Retail Businesses: Financial Support - Question

– in the House of Lords at 1:18 pm on 21st September 2020.

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Photo of Lord Allen of Kensington Lord Allen of Kensington Labour 1:18 pm, 21st September 2020

To ask Her Majesty’s Government what steps they are taking to provide financial support to retail businesses which have been categorised as ‘undertakings in difficulty’ under European Union state aid rules, and are unable to access support under the Coronavirus Business Interruption Loan Scheme; and what assessment they have made of the effectiveness of any financial support that they have provided to such businesses.

Photo of Baroness Andrews Baroness Andrews Deputy Chairman of Committees, Deputy Speaker (Lords), Chair, Common Frameworks Scrutiny Committee, Chair, Common Frameworks Scrutiny Committee

My Lords, on behalf of my noble friend, and with his permission, I beg leave to ask the Question standing in his name on the Order Paper.

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The Government amended the CBIL scheme on 30 July to exempt smaller businesses from elements of the undertaking in difficulty test. The British Business Bank has also clarified that if an applicant was not classified as such from the application date, but was so on 31 December 2019, they would, in principle, be eligible. By 16 August more than £53 billion had been approved through the loan schemes, including 60,409 loans worth £13.68 billion through CBILS.

Photo of Baroness Andrews Baroness Andrews Deputy Chairman of Committees, Deputy Speaker (Lords), Chair, Common Frameworks Scrutiny Committee, Chair, Common Frameworks Scrutiny Committee

My Lords, the changes for small businesses that the Minister mentions are very welcome. Does he agree with me, however, that it is the larger stores that face the greatest difficulties? Over 13,000 stores have closed in the year to date and 125,000 retail staff have lost their jobs. One in three of retail staff are aged under 25, and 146,000 of them have lost their jobs in the last quarter. In the light of potential further restrictions, will the Government look urgently at providing more access to finance and at extending business rates relief and the furlough scheme, in a targeted way, to stem the further collapse of retail and, indeed, the high street itself?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

We continue to keep all these things under review. I hope that the noble Baroness will appreciate that our response so far has been tremendous. The Bounce Back Loan Scheme has supported nearly 1.2 million loans; the Coronavirus Business Interruption Loan Scheme has supported more than 60,000 loans, worth £13.7 billion. There are, of course, always additional things we could be doing but I hope she will acknowledge that we have done a lot for this sector.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, many of the businesses that have not been able to claim have also been impacted by the lack of insurance cover, even though they thought they were covered. Can my noble friend use his good offices to intervene to make sure that, at the very least, they can claim on the insurance for which they have paid premiums? Also, has he looked at the impact on the night-time economy—pubs, clubs, casinos and such—if the curfew imposed in certain areas is extended for any length of time?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Insurance cover is a matter of commercial contracts between providers and the insured; it would not be right for us to interfere in a contract that was lawfully made. My noble friend will understand that I am unable to comment on the possibility of any curfews at the moment.

Photo of Lord Loomba Lord Loomba Crossbench

My Lords, as the pandemic continues to progress and more restrictive measures to counteract it are being considered, what assessment have the Government made of the long-term viability of financial support to help businesses survive for longer periods?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The noble Lord will be aware that, by 16 August, the Future Fund to help businesses had supported 590 investments with a total of £588 million.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Digital, Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy and International Trade)

My Lords, a number of measures aimed at preventing company insolvencies, included in the recent Corporate Insolvency and Governance Act, expire at the end of this month. What plans do the Government have to extend those provisions? Can the Minister set out the new timetable?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The noble Lord makes a good point. We are urgently considering the need to extend these measures and will announce a decision shortly.

Photo of Baroness Burt of Solihull Baroness Burt of Solihull Liberal Democrat

My Lords, that is very good news from the Minister. While we welcome the changes to the temporary framework and the definition of “undertakings in difficulty” earlier this year, the fact is that some small businesses are still falling through the cracks. What further work are the Government doing to ensure that businesses acutely impacted by Covid—especially retail—can access the finance they need to make it through?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I would hope that, through the changes we have announced, the vast majority of small businesses are able to access the finance they need, but of course, we keep these matters under constant review. We are aware that the schemes were put together very quickly, and there will always be some businesses that fall through the cracks, but the Chancellor is looking at these matters urgently.

Photo of Lord Mackenzie of Framwellgate Lord Mackenzie of Framwellgate Non-affiliated

My Lords, the Question in the name of the noble Lord, Lord Allen, illustrates the inequity in some areas of financial support following the spread of the virus. The Government have pre-empted my original question, of which I gave the Minister notice, requesting improved support for those self-isolating in the north-east. I would like to think that the £500 grant is a response to that. I welcome this additional support and ask if the grant also applies to those wanting to self-isolate on return from a listed foreign country.

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I thank the noble Lord for his support for our £500 payments. I hope that that will be sufficient at the moment but, as with all these schemes, we will keep it under review.

Photo of Baroness Warsi Baroness Warsi Conservative

My Lords, I welcome the changes in July which now enable more struggling businesses to access the Government-backed CBILS loans. Have the Government, in the run-up to Brexit, engaged with UK businesses for whom EU public or private sector contracts are their only, or main, form of business? I have raised this question with my noble friend before, but I am increasingly concerned as we approach deadlines.

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I know that my noble friend is concerned about this matter and she is right to raise it. We will continue to engage with the business sector to find out what we can do to help those who are increasingly reliant on EU contracts.

Photo of Lord Holmes of Richmond Lord Holmes of Richmond Non-affiliated

My Lords, in general, what analysis have the Government undertaken of other member states’ use of state aid, what insights have been gained from that and what changes are the Government considering in the light of that?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

We are, of course, willing to learn from the example of other countries. However, as my noble friend is aware, all existing member states, and the UK during its transition period, continue to operate under the same state aid framework.

Photo of Lord Cotter Lord Cotter Liberal Democrat

My Lords, we are a nation of shopkeepers, and small outlets are the heart of our local community in Weston-super-Mare. Should the Government not have a special plan to help them? When can we expect one? Business rates are the predominant issue of concern.

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, the noble Lord is right to be concerned about the high street, and I am sure that Weston-super-Mare is no exception. As he will no doubt be aware, we abolished business rates for 12 months for all eligible businesses in the retail, hospitality and leisure sectors. That support was worth almost £10 billion. We also gave local authorities grants worth £11 billion to distribute to help local businesses.

Photo of Baroness Wheatcroft Baroness Wheatcroft Non-affiliated

My Lords, retail is a dynamic sector that was undergoing radical change even before Covid hit. The rise of internet shopping has changed the shape of retail. Does the Minister accept that there is no point in propping up retail businesses which would not have survived the course anyhow? Perhaps the Government ought to be looking at helping more community shops get under way so that, particularly in rural areas, people can get what they want on their doorsteps.

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The noble Baroness is right to draw attention to the massive changes taking place in the retail sector, some of which were exacerbated by the Covid dynamic. There has been a lot of switching to online shopping, but many high street premises are engaged in online business as well. So, there is a vast range of innovative things happening throughout the sector.

Photo of Lord Dholakia Lord Dholakia Co-Deputy Leader of the Liberal Democrat Peers

My Lords, a number of small retail businesses are owned by people from ethnic minority communities. What consultation has taken place with their professional bodies? Can the Minister produce a list so they can see how to survive the present crisis?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

We continue to engage with professional organisations from all sectors. The Covid support schemes, including the loan guarantee schemes, are designed to be as accessible to as many businesses as possible, including, of course, BAME businesses.

Photo of Lord Lexden Lord Lexden Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, all supplementary questions have been asked and we now move to the next Question.