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Covid-19: Employment Support - Statement

– in the House of Lords at 12:36 pm on 19th March 2020.

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Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union) 12:36 pm, 19th March 2020

My Lords, I will now repeat in the form of a Statement the answer to an Urgent Question made in the House of Commons by the Economic Secretary to the Treasury, John Glen. The Statement is as follows:

“Mr Speaker, this is an uncertain time for our country, but the Government are clear that they will do whatever it takes to protect our people and businesses from the coronavirus pandemic. On Tuesday, the Chancellor of the Exchequer set out further steps in the Government’s economic response, building on the initial response he outlined in the Budget last week. This included standing behind businesses small and large, with an unprecedented package of government-backed and guaranteed loans to support businesses to get through this crisis. I have been working very closely with him and the banks and they are very clear about their responsibility to make these work.

The Government have made available an initial £330 billion of guarantees—equivalent to 15% of our GDP. That means that any business which needs cash to pay salaries will be able to access a government-backed loan, on attractive terms. The Government will do whatever it takes to support our economy through this crisis and stand ready to provide further support where necessary.

As the Chancellor announced, we will go much further to support people’s financial security, working with trade unions and business groups. Following his appearance before the Treasury Select Committee yesterday afternoon, the Chancellor spoke to the trade unions and he will today be meeting the TUC, the CBI, the BCC and the FSB—I will not spell out those acronyms. This will be with a view to urgently developing new forms of employment support to help protect people’s jobs and incomes through this period.

I am sure that you will appreciate that these are unprecedented times. The Chancellor has said he will look at further steps to help protect jobs and incomes, and he will announce further details in due course.”

My Lords, that concludes the Statement.

Photo of Lord McNicol of West Kilbride Lord McNicol of West Kilbride Opposition Whip (Lords) 12:38 pm, 19th March 2020

My Lords, I thank the Minister for repeating the Statement. We welcome the Government’s commitment to do whatever it takes during this crisis, and especially the comments about not just standing behind business but standing shoulder to shoulder with businesses and workers and engaging with the trade unions and the TUC. I have only two questions for the Minister. First, when will the new forms of employment support be introduced? Secondly, are the Government considering paying the majority of wages to provide the job guarantees? As Gordon Brown said earlier today, if families do not have income protection, there will be a lot of other consequences. People may try to work when they are sick, putting themselves at risk, so their health becomes a public health issue.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

I thank the noble Lord for his questions and for the responsible attitude that the Opposition are taking to this emergency. I am afraid that I am unable to give him a timescale at the moment; I can say only that all government departments are working as urgently as they possibly can on these matters. As soon as we have any further information on schemes that will be introduced, the Chancellor will make the appropriate announcement.

Photo of Baroness Grender Baroness Grender Liberal Democrat

I wish to associate myself with the thanks for the Statement. The difficulty is that the people are being laid off now, and those who have no cash are the ones we worry about most. Have the Government considered paying two-thirds of salaries, like the Governments of Denmark and France, in order to ensure that people have temporary relief? Will the Government consider the very interesting Resolution Foundation suggestion of using a model of statutory maternity pay? The welcome measures yesterday for private renters will not be enough. I regret the lack of scrutiny of that in this House today. Will the Government consider looking at the local housing allowance, given that there is such a shortfall at the moment? Perhaps something could be done about that, because it reaches directly into the homes that we are most concerned about. Finally, what will happen to freelancers, from creative industries right through to cleaners? They are not in business and are not employed but self-employed. Often they do not even have the status where the Government will find them.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

I thank the noble Baroness for her questions. Their extent reveals the number of different sectors of the economy that we will need to look at. As she says, they range from sole traders to small businesses and to the very largest companies. We are looking at a comprehensive package. There are a number of different international models that have been introduced. A number of think tanks in the UK have also produced suggestions. They are all being examined at the moment. We are guided by three principles: it has to be a comprehensive package; it has to be co-ordinated; and it has to be coherent. The noble Baroness will understand that we need to look at these things properly. It is no good having a scheme that comes into effect in six months’ time. It needs to work now, it needs to be available and it needs to be deliverable. We are doing all those things, and we will make the appropriate announcements as soon as we possibly can. I understand people’s natural frustration and their wish for urgent action.

