Covid-19: Economy Update — House of Commons, 2020-10-22
Topic: Macroeconomics
Rishi Sunak (Conservative, Centre-right): Let me speak first to the people of Liverpool, Lancashire, South Yorkshire and Greater Manchester, and other areas moving into or already living under heightened health restrictions. I understand your frustration. People need to know that this is not forever; these are temporary restrictions to help control the spread of the virus. There are difficult days and weeks ahead, but we will get through this together. People are not on their own. We have an economic plan that will protect the jobs and livelihoods of the British people, wherever they live and whatever their situation. Just as we have throughout this crisis, we will listen and respond to people’s concerns as the situation demands I make no apology for responding to changing circumstances, so today we go further. The Prime Minister was right to outline a balanced approach to tackling coronavirus, taking the difficult decisions to save lives and keep the R rate down while doing everything in our power to protect the jobs and livelihoods of the British people. The evidence is clear: a regional, tiered approach is the right way to control the spread of the virus. My right hon. Friend the Chief Secretary to the Treasury yesterday set out for the House our economic support for businesses that are legally required to close. We are providing: billions of pounds of support for local authorities and a grant scheme for affected businesses, worth up to half a billion pounds every month. Of course, we also expanded the job support scheme, with the Government covering the cost of paying two thirds of people’s normal wages if their employer had been legally required to close. For areas in local alert level 3, we have made available over £1 billion of generous up-front grants, so that local authorities can support businesses, protect jobs and aid economic recovery in a fair and transparent way. That is our plan to support closed businesses But it is clear that even businesses that can stay open are facing profound economic uncertainty. This morning I met business and union representatives, including those from the hospitality industry, to discuss the new restrictions. Their message was clear. The impact of the health restrictions on their businesses is worse than they hoped. They recognise the importance of the tiered restrictions in controlling the spread of the virus, but a significant fall in consumer demand is causing profound economic harm to their industry. It is clear that they and other open but struggling businesses require further support, so I am taking three further steps today First, I am introducing a new grant scheme for businesses impacted by tier 2 restrictions, even if they are not legally closed. We will fund local authorities to provide businesses in their area with direct cash grants. It will be up to local authorities to decide how best to distribute the grants, giving them the necessary flexibility to respond to local economic circumstances, but I am providing enough funding to give every business premises in the hospitality, leisure and accommodation sectors a direct grant worth up to £2,100 for every month for which tier 2 restrictions apply. That is equivalent to 70% of the value of the grants available for closed businesses in tier 3. Crucially, I am pleased to confirm that these grants will be retrospective; businesses in any area that has been under enhanced restrictions can backdate their grants to August. I have been listening to and engaging with colleagues around the House, including—but not only—my hon. Friends the Members for Heywood and Middleton (Chris Clarkson), for Hyndburn (Sara Britcliffe), for Penistone and Stocksbridge (Miriam Cates), for South Ribble (Katherine Fletcher), for Burnley (Antony Higginbotham), for Keighley (Robbie Moore), for Cheadle (Mary Robinson), for Leigh (James Grundy) and for Southport (Damien Moore), and I am pleased to confirm that the backdating of the new grants means that we are being more generous to the businesses and places that have been under higher restrictions for longer. Let no one say that this Government are not committed to supporting the people and businesses in every region and nation of the United Kingdom Secondly, to protect jobs we are making the job support scheme more generous for employers. If businesses are legally required to close, as we have already outlined, the Government will cover the full cost of employers paying two thirds of people’s salary where they cannot work for a week or more. For businesses that can open, it is now clear that the impact of restrictions on them is more significant than they had hoped, particularly for those in the hospitality sector. I am therefore making two changes to the short-time work scheme to make it easier for those businesses to keep staff on, rather than make them redundant: first, under the original scheme, employees had to work for 33% of their normal hours, whereas now we will ask them to work only 20% of those hours; and secondly, the employer contribution for the hours not worked will not be 33% as originally planned, or even 20% as it is in the October furlough scheme, but will reduce to 5% The scheme will apply to eligible businesses in all alert levels, so that businesses that are not closed, but which face higher restrictions in places such as Liverpool, Lancashire, South Yorkshire, and Greater Manchester, as well as the devolved nations, will be able to access greater support. These changes mean more employers can access the scheme and more jobs will be protected. We have made this one of the most generous versions of a short-time work scheme anywhere in the world. It is better for businesses, better for jobs and better for the economy Thirdly, as we increase the contribution we are making towards employees’ wages, I am increasing our contribution to the incomes of the self-employed as well. Today we are doubling the next round of self-employed income support from 20% to 40% of people’s incomes, increasing the maximum grant to £3,750. So far through this crisis, we have provided more than £13 billion of support to self-employed workers. Sole traders, small businesses and self-employed people are the dynamic entrepreneurial heart of our economy, and this Government are on their side In conclusion, a wage subsidy for closed businesses, a wage subsidy for open businesses, cash grants of over £2,000 a month for tier 2 businesses and up to £3,000 a month for closed businesses, support for local authorities, support for the self-employed, support for people’s jobs and incomes, all on top of over £200 billion of support since March. This is our plan—a plan for jobs, for businesses, for the regions, for the economy, for the country. A plan to support the British people. I commend this statement to the House.