Covid-19 — House of Commons, 2020-05-11
Topic: Macroeconomics
Melvyn John Stride (Conservative, Centre-right): Thank you Madam Deputy Speaker. May I begin by associating myself with the very poignant and moving remarks made by those on both Front Benches about those who have sadly lost their lives to this devastating virus, and with the appreciation that they showed to those who have helped so much and are on the frontline? I will address my remarks specifically to some of the economic issues around covid-19, not least the inevitable withdrawal of some of the Government’s support for businesses as we come out of lockdown. I do not say "inevitable" because the Government were not right to introduce the scheme in the first place—the Chancellor did entirely the right thing, and came in with the scale and pace to support business—but in the longer term, the amount of spend involved in such measures is simply unsustainable For example, the furlough scheme is costing as much on an ongoing basis as the funding of the national health service. Before coronavirus, Governments agonised over whether we could spend another 1%, 2% or 3% on the national health service, but here we are spending the equivalent of 100% on furloughing 25% of all workers in the United Kingdom I want to focus for a moment on how we might unwind the furlough scheme most productively and effectively. First, we should seek to taper it away, from 80% down to 60% and then to 40% and so on, to smooth our exit. Secondly, it is particularly important that employers should contribute to the cost of furlough beyond the end of June, because many of those with staff currently on furlough are not having to pay them and have no intention, in the medium term at least, of bringing them back in to their business. Thirdly, we need to encourage part-time working within the furlough scheme, where possible Finally, the Chancellor should look very closely at targeting support, not just in respect of the furlough but in respect of the other support that the Government are providing. There are at least three categories of businesses in our economy at the moment. There are those that will survive without any additional support through this crisis. Indeed, there is a small minority of businesses whose business model has actually thrived under our current circumstances. They clearly do not warrant support. Secondly, there are companies that, in the medium term, can be bridged out of the current crisis, through the provision of support. That is where a particular focus must lie. Thirdly, there are those businesses whose business model is such that, under the new economy of social distancing and before a vaccine arrives, they are, sadly, going to struggle to survive even if they are given support. I urge the Chancellor to take the courageous and difficult decisions on targeting at business and sector level, to make sure that the Treasury’s finite resources are used productively to support jobs and the economy as we emerge on the other side We also need to start talking about the plan beyond coronavirus, even though that may seem some way away. We need to talk about growth and how we are going to support consumer expenditure in particular, given that consumers do not feel like spending and may have increased their savings during this crisis. Temporary tax incentives, such as a time-limited VAT break, may be good in that regard. Finally, as I stick within my four minutes, business indebtedness will have increased. We need the Government to look at how some of that debt can be turned into equity, so that businesses can focus on investing and creating jobs.