Photo of Lord Balfe Lord Balfe Conservative

I wish to make a very minor but important point. At the moment, if a company is insolvent, the workers do not get paid. They can have worked for several weeks up to the date of insolvency but when insolvency comes, their pay is basically at the mercy of the receiver, or whoever is winding up the company. In the Statement the Minister said that any business that needs cash to pay salaries will be able to access a government-backed loan. In other words, a company that cannot pay salaries but is not becoming insolvent will apparently be able to access it. I know that in its submission to the Government the TUC has asked for a relaxation of the rules on insolvent companies, and I realise that it will probably be beyond the Minister’s pay grade to agree that that will be done, but will he agree to reflect to the Government that this point has been raised and possibly to write to let us know what has been decided? This is a small category, but companies are going to go bankrupt and workers may be denied their wages, while others in companies that have not gone bankrupt will be able to access a loan. It is a small point, but it is very important.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

The noble Lord speaks with great authority on these matters. This might be a small point, but I agree with him that it is important. Actually, within my ministerial portfolio I have responsibility for the Insolvency Service, although not for the Treasury and the guarantees that it will provide. I take on board my noble friend’s point and will make sure that it is conveyed to the Chancellor. My noble friend’s intervention is welcome.

Photo of Viscount Colville of Culross Viscount Colville of Culross Crossbench

I declare an interest as a freelance series producer working at Raw TV making content for CNN. The Minister was asked about coverage for the self-employed and freelancers who have been made unemployed and he said that he was looking at that and wanted it done properly. However, these people have no prospect of work at the moment. Their income has suddenly stopped, and their bills have not. Is it not possible very quickly to put in place an emergency fund, as has happened in other countries, and at the very least to extend statutory sick pay to all workers affected by Covid-19? Surely that could be done very quickly.

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

I think, again, the noble Lord makes a very good point. We have of course already announced extensions to statutory sick pay and the qualifying period. His points are well made and echo the points made earlier about freelancers. All the different sectors of the economy need to be looked at. We will do whatever it takes. We will put in place a comprehensive package and will announce details of that as soon as we are able to.

Photo of Lord Hendy Lord Hendy Labour

My Lords, all legal categories of worker will need income protection in this crisis, but can the Minister say whether the income protection proposals will cover, in the mind of the Government, five particular situations? First, there are those who will be off sick with coronavirus: clearly, they will be entitled to statutory sick pay, even though it is a pittance at £94.25 a week—a figure that will have to be increased. Secondly, there are those who are self-isolating and are not sick—at least not yet—and will not be entitled to statutory sick pay because they are not sick. Thirdly, there will be those who are off work to care for others, including children shut out of school, who will never be entitled to statutory sick pay but who do need income protection. Fourthly, there will be those who lose their jobs because of the loss of trade by reason of Covid-19 or following advice from Public Health England or the Government. I remind the Minister that the Financial Times this morning said that over 200,000 people in restaurants and catering have already lost their jobs—have been laid off—since mid-February. I noted that the figure did not include air transport or the holiday trade; I saw in the newspaper yesterday that British Airways had served an HR1, and it has 30,000 employees. Income protection must cover those who have lost or may yet lose their jobs. Fifthly, will it cover those who are redeployed from existing work to do emergency work, social care work or other work, not just volunteers?

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

I thank the noble Lord for his question, which illustrates the complexity of the problem, all the different factors that need to be taken into consideration, and how there needs to be a cross-government response, across a number of departments and obviously backed by the Treasury with comprehensive financing. The answer to his question is: yes, all these matters are being looked at. We are looking at various international options and proposals and we will hopefully have something to announce very soon.

Photo of Baroness Warsi Baroness Warsi Conservative

Can my noble friend inform the House whether much broader thinking is now being done by government about employees who are affected by the coronavirus crisis, not just regarding health issues for those self-isolating or who have symptoms, but those who are now affected because they have children at home or because the people they work for do not have the orders and they are therefore short-working, and those who are not contractually protected—people on zero-hours contracts? Would it be easier for the Government simply to respond to people’s needs because they are impacted by coronavirus, rather than breaking them down into specific categories?

Photo of Lord Callanan Lord Callanan Minister of State (Department for Exiting the European Union)

Similarly to the previous question, my noble friend’s question reflects the complexities of the issue and why a comprehensive response is required. We are working on that; we of course have universal credit, the social security system—the welfare system—for people to fall back on, but there are numerous different aspects to it and different sectors of the economy that will require a response. We are working on it urgently and cross-departmentally; the whole of government is focused on this and we will come back to both Houses as soon as we possibly can.