond to changing circumstances, but part of the design of the package of support was that, if there was a delay to step 4, it would be accommodated through the continuation of measures such as the furlough, the self-employment income support scheme, the business grants, the business rates relief and the loans programme. That was part of the design, but throughout the pandemic it has very much been the Chancellor’s ethos to respond to changing needs.

Photo of Cat Smith Cat Smith Shadow Minister for Young People and Voter Engagement

For as long as the health restrictions mean that businesses must stay closed, it is right that the economic support package supports jobs in those workplaces, but that simply is not the case. With the extension of the restrictions and, from 1 July, employers having to make a 10% further contribution to the wages of employees who are furloughed, jobs and livelihoods will be put at risk, including 3,700 jobs in my Lancaster and Fleetwood constituency. Surely the Minister can see how illogical that is, so will he reassess the tapering on the furlough scheme?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

With respect to the hon. Lady, the number on the furlough has come down. As I mentioned in my opening remarks, there has been an increase in the level of employment since November, and my right hon. Friend the Member for Preseli Pembrokeshire mentioned some of the challenges around employers wanting to hire and finding on some occasions that the furlough is an impediment to labour moving. Actually, I do not think the data bears out the hon. Lady’s point. The furlough has been a very expensive but essential measure in order to reduce economic scarring, but it is right that it tapers as we bounce back and more businesses open, and I think the data supports that.

Photo of Bim Afolami Bim Afolami Conservative, Hitchin and Harpenden

As the Chief Secretary has mentioned, unemployment is down. It is 2 million people fewer than originally forecast in April last year, and the unemployment rate at the moment is about 4.7%. Does this not show that our plan for jobs is working, and will the Chief Secretary set out how the plan will help people take advantage of the many vacancies that there are across many sectors?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

I agree with my hon. Friend that the plan for jobs is working. We see that in the furlough data from the end of April, which is the last set of data that we have. There were 3.4 million people on furlough—down from a peak of 8.7 million—which shows the effectiveness of that. Output grew by 2.3% in April, and there was growth of 2.1% in March. Again, one can see the trajectory and the improvement there. Indeed, GDP data so far through 2021 has come out above the Office for Budget Responsibility forecast. There is still much work to do, but my hon. Friend can take comfort from the trajectory, which shows that the plan is indeed working.

Photo of Sarah Owen Sarah Owen Opposition Whip (Commons)

At the weekend, I visited Tip Top Linen Services in Luton North, which is a fantastic part of the local hospitality supply chain, with its roots committed to the community and an ethical ethos to be proud of, but the Government’s abject failure means that many of the company’s clients now cannot reopen for at least another four weeks. What does the Chief Secretary say to this and other brilliant but forgotten firms, which have taken a hit yet again because of his Government’s failure to contain this dangerous new variant and to recognise that the hospitality sector is not just hotels and restaurants?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

I do not accept that. Looking at the vaccine programme that the UK has had thanks to the huge efforts of our NHS, volunteers and so many people in communities up and down the country, I would not characterise it as an abject failure. Actually, our deployment of vaccines is the envy of many countries, and it is key to the road map.

For Tip Top Linen Services, and businesses across the United Kingdom, we have provided a comprehensive package of support, as I set out in a number of responses. That is key to those important businesses being able to bounce back as the road map moves to step 4.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

Thank you, Madam Deputy Speaker. My right hon. Friend will be aware that some people who have been furloughed during lockdown have taken on other jobs. A big hotel and golf complex—a family-owned business in South Northamptonshire—furloughed about 300 staff. When it came to unlocking and it called back all those staff, around half of them resigned because they already had other jobs at supermarkets, delivery companies and so on. What can my right hon. Friend do, first, to protect the taxpayer from people effectively earning double pay, and also to stop that happening to the huge detriment of this family-run business?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

First, may I join you, Madam Deputy Speaker, in offering congratulations to my right hon. Friend on her well-deserved recognition? She raises an important and legitimate point. The furlough scheme was designed to operate within the employment law framework. An employee is able to have a second job while on furlough, provided that that was allowed within the terms of their existing employment contract. I appreciate the spirit of the point she raises, and that was not the original intention when someone moved on to another job. It was part of the balance, as we have debated in this House many times, between the speed of the scheme’s deployment and how one designed its various features. What is allowed within an employment contract shapes what employees can do while on furlough.

Photo of Ben Lake Ben Lake Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Environment, Food and Rural Affairs), Shadow PC Spokesperson (Education), Shadow PC Spokesperson (Digital, Culture, Media & Sport), Shadow PC Spokesperson (Health and Social Care), Shadow PC Spokesperson (Housing, Communities & Local Government), Shadow PC Spokesperson (The Constitution and Welsh Affairs)

In addition to addressing the public health emergency of covid-19, there is a pressing need for Governments across the world to act decisively to combat climate change. The Climate Change Committee has today criticised the Government’s lack of action on climate-proofing our economy and society. Will the Treasury adopt the same urgency in tackling this crisis as it did when tackling the covid-19 pandemic, by allocating the funding necessary to address the recommendations in today’s report, and accelerating our net-zero transition?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

Future spending commitments on net zero will be matters for the spending review, but the hon. Gentleman will know well the Prime Minister’s commitment to that agenda and the 10-point plan, as well as the leadership that the UK is providing through COP26. This issue is a key priority of the Prime Minister and the Government as a whole. There is much agreement across the House about the urgency of addressing climate change, but spending decisions on that will be for the spending review.

Photo of Andrew Selous Andrew Selous The Second Church Estates Commissioner

I thank the Chief Secretary to the Treasury for the £352 billion for jobs and businesses. Will he look urgently at sectors such as aviation, travel agents, and the events industry, which cannot currently trade out of the pandemic? For example, Ace Bar Events in Studham has had very little income and no help since the March 2020 £10,000 grant.

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

As my hon. Friend will know, Treasury Ministers and colleagues across the Government are always keen to engage with him on specific sectoral issues. The wider package of support was designed to work across sectors, and in addition to that I also mentioned specific support for the culture and sport sectors, such as the £1.57 billion announced and the further grant of £300 million. More than £11 billion of support has gone to the aviation sector. There are targeted measures of support for specific sectors, but they fit within the wider package of support such as the covid corporate financing facility, grants on research and development, and the furlough package of support.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Trade)

People and businesses, especially in the hospitality sector, still need urgent and ongoing help to navigate the continuing covid emergency. The UK Treasury alone can help in three ways: it could continue the VAT cut for the sector or, even better, remove VAT; it could continue furlough at its current rate; or, as less than a fifth of the promised £350 billion for covid loans has been used, it could convert a chunk of it to grant funding. Will the Treasury do all or any of those three things?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

The support package announced by my right hon. Friend the Chancellor was designed to anticipate any potential slippage in the covid road map. The hon. Gentleman specifically mentions VAT, which has not been raised so far. The package of support in terms of reducing VAT totals £7 billion so far, with the 5% rate being extended to 30 September. Then there is a further transitional period for six months at 12.5%. Again, the narrative that VAT reductions are coming to an end, and that that is out of step with the covid road map, is not the case: the VAT reduction has already been extended to 30 September and then there is a transitional period at the lower level of 12.5%, in anticipation of the situation we face.

Photo of Christian Wakeford Christian Wakeford Conservative, Bury South

The business rates holiday last year delivered a tax cut worth £10 billion for businesses in the retail, hospitality and leisure sectors—businesses such as the Goat’s Gate in Whitefield in my constituency, which won my best pub competition. Will my right hon. Friend confirm that 90% of the businesses that benefited last year will also receive a 75% cut to their business rates bill for the full year to March 2022, thus continuing to support vital businesses in Prestwich, Whitefield and Radcliffe?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

My hon. Friend is absolutely right that businesses will continue to benefit from support. It is about getting the balance right between support for businesses and the cost to the Exchequer. There was 100% support for those businesses last year, and this year it equates to a 75% reduction in their business rates bill across the financial year.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Labour, Salford and Eccles

Both the Association of Independent Professionals and the Self-Employed and the CBI have this week called for urgent sector-specific support packages; the British Chambers of Commerce and the TUC have urged the extension of the full furlough scheme; and ExcludedUK has reiterated calls to support the millions who have been left without support for over 15 months.

Will the Chief Secretary heed these calls and commit today to outlining urgently updated sector-specific support for industries subject to continuing restrictions, to extending the full furlough scheme for as long as needed and, finally, to ensuring a comprehensive and backdated package of income support for the excluded?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

We have already covered the point that furlough has been extended until the end of September. As I said in my answer only a moment ago, there are specific sectoral support packages in addition to that. At the same time, we need to get the balance right between that and the very considerable cost to the Exchequer—borrowing £200 billion last year and with significant further borrowing this year and next. We need to get the balance right between that level of borrowing and the wider package of support offered.

Photo of Eleanor Laing Eleanor Laing Deputy Speaker and Chairman of Ways and Means, Chair, Standing Orders (Private Bills) Committee (Commons), Chair, Standing Orders (Private Bills) Committee (Commons)

I appreciate that these are complex issues and that the Chief Secretary is being most assiduous in giving full answers, but I wonder if we could go just a little faster now. We have a lot of business to get through, which means people have to ask questions, not make statements.

Photo of Scott Benton Scott Benton Conservative, Blackpool South

Nobody in this House, or indeed in Blackpool South, wanted to see a pause in our road map of easing restrictions. Does my right hon. Friend the Chief Secretary to the Treasury agree that this short delay is necessary so that we can proceed irreversibly out of lockdown, build back better from covid and, finally, begin to get our public finances back in order?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

Yes, I agree with my hon. Friend. The key is that it will allow time for more second vaccinations, which is key in the step-forward decision on the road map.

Photo of Catherine West Catherine West Shadow Minister (Foreign and Commonwealth Affairs)

My constituents will be very disappointed that the Chancellor has not bothered to come to this Chamber in such a week as this to answer my question relating to freelancers—particularly but not uniquely in the creative sector—who have been excluded from any package. So to pay for that, will the Minister have an urgent meeting with me and other Members who are worried about those who have been excluded from all packages of support, by the end of this week?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

It is slightly odd to criticise me when I am literally in the Chamber answering the hon. Lady’s question. The point is that there has been a comprehensive package of support for those on the self-employment income support scheme, which has been further extended. Many of those who were of most concern to colleagues on both sides of the House in earlier debates have come into scope of those schemes as we have gone through extensions, and I understand that my colleague the Financial Secretary has met groups to hear representations on these issues.

Photo of Nigel Mills Nigel Mills Conservative, Amber Valley

I welcome the measures announced today to help business tenants resolve any arrears disputes with their landlords. Does the Chief Secretary think that money could be found for a similar scheme for residential tenants who have gone into arrears with their landlords, to help to contribute to clearing those arrears so that tenants can have a fresh start once the pandemic is over?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

Today’s announcement clearly pertains to commercial rents. Of course, colleagues continue to listen to Members from across the House on other issues as they arise. I am very happy to have further discussions with my hon. Friend.

Photo of Joy Morrissey Joy Morrissey Conservative, Beaconsfield

I thank my right hon. Friend for the assistance and tax cuts that he has given to businesses. Unlike Opposition Members, I will not demand additional spending and borrowing: does my right hon. Friend agree that we must come to grips with our level of borrowing and spending? We must have sound financial management moving forward out of the pandemic. Will he confirm that the Government have firm plans to do that?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

I strongly welcome my hon. Friend’s question. She is absolutely right to focus on that. That is why, at the Budget, my right hon. Friend the Chancellor announced key measures such as maintaining the level of personal tax thresholds until 2025-26 and increasing the main rate of corporation tax. It is important that we take measures to protect the public finances and get them back on to a sustainable path in the medium term. She is absolutely right to highlight that important issue.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Energy and Climate Change)

In December, the UK Government provided a quarantine exemption to people flying business class, as if somehow the richest were immune to covid. Despite the bluster, we know that India was not added to the red list quickly enough. In terms of learning lessons, does the right hon. Gentleman agree that financial analysis needs to be undertaken on the cost of protecting borders with full quarantine and supporting the travel and tourism industries, versus the damage in financial impact of the longer imposition of restrictions?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

Where there is a balance between protecting the unlocking of the wider UK economy versus a tougher approach at the border, the bigger prize economically is the UK’s ability to unlock our economy. As the Prime Minister set out in Prime Minister’s questions, we should not judge that with the benefit of hindsight when information on variants of concern which were not known at the time subsequently come to light, not least because of the UK’s capacity to undertake 47% of current global genome testing. Again, that is a further illustration of the UK-wide capacity that allows us to be more effective in our response.

Photo of Andrew Jones Andrew Jones Chair, European Statutory Instruments Committee, Chair, European Statutory Instruments Committee

At the Budget in March, the Chancellor made it clear that he was taking a long-term approach to the support schemes for two specific reasons: to accommodate any short pauses in the road map, and to provide certainty in planning for businesses and families. Does my right hon. Friend agree that because the support schemes—most of them, anyway—do not end until September, the principle of continuity and certainty is being delivered? Will it continue to be a part of all planning?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

Very much. I am grateful to my hon. Friend for that question, and he is absolutely right. That was exactly the Chancellor’s design for that continuity and certainty. Indeed, that particular thing was recognised and welcomed by many business leaders at the time.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak

Nightclubs and live music venues across Birmingham have been busy preparing and selling tickets for events in anticipation of the now delayed reopening. That is a further cost they can ill afford. Is there any further support the Minister is prepared to give them?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

I have set out the comprehensive package of support that applies to businesses with restart grants and so forth. Of course, I would draw the hon. Gentleman’s attention to the support through local authorities, including the discretionary grants that are available as well.

Photo of Luke Evans Luke Evans Conservative, Bosworth

I continue to meet businesses in Bosworth, most recently those from the Hinckley business improvement district. They told me they were very grateful for all the support the Government have offered during this time, but they are looking to grow for the future as they come out into the post-pandemic economy, and one of the biggest concerns they have is business rates. I know the Chancellor is committed to a review of business rates. Is the Treasury heeding that call, is the Chancellor committed to bring that forward, and is there a timeline to do so?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

As my hon. Friend touched on in his question, the Government have committed to conclude the business rates review by autumn 2021. The review is considering the issues he mentions, including the fundamental changes to the administration of the business rates system and indeed the impact that has on businesses.

Photo of Afzal Khan Afzal Khan Shadow Deputy Leader of the House of Commons

It is wonderful to see cafés, restaurants, pubs and bars in my constituency reopening their doors. Local spots like Levenshulme Bakery, Mediterranean Café and Coffee Cranks in Whalley Range and the Sanam restaurants in both Longsight and Rusholme are well worth a visit, if the Minister would like to join me some time. Despite doors being open again, the hospitality sector is now facing a mountain of debt. Forcing businesses to pay this back while many are still struggling to turn a profit is unfair and could well harm the recovery, so does the Minister agree that a flexible repayment scheme tied to profits is now necessary?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

First, I am very grateful to the hon. Member for the kind invitation, and I hope one day to be able to join him in what I am sure are fantastic local businesses to which he is quite right to draw the House’s attention. The key is the support that those businesses have had so that they are able to bounce back and to be open now. On the issue of debts carried by business, part of the design of the Chancellor’s schemes such as bounce back loans has been to allow additional time for those loans to be repaid so that they do not become an undue burden on those businesses.

Photo of Simon Jupp Simon Jupp Conservative, East Devon

East Devon is back open for business, but step into any pub, café, hotel or restaurant and it is clear that it is struggling with the impact of social distancing. Does my right hon. Friend agree with me that social distancing in hospitality must go next month to give these businesses a fighting chance of survival?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

My hon. Friend is right to highlight the importance of the review of social distancing that the Government are committed to undertaking, and that will obviously shape the approach. We have said that we will have a review, and we are very committed to that. The future beyond step 4 will therefore need to be taken in the round, shaped by the data in that review.

Photo of Martyn Day Martyn Day Shadow SNP Spokesperson (Public Health and Primary Care)

Last year, when faced with the second wave of covid-19, the Scottish Government called for an extension of furlough as Scotland went into a further lockdown. However, the Tories only extended the scheme when it was clear that the south of England needed to be placed under tighter restrictions. Does the Minister agree that if Scotland is to be treated as an equal partner in the United Kingdom, furlough must be available if and when we need it?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

The furlough is available—it extends to the end of September—but the hon. Gentleman seems to be suggesting that it is there almost indefinitely, as opposed to being an exceptional measure in response to the exceptional circumstances of the pandemic. Given the wider fiscal cost, not least the £352 billion spent to date, I do not think that that would be fiscally responsible.

Photo of Richard Fuller Richard Fuller Conservative, North East Bedfordshire

May I commend my right hon. Friend for the Treasury’s response to the immediate challenge of covid, but also for having an eye on the longer-term challenge of inflation? We are now in the 13th year of competitive quantitative easing by the Fed, the Bank of Japan, the European Central Bank and the Bank of England. May I ask for his reflections on its effect on his near-term economic plans?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

Of course, decisions on quantitative easing are for the Bank of England, which is independent. The last time I looked, I think the initial response to the global financial crisis was approximately £75 billion, and there has been about a twelvefold increase in QE since then, so I understand my hon. Friend’s underlying point. Ultimately, what my right hon. Friend the Chancellor has been focused on is the plan for jobs and supporting the economic recovery. We can see from the output data that the economy grew by 2.3% in April, as I said earlier, and GDP data has come out of the Office for Budget Responsibility forecast.

However, as my hon. Friend, who takes a deep interest in the matter, well knows, the picture remains challenging. There were 1.9%—or half a million—fewer employees in May than in February 2020, and 3.4 million people are still on furlough. It is a challenging picture, but I think that the plan for jobs is working, and the data suggests that.

Photo of Toby Perkins Toby Perkins Shadow Minister (Education)

The impact of these restrictions on Britain’s pubs has been very tough indeed, but it has been even worse for nightclubs that have been unable to open at all. It seems entirely wrong to me that, from 1 July, a nightclub that is unable to open will be paying a 33% business rate bill and seeing an increase in its furlough contributions. Given that the Government’s failure has forced them to extend how long the nightclubs are closed for, will the Chief Secretary confirm that he will consider whether nightclubs should no longer be expected to pay that 33% on their business rates?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

The hon. Gentleman raises a perfectly legitimate point about how acutely that sector in particular has been affected, as I think everyone in government recognises, but I do not think it fair to say that the Government have not announced any measures that reflect those challenges. Indeed, on commercial rent, he will have heard in my statement today’s specific announcement that applies to the sector. There are also other things, such as the furlough going long, the restart grant and a number of things within the comprehensive package, that are obviously of benefit to nightclubs.

Photo of Gareth Davies Gareth Davies Conservative, Grantham and Stamford

This morning’s ONS inflation report highlights the risk we face of rising rates, given the amount of debt that we have incurred during the pandemic. Does my right hon. Friend agree that it is important we focus on sustainable public finances, and that one way we can help is by mobilising more private capital investment?

Photo of Steve Barclay Steve Barclay The Chief Secretary to the Treasury

I absolutely agree, and I think that the importance of securing private investment is a very good note on which to end. My hon. Friend will know that in May, on the consumer prices index, inflation rose to 2.1% and the Monetary Policy Committee judged:

“Inflation expectations remained well anchored.”

However, with debt at nearly 100% of GDP, we need to pay close attention. To finish on a more sobering note, perhaps, a sustained increase in inflation by one percentage point would increase debt interest spending by £6.9 billion in ’25-26, so my hon. Friend raises—as did Rachel Reeves—an important point that the House needs to keep under review.

Photo of Eleanor Laing Eleanor Laing Deputy Speaker and Chairman of Ways and Means, Chair, Standing Orders (Private Bills) Committee (Commons), Chair, Standing Orders (Private Bills) Committee (Commons)

I thank the Chief Secretary and everyone who took part in the statement for getting through it in 58 and a half minutes. That always keeps the occupant of the Chair happy.

I would like to take a second to thank Sir Roy Stone for his extraordinary, long and patient service to this House; I cannot imagine this place without him. I know that we all wish him well.

We come to the result of today’s deferred Division on the Draft Climate Change Act 2008 (Credit Limit) Order 2021. The Ayes were 363 and the Noes were 263, so the Ayes have it.

[The Division list is published at the end of today’s debates.]

We now come to the exciting annual event of the presentation of Bills, which have arisen as a result of the private Members’ Bills ballot. We have 20 such Bills. Contrary to the normal procedure when Members queue up behind the Chair, I hope that all 20 Members are either now in their places, or ready to participate virtually.