I’m grateful to the Chancellor for advance sight of this statement, and that he has accepted my request to meet again with him.
I want to pay tribute to those Treasury civil servants, HMRC and DWP staff who have been working incredibly hard. And I fully appreciate that the Chancellor’s job has not been an easy one.
Nonetheless it is our job, as a constructive opposition, to point to problems that we are hearing from the frontline and indicate solutions. And it appears those problems are more acute in our country than in many others.
The Purchasing Managers’ Index figures that came out last week indicated a sharp fall in business confidence- and that sadly was not a surprise. It has been clear for some time that the economic slowdown we are currently experiencing is sharp and deep.
Deeply unsettling, however, was the fact that those figures suggested that business confidence had taken a stronger hit in the UK than in the Eurozone. I’ve heard from small business owners who have put their life and soul into their firms, but have less than two weeks of cashflow left – they are devastated. We all need to work together to get the different support schemes working for our country. We must fix this.
Now I’m well aware that many of the prerequisites for shifting out of lockdown are not within the Chancellor’s grasp. However, there are matters where his government needs to be open about blocks on progress, and how it will remove those blocks. That applies to the test, track and trace regime which must be in place before key sectors can open again. It also applies to the creation of a proper national, tripartite system to ensure workers and employers have confidence that they can return to work, when the right time comes.
The Chancellor is responsible for the economic package, and he knows we supported him in creating the furlough scheme, for example – indeed, we called for it. But the evidence is that other key elements of the economic package are failing- so in a constructive spirit I want to ask the Chancellor whether he will be willing to countenance solutions, in three areas.
First, CBILS. This scheme, to underwrite loans for SMEs, is an international outlier. As of last Thursday, 16,600 loans had been approved, and 9,000 provided- £2.8billion of lending to SMEs. That is an eighth of the size of the comparable French scheme, which has lent to ten times as many companies. Switzerland has a population of under 9 million, yet it approved four times as many loans within its first week than the UK has done in a month.
Other countries are guaranteeing 100% of their SME loans and have stripped off normal commercial loan requirements. And while it’s a relief to hear from the Chancellor that there will now be a full guarantee for loans of up to £25,000, we need to know that normal commercial loan requirements will not continue to clog up the system. So will he also be changing the rules for the scheme, so we can get money to those SMEs that really need it?
Second, recent figures suggesting one in ten of our workforce look set to be unemployed as a result of this crisis are deeply worrying- with all that entails for peoples’ future prospects, incomes, and their and their families’ health.
Again I say to the Chancellor – we will work with him, to do more to protect peoples’ incomes and support people back into work when the recovery comes.
We have indicated many of the gaps within existing schemes to protect incomes – and will continue to push for them to be filled. However, we must be clear. The reason why those gaps are such an income-crushing, insecurity-producing crisis for so many, is because the only alternative to coverage by the schemes is in most cases Universal Credit. Universal Credit, which pushes people right down to an average of ten percent of the income of the rest of society.
The DWP has made some welcome changes. But failure to change the initial loan into a grant threatens to create even more of a debt crisis among households. Apparently the government is sympathetic to changing the loan into a grant but we are told the computer system just won’t allow it. So my second question is – when will he knock heads together and get the computer to say ‘yes’, to switching UC loans into grants?
As he knows, before this crisis we had an economy which, for so many, simply did not work. Around a quarter of all families lacked £100 in savings even before the crisis began. The UK is the most regionally unequal country in Europe. And we have just had the longest squeeze on living standards, not just in a generation, but in eight generations.
To ensure as many people as possible have a job to go back to, we need a flexible furlough scheme. The Chancellor told me previously it can’t currently be made more flexible- but other countries have done this. Will he work to amend the furlough scheme, to allow workers to come back on a part-time basis?
Finally, many countries are already looking at how those who are already unemployed or are becoming so can be supported to retrain and access new opportunities. From Germany to New Zealand, the discussion is on how those hit hard by the crisis can be supported, not just now but in the future as well- with employment-boosting, redeploying and retraining schemes.
History, not least the aftermath of the pit closures, tells us that an approach where the government shrugs its shoulders, will scar our economy for generations to come.
So my last question is, will he work together, together with me, with trade unions, with businesses, and with local authorities across the country, to develop a plan to offer the hope of work to those who’ve become unemployed, and get our economy moving again?