VAT and SDLT cuts on menu as Chancellor serves up ‘Plan for Jobs’

10 Jul 2020

Chancellor Rishi Sunak has provided an update on the UK’s economic recovery from COVID-19 and set out a ‘Plan for Jobs’ which includes a targeted VAT cut, a ‘Job Retention Bonus’ and a cut in stamp duty land tax (SDLT).

The Chancellor outlined the Government’s three phase economic response, noting the first phase began in March with the Government asking businesses to close. He spoke about the success of the UK’s response and support for employees through the CJRS and support for the self-employed, as well as businesses with tax cuts, grants and loans. He noted this support had been accessible by all of the devolved administrations. The Chancellor said it was now time to move into the second phase, which would focus on protecting jobs. He added there would be a third ‘rebuild’ phase, and confirmed a Budget and Spending Review would take place this autumn, which would address the challenges facing public finances.

Speaking about the Government’s plan for jobs, the Chancellor said this would include:

  • A phased end to the Job Retention Scheme in October, as the longer workers remained on furlough, the harder it would be to return to employment.
  • A new Job Retention Bonus scheme, which will reward businesses with £1,000 for each employee that is hired back through to January and is paid at least £520 per month.
  • The Kickstart Scheme, which will directly pay employers to create jobs for any 16 to 24-year-old at risk of long-term unemployment. The jobs must pay at least the National Living Wage and provide 25 hours a week of work. Employers will also need to provide training and support to help the worker find a permanent job. There will be no cap on the number of places available for the £2bn scheme.
  • Employers will be paid £1,000 to take on trainees, and will also be paid to create new apprenticeships over the next six months. Businesses will be paid £2,000 to hire young apprentices, while a new bonus will be created to reward businesses for hiring apprentices over the age of 25.
  • A total of £17 million will be provided to triple the number of sector-based work academy placements in 2020-21.
  • The number of work coaches will be doubled to 27,000, while £32 million will be provided for the National Careers Service.
  • £1bn will be given to the DWP to support workers getting back to work.
  • A £2 billion Green Homes Grant will begin in September, which will allow home owners and landlords to apply for vouchers of up to £5,000 to make their homes more energy efficient. Low-income households will be eligible for vouchers of up to £10,000.
  • £1bn will be invested in the Public Sector Decarbonisation scheme, which aims to half greenhouse gas emissions from the public sector by 2032.
  • A Social Housing Decarbonisation Fund will be established to help social landlords improve the least energy-efficient social rented homes.
  • SDLT will be cut for all transactions below £500,000 from today until 31 March 2021.
  • VAT in the hospitality and tourism sectors on food, accommodation and attractions will be cut from 20 per cent to five per cent.
  • In the month of August, an ‘Eat Out to Help Out’ discount will be available in all participating businesses between Monday and Wednesday, which will provide a 50 per cent discount, up to a maximum of £10 per head, including children, and will allow businesses to claim the money back within five working days.

Labour frontbench reaction

Responding to the Chancellor’s ‘economic update’ statement, Shadow Chancellor Anneliese Dodds said Britain should have had a back-to-work Budget; but instead we got this summer statement, with many of the big decisions put off until later. The Government has failed to create a fully functioning test and trace and isolate system and that has harmed consumer demand in general, she asserted.

Dodds (pictured thanks to Parliament UK) welcomes the Government’s announcement of targeted VAT cuts on hospitality and tourism and of vouchers to be used in restaurants. She said that while jobs markets in many other countries have already fully recovered, in Britain it could take much, much longer for vacancy levels to return to normal. Chancellor still needs to abandon his one-size-fits-all approach to ​withdrawing the job retention and self-employed schemes. “We also need a strategy for the [CJRS) scheme to become more flexible so that it can support those businesses forced to close again because of additional localised lockdowns.” She also complained that there will be no solutions for SMEs who cannot take on additional debt until the autumn.

The £50 million to support retrofitting in social homes is just a seventh of what the Conservatives said they would be spending every year, said Dodds. “The muddled confusions over stamp duty over the past 48 hours reflect a broader lack of strategy when it comes to house building, particularly for genuinely affordable and social homes,” she added. If the