Coronavirus: Employment Support

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement about support for the wages of employees.

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, which included standing behind businesses, small and large, with an unprecedented package of Government backed and guaranteed loans to support businesses 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 measures work. The Government have made available an initial £330 billion of guarantees, equivalent to 15% of our GDP. That means that any business that 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 at the Treasury Select Committee yesterday afternoon, the Chancellor spoke to the trade unions, and he will today be meeting the TUC, the CBI, the British Chambers of Commerce, and the Federation of Small Businesses. 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, Mr Speaker, that these are unprecedented times. The Chancellor has said that he will look at further steps to help protect jobs and incomes, and he will announce further details in due course.

For much of yesterday, like many Members of the House, including the hon. Member for Birmingham, Erdington (Jack Dromey), with whom I have been working, I was speaking to businesses in our constituencies that are facing a crisis. With revenue collapsing and no knowledge of when normal trading can resume, they see no choice but to lay off workers now. The loan scheme that the Chancellor announced on Tuesday is not enough to prevent that. These businesses have no idea when they will be able to pay back the debts they would incur and it provides no reason to keep staff employed. In fact, the reverse is true because, the smaller the wage bill, the less would have to be borrowed. On Tuesday, the Chancellor promised that there would be employment support, but as each day goes by, businesses are making decisions that will be irreversible and if the Government do not act immediately, large numbers of people will be unemployed and registering them will put huge pressure on the welfare system. Vital skills will be lost and good businesses, which will themselves be the customers and suppliers of other businesses, will cease trading.

There is a straightforward and immediate solution. All employers have an account with Her Majesty’s Revenue and Customs to pay tax for employees through pay-as-you-earn. The monthly wage bill is known to HMRC. Instead of firms paying PAYE to the Government, that flow should now be reversed, with the nation paying the wages of people for the next few weeks if, and only if, they continue to employ their staff. Separate arrangements would need to be made for the self-employed, but at a stroke this would save people’s jobs, save businesses and put an immediate end to the risk of contagion and help to save the economy. This is a crisis the like of which we have not seen for 100 years. It requires a response that is immediate, effective and equal to the scale of the problem. The Chancellor said that he will do whatever it takes, and do so urgently. He now needs to make good on that without delay.

I am very grateful to my right hon. Friend for raising this matter. I made clear in my response the urgency of the Government’s deliberations on this—it is absolutely at the top of everything we are doing. Ministers are working flat out, 24/7, to look at all the options.

My right hon. Friend raises the specific anxieties of businesses. I recognise that the package of measures that we have put out—with respect to statutory sick pay, easier access to universal credit and employment and support allowance, the business rates relief, the small business grant facility, the local authority hardship funds and the HMRC forbearance measures—will for some not feel sufficient at this point. However, he will also know from his experience in government that it is very important that when the Government announce the measures that we wish to take to assist with supporting employees, they need to be effective and need to work. So I say to the House and to my right hon. Friend: be in no doubt that all options are being examined. We are looking at models that exist in other jurisdictions and when, very imminently, the Chancellor comes to the House, we want to be sure that what we announce will be effective.

It is now six and a half weeks since the first cases of coronavirus were reported in the UK. For over a month we have known about the substantial risk that coronavirus poses to the economy and to workers, yet the Government have announced no plan to protect jobs and wages—no full plan for employment support. We are all—all of us—inundated with so many questions, and I have just four of those questions to ask.

People are asking us: why, for example, have Denmark, which had its first coronavirus case on 27 February, and New Zealand, which had its first case on 28 February, four weeks after our first case, both announced comprehensive job protection plans, while we have announced nothing to secure people’s jobs and wages? Given that, the second question is: what consideration has been given to the models in Denmark and Austria, which the Economic Secretary referred to, which involve the Government paying the bulk of people’s wages in exchange for job guarantees?

The third question is: why, when the Chancellor announced the loan guarantee on Tuesday, did the Government not tie those loans into an undertaking from business that no one would be laid off? The fourth question: will the Minister accept that freelancers will need additional support if they do not qualify for statutory sick pay? For example, in the culture sector we have as many as 2 million people, hundreds of thousands of whom may be affected.

The country deserves answers to those questions as a matter of urgency. We will continue to ask these questions not as a matter of political point scoring or ideology, but to ensure that we have a Government response that properly protects the public and matches the scale of the crisis affecting us here and now, not just next week.

It is in order for the hon. Gentleman to raise those points, and he is right to draw attention to the experience in Denmark. Throughout this crisis, the Government have acted on the best scientific and health advice, and that has clearly had to move over time. That advice has been challenged and questioned, and the Prime Minister and the Cabinet have made decisions based on the best advice available. Consequent to the health advice, which is clearly motivated to relieve as much pressure as possible on the NHS, there are other issues that we are dealing with urgently, and sequentially we are offering that advice as urgently as we can in different domains.

The hon. Gentleman asked about the Danish experience, and we are looking at the furlough system. We are looking at the proportion of support that is available, and we are also looking at the German system. In the last significant recession that happened in 2009-10—that is broadly the comparator that we could use—only 3% of German firms were helped. We are aware of what is happening in the US, and we are aware of the proposals that have been put forward by various think-tanks this morning. We are looking thoroughly at all those options, but it is very important that we have a system that delivers the support that is required to employers.

We have extended the coronavirus business interruption loan to up to £5 million. It is clear that there will be no interest payable in the first six months and no fees, and obviously we expect businesses to use that to support their employees during this time.

To assist the House, I can say that I expect this to run until around 11.15.

