Covid-19: Economic Recovery

Lord Tunnicliffe Excerpts

Tuesday 20th April 2021 Grand Committee

[Lord Tunnicliffe (Lab) [V]]

My Lords, the last 13 months have been hugely challenging for everyone across our country. Using the 28-day measure, Covid-19 has, sadly, claimed the lives of more than 127,000 fellow Britons. The Office for National Statistics puts the death toll in excess of 150,000, while millions more have tested positive for the illness or have loved ones who have.

After a brutal second wave of the virus that stretched our NHS to its limits, the country and our economy are now gradually reopening. With the days growing longer and warmer, and with an increasing number of vaccines having been administered, it is heartening to see signs of a return to normality. However, we are on a long road and we must not repeat the mistakes of the past.

Despite the experiences of last autumn and the emergence of multiple new strains of the virus, there remain some who continue to call for restrictions to be eased more quickly. We support the current road map out of Covid-19 restrictions and hope that the Prime Minister will remain steadfast in his new-found commitment to being guided by the scientific data.

The number of cases, hospital in-patients and deaths are thankfully now down, but all three counts remain higher than we would like. Indeed, while we have not seen any sustained spikes since we began to exit lockdown, it is also true that we are experiencing some days where cases are higher than the corresponding day during the previous week. This adds to the case for remaining vigilant and taking time to assess the situation before moving on to the next step in the road map.

While the pandemic has been tough for everyone, there is little doubt that businesses and working people have found the last 13 months especially hard. We have previously acknowledged the unprecedented levels of economic support provided by the Government and I do so again today: the Treasury has put forward a significant sum of money.

However, despite the headline figures of 11.4 million jobs furloughed and 2.2 million applications to the Self- employment Income Support Scheme, the Government’s support package has ultimately fallen short of repeated promises from the Prime Minister and the Chancellor to do whatever it takes to get people through these tough times. For example, although we have finally seen some changes to the Self-employed Income Support Scheme’s eligibility criteria, it remains a major concern that the Chancellor was willing to exclude so many from receiving proper financial help, and for a full year.

Due to the nature of the scheme, money has gone to people with other sources of income while many individuals with nothing to fall back on have been forced to rely on universal credit. The Treasury cannot claim ignorance: we raised the issue on multiple occasions, as did a variety of trade bodies and campaign groups. Ultimately, the Chancellor refused to act.

The operation of the furlough scheme has been somewhat haphazard. Last summer, to the frustration of struggling firms, the scheme was completely redesigned. That decision was eventually reversed mere days before the changes were due to come into force. Subsequent announcements extending job support have come very late in the day and timescales have occasionally appeared divorced from reality.

Some may say that there was no harm done. However, the mismanagement of the furlough scheme has had a real impact. In addition to the jobs placed on hold, hundreds of thousands have been lost entirely. Numerous businesses that wanted to keep staff on ultimately made the call to lay them off. For some, decisions were driven by short-term concerns about patchy and unpredictable government support, while for others there are major concerns about what the economy will look like after the pandemic. The Minister will point to the provision which allowed businesses to rehire and re-furlough some of those who had been let go. Some have been given their jobs back, albeit after the stress of being let go. However, many have not.

A high proportion of the people who lost their jobs are in the 18 to 24 or over-65 age groups, creating specific challenges when it comes to their re-engaging with the labour market. This is an area where the Labour Party, trade unions and business groups have pushed the Government for action. We want to see a proper plan for reskilling the workforce, with a particular focus on helping young people. Initiatives announced thus far are far too limited in scope, ambition and resource.

Although some businesses have continued trading, even if at a reduced capacity, others have been unable to operate at all. In some cases, Treasury grants have not been sufficient to cover all the costs of keeping businesses going. This has been a particular challenge for hospitality, where firms often have significant fixed costs even after rent payments have been deferred and other bills covered by government support.

Help available to firms operating in the supply chain or other industries has been even less comprehensive. While it may not have been possible to implement special arrangements for every sector, there are examples where the Treasury seemingly ignored clear cases for tailored support.

The result is that many businesses in aviation and aerospace, steel, hospitality, travel and tourism, or the cultural and retail sectors, have had to take on significant additional debt. This is likely to act as a millstone around their neck, weighing down not only the recovery of individual firms but our country as a whole. We can already see this reflected in the disappointing economic forecasts attached to the Budget. Our recovery is likely to be modest, limited by the costs of recent inaction—including lower growth, lost tax revenue and higher than necessary unemployment.

None of this is simple, and the Minister knows that we try to approach these matters in a spirit of co-operation. However, that is a two-way street, requiring a willingness from the Government to listen and take ideas on board. Sadly, what we have seen in recent months suggests a lack of learning from past mistakes. The paltry 1% pay offer for NHS nurses is an insult to their heroism over the past 13 months. Severe cuts to departmental budgets for future years will stifle rather than nurture public services.

We all have an interest in building back better after this pandemic and securing a stronger, fairer economy where jobs and livelihoods are not only protected but enhanced. This will require creativity, particularly around the restructuring of business debts and the reskilling of the workforce. Let us meet this challenge with new ideas rather than resorting to yet more half-measures and failed austerity.