17 September 2020
Backbench Debate: Coronavirus Job Retention Scheme

Jesse Norman responds to a backbench debate on the Coronavirus Job Retention Scheme.

The Financial Secretary to the Treasury (Jesse Norman)

I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on introducing the motion and I thank the Backbench Business Committee for granting the debate. I thank other hon. Members for their contributions to an energetic, well-attended, engaged and interesting debate. As the hon. Lady will know—as we are all aware—we in this House continue to face an enormous challenge.

As has been widely recognised across the Chamber, since March, the Government have acted with great determination to protect people’s livelihoods. Indeed, I think it is recognised that our response has been one of the most comprehensive and generous anywhere in the world. The Office for Budget Responsibility and the Bank of England agree that the Government’s actions in the face of the pandemic have helped to safeguard millions of jobs and businesses.

The job retention scheme—the furlough scheme, as it has been described—has been central to that response. I will talk a little about that and then come on to some of the very interesting points made by colleagues from across the House. As the House will be aware, the furlough scheme was designed and implemented at extraordinary speed, and launched on 20 April, just a month after its announcement. Its purpose has been to help those who would otherwise have been made unemployed and to support businesses as quickly as we could. I do not think that anyone has questioned its success, as I have mentioned. According to the latest figures available, the CJRS has helped 1.2 million employers across the UK to furlough 9.6 million jobs, at a value of some £35.4 billion.​

The hon. Member for Ilford North (Wes Streeting) will not often hear me say this, but how right he was to describe this as one of the Government’s most effective schemes. It is a hotly contested area, and there are many schemes that he could have chosen, but I think I heard him say—I wait to be corrected—that this was one of the most effective. He is absolutely right about that: it was, and it is. Detailed figures show that, up to 30 June, the CJRS had supported nearly 800,000 jobs furloughed in Scotland, more than 400,000 in Wales and almost 250,000 in Northern Ireland. The hon. Member for North Ayrshire and Arran was right to say that it would be churlish not to recognise the CJRS as a laudable scheme. It has had an enormous impact on every single constituency represented in this Chamber.

Opposition Members have pointed to other countries that they would like the furlough scheme to emulate. Of course, they are welcome to do that. They might, for example, want us to contribute at the same wage rate as in Spain, but in fact our furlough scheme does more than that. They might want us to support the same range of businesses as the furlough scheme in New Zealand does, but in fact we are supporting a much wider range of businesses. They might want our scheme to run for as long as that originally proposed in Denmark, but in fact our scheme runs for twice as long. In a majority of sectors in France, which has been mentioned on several occasions, businesses have had to make an employer contribution of 40%, which is significantly higher than in the UK. Why should we imitate that scheme? Why should we have a 40% contribution rate? I think that would be wrong.

At its conclusion in October, the furlough scheme will have been open for eight months from start to finish. Of course, it is understandable in that context that Opposition Members should be calling for an extension, but the Government’s view is that it is in nobody’s interests for the scheme to continue forever—I am not suggesting that that has been widely promoted as a policy option by Opposition Members—and, if it does not, it has to be brought to an end at some point. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) mentioned that it was important to do that on the basis of analysis. Let me reassure him that no one does more analysis than the Treasury does. We look at these issues every which way. We draw on an extremely wide spread of data sources across a number of different areas of behaviour, in both the consumer sector and the wider productive economy. Our view, which has been expressed separately and independently by Andy Haldane, who has been mentioned in this debate, is that it would be irresponsible to trap people in jobs that can exist only because of Government subsidy.

My hon. Friend the Member for Sevenoaks (Laura Trott) was absolutely right to point to the importance of energising the possibilities for new work, new opportunities and new scope in the labour market, particularly for women. However, the onus must be on us to provide fresh work opportunities for those who need them across the UK, and the Government have been doing just that through the Chancellor’s plan for jobs.

As the House will know, we are thoroughly committed to the responsible management of the public finances, in part because no one can say how long this pandemic will last for. As has been recognised by none other than ​the OECD, the work of the last 10 years has given us relatively strong public finances, which we have achieved by bringing borrowing and public debt under control. That is what we are needing to draw on in tackling the challenges posed by covid-19. With Government debt now exceeding the size of UK economy for the first time in more than 50 years, we must continue to balance the needs of the present moment with the need to maintain the country on a sustainable financial footing.

Stuart C. McDonald

The Minister will have heard a couple of folk refer to analysis that shows that by extending the scheme for eight months, debt as a percentage of GDP will fall rather than rise because of the positive impact that it would have on growth and total GDP.

Jesse Norman

I have not seen the National Institute of Economic and Social Research analysis that the hon. Gentleman talks about, which is somewhat embarrassing, since I am a governor of the national institute—I shall ask it to forward that to me. I am pleased to say that it is independent of its governors and rightly so. I will certainly look at that.

The point I would make is that although the scheme as such is winding down, Government support is very much not. It continues across a very wide range of packages and includes, as colleagues rightly mentioned, the bonus. I think that that is much underestimated by colleagues—it is a very important element. That guarantees a one-off payment of £1,000 to employers for each furloughed employee they bring back to do meaningful work and earn an average of £520 a month between November and January, and who continues to be employed by the same employer as at 31 January 2021.

Wes Streeting

Will the Minister give way?

Jesse Norman

I have very little time—if the hon. Member does not mind, I will proceed. That bonus is an important aspect because it provides a marginal benefit to a very large group of relatively low-paid employees. Of course, we have also launched the kickstart scheme.

Let me pick up a couple of points that have been raised. The hon. Member for North Ayrshire and Arran said that it is very important for Scotland to have powers of its own in this context. I echo again—I am becoming like a broken record—the hon. Member for Ilford North who said that the Scottish Government are good at passing the buck and bad at taking responsibility. The Scottish Government House has tax-raising powers devolved through the Silk commission. Let it use those. At the moment, the vast majority of money spent in Scotland and in Wales is spent by and raised through local government—regional government—but raised through UK Government, and that is crucial.

My hon. Friend the Member for Warrington South (Andy Carter) rightly pointed out that the Chancellor has included many flexibilities in the design of the furlough scheme, and it is important to recognise that it has evolved over time. It has not been a fixed thing. My hon. Friend the Member for South Cambridgeshire (Anthony Browne) rightly pointed out that the ​unemployment drop had been much less in the UK than elsewhere and that there had been a rapid fall in furloughing. He pointed to the tapering out that that implied and he is right about that.

The hon. Member for Richmond Park (Sarah Olney) was right to raise the point about the need for green jobs. The Government absolutely share that view, and that is one of the things that successive policies have focused on. I have no doubt that it will be an important part of the consideration in the net-zero review and all the other measures that are presently in place.

Quickly, on the issue of fraud—if I may for a second before winding up, Mr Deputy Speaker—it is much misunderstood; the planning assumptions that were outlined in the evidence from the CEO of HMRC are just planning assumptions, and we wait to see what the final numbers will be after enforcement. He has said in terms that he does not rule out penalties and potentially criminal procedures to bring that back under control—

Mr Deputy Speaker (Mr Nigel Evans)

Order. I am sorry, Minister—

Jesse Norman

And with that, let me sit down.

Mr Deputy Speaker

Thank you.