I commend my hon. Friend and I agree with him—that is something that the Government should be moving on now, but there is something else the Government could do literally today. Universal credit has three basic levers that can all be pulled now enormously to help people who are in work. First, the taper could be lowered dramatically at this stage, which would push the floor right up underneath people in work at the moment, allowing them to fall back on that if employers cannot deal with them. Secondly, Ministers could change benefit rates, allowing a greater expanse of money to flow to claimants: that could be done today. The third area where my hon. Friend could act is to look at the waiting time and reduce that almost immediately. Those three things were always built into the system for flexibility and they can be done today. They can be delivered within days by a Department that already has the ability to do that while he gets on with the other facilities.

I am grateful to my right hon. Friend, who has unrivalled experience in this area. He makes some very reasonable points, and we are looking very carefully at all the options. As I said earlier, when we have decided—very imminently—the Chancellor will make announcements to this House first.

In recent days, the Chancellor has already outlined support for business, which the SNP has welcomed. In Scotland, that support has been passed on in full by our Finance Secretary, Kate Forbes. However, I remain concerned that not enough support is being mobilised for sole traders, freelancers and the self-employed. Today though, our focus is rightly on people many of whom are already self-isolating or moving to work from home, if indeed they can. But bills are still coming in and rent payments are being sought, and so I welcome the news that some support will be put in place, for example, for payment for energy bills. The question is who is eligible for that, and will that go far enough. Will the Government use the tax system to put thousands of pounds in people’s pockets by way of an emergency universal basic income? Will the Government extend statutory sick pay to the 2 million people who earn less than £118 a week and benchmark it to at least the real living wage?

Firms are already starting to make staff redundant, but we need to stem the flow of that immediately, and today. The Government should introduce a statutory retention scheme to provide firms with financial support to keep staff in employment during this uncertain time.

Now more than ever, our social security system needs to kick in. To protect families impacted by hardship and strengthen automatic stabilisers that support demands in the economy, does the Minister agree that the main adult rate of out of work support in universal credit and other benefits, including carer’s allowance, should rise by a third to £100 per week?

We are in the midst of a national emergency the likes of which I have never seen before. How this generation of politicians responds to the crisis will be how history judges us. During the financial crisis of 2008, no expense was spared to bail out the banks, so today with the coronavirus outbreak we must similarly be prepared to bail out household budgets at this time of economic crisis. It calls for us all to rise to the occasion.

The hon. Gentleman is absolutely right. It is important that the Government do whatever it takes in these circumstances. He raises a number of specific points. He will be familiar with the changes we have made in terms of access to statutory sick pay and eligibility starting much sooner; that commenced from 13 March. He will be aware that, to make that easier, there is now no need to have a GP note. He makes a number of points on universal credit and changing the eligibility there. Advances are available online; the minimum income floor has been temporarily released. He also makes a number of points about freelancers and the self-employed, which the Government are clear about.

The hon. Gentleman mentioned the universal basic income. The Government are looking at that, but the question whether it will help the most affected most urgently is one we have to consider. Many of us in this House, for example, would not require such support. We have to ensure that we target it at the most vulnerable.

I have had a lot of emails on this subject, so may I ask the Minister again how the Government are going to support freelancers and the self-employed? They are desperately worried.

My hon. and gallant Friend is right to raise that. We have changed the rules on access to employment support allowance and sick pay. It will depend on individual circumstances. We have also released funds to local authorities for hardship relief. Further advice on that will be given tomorrow by the Ministry of Housing, Communities and Local Government.

I very much agree with the proposals just made by the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith). It is particularly important that the advances paid to people claiming universal credit become non-repayable for those affected by the crisis. The Minister mentioned the suspension of the minimum income floor for self-employed people—a welcome announcement made by the Chancellor in the Budget—but it appears to relate only to people who are directly affected by covid-19, whereas many of those suffering at the moment are not themselves ill but are affected by the wider changes in the economy. Will the Economic Secretary confirm that the lifting of the minimum income floor will apply also to those who are not directly affected? Will we know the details of the employment support package—I am glad the Government are working on that—before this weekend?

The right hon. Gentleman makes some specific points essentially about the consequential effects on different groups of employees who are affected. I cannot comment on the details of that. As for the timing of the employment support announcement, we are working on it as quickly as we can. There is no timetable or specific date because we have got to get it right. We are working as urgently as possible, but I cannot tell him the precise moment at this point.

I commend my right hon. Friend the Member for Tunbridge Wells (Greg Clark) for his urgent question and endorse everything he said. Those of us who are not in the engine room of Government are being told by our constituents that, welcome though Tuesday’s package was, it is simply not going to be enough. When diehards such as my right hon. Friend the Member for Wokingham (John Redwood) and Allister Heath of The Daily Telegraph are lining up for far more radical measures than the Government have yet announced, the Government must take note. May I urge the Government to say something today to give people assurance that the help will come?

I thank my right hon. Friend for his observations. He is right, but there is no sense that the Government are saying that what we have announced is the last announcement we are going to make. It is a question of making sure that when we announce measures, they will be effective in meeting the needs that we know exist. All of us, across the House, will have been inundated with emails from concerned individuals and businesses. We are taking that on board and acting as swiftly as we can. The points raised today are directly informing the nature of our response.

I understand that this is very difficult for the Government and I am sympathetic, but this is about real people’s lives. The Treasury’s natural approach—being cautious and wanting to stress-test everything—is not appropriate in these circumstances. The right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) suggested some really good ideas. Why can they not just be implemented today?