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Budget Statement - Motion to Take Note

Part of the debate – in the House of Lords at 4:12 pm on 18th March 2020.

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Photo of Lord Oates Lord Oates Liberal Democrat Lords Spokesperson (Energy and Climate Change) 4:12 pm, 18th March 2020

My Lords, Harold Wilson advised us that a week is a long time in politics. Never has that adage proved truer than in the seven days between the Budget and this debate. Today we face not only a public health crisis, but also a national and international economic emergency without parallel, something which I am afraid did not seem to be fully recognised in the speech from the Government Front Bench.

Having said that, we on these Benches welcome the proposals made by the Chancellor yesterday and pay tribute to the dedication of civil servants across Whitehall as they seek to protect the health and economic well-being of the nation. The Government will have our support as they tackle the crisis ahead. This is a time to come together. It is what the public will expect, and it is what we should all deliver. I hope that the Government respond to our questions and constructive suggestions in that spirit.

We need to address the immense challenges that we face through a number of different lenses. The first is around people, the second around supply chains and the third around demand. First and most important is people. As we speak, millions of people are facing the future with deep anxiety, because of not only the threat to their health, but also the threat to their livelihood. The Government’s announcement of mortgage holidays and government-backed loans, rate relief and grants to support business is welcome, but we must go much further in the coming days. We must address the concerns of those who are not owner-occupiers but in the rented sector, and, as the director-general of the CBI, Caroline Fairbairn, said today, our top priority must be to keep employees in work. It is critical to those individuals and to their ability to pay their bills and look after their families, but it is also essential to the economy. People are being laid off now and people’s businesses are going bust.

For many businesses, taking out a loan to meet the wage bill is not an option. Many small businesses operate on wafer-thin margins, and it makes no sense for them to rack up debt at a time when demand for their services has collapsed, or in many cases, where they are no longer able to provide them at all. Speed is of the essence. Cash flow over the next week or two will be critical. Businesses do not have the luxury to wait for loan or grant applications to be processed; they need help now.

As I understand it, the grants of £10,000 for small businesses are available only to companies that pay rates directly. Many businesses do not. Will the Minister clarify that, because it is cause for concern for a number of people?

I ask the Government to look also at how they can direct money to support payroll immediately and directly. Can they look at ideas to reverse the NIC system to support employment, and at whether we can pay directly through PAYE? We must know how much everybody is paid, and perhaps the Government can come up with a scheme where we pay a percentage of the wage bill, so that businesses can keep people in employment at this time.

There is no perfect solution to this, but we cannot afford to let perfection be the enemy of the good. Speed is of the essence and we will have to learn along the way, because if we are not able to provide urgent support to keep people in employment, we will rapidly face much bigger problems across our economy, including in our supply lines.

This morning, on the “Today” programme, I heard the CEO of Swissport, Jason Holt, speaking about his concerns for his business. Swissport handles 90% of all air passengers and air freight and employs 25,000 workers. It is facing economic catastrophe. If it is not able to pay its workforce and remain in business, we will in turn face major problems in our supply chain, including for vitally needed medical equipment and computer equipment. The Government need to look urgently at how they can support these businesses, which are absolutely critical to the economy.

We also need to relieve unnecessary burdens on business. Business groups have told me that they are receiving similar asks from across government departments, and sometimes from within departments. The Government have to establish a co-ordinated approach to minimise the energy being expended by businesses responding to them. All consultations on regulations, unless absolutely essential at this moment, should be put on pause while we deal with the crisis.

This crisis is making us all increasingly reliant on our digital infrastructure, not all of which is designated as critical national infrastructure, and much of which is underpinned by small businesses. Representing 850 large and small companies employing over 700,000 people, techUK has highlighted the fact that maintaining this infrastructure is not just about hardware but about people. Urgent thought needs to go into how we handle these critical workforces. A government-led testing and management regime needs to be put in place to ensure that we can maintain systems operationally. We cannot just rely on individual engineers to determine whether they are sick or not. Such a workforce testing regime is obviously also critical for our NHS workforce, who must be an absolute priority.

Finally, I turn briefly to demand. We face a paradoxical situation, where our economy is facing overall collapse in demand, while at the same time suffering an excess of demand in specific areas. As we have seen, panic buying begets panic buying. The anxiety of seeing empty shelves converts even sensible people to conclude that they need to grab stuff when they can. The Government need to get ahead of this. It is illegal for retailers to co-ordinate with regard to their response to rationing and goods to customers, so the Government should step in and provide clear guidance and, if necessary, take enforcement powers to ensure that people get what they need and do not take what others require.

This is a huge area, but time does not afford us to cover it all. I fear that the impact of Covid-19 will be rather more profound and long-lasting than the Minister seems to envisage. He is right, of course, that we must continue to look beyond the current crisis, in particular to how we can build a net-zero economy for the future. But as we look to build that economy of the future, I think it is likely to be a very different economy than the one that we envisaged just a week ago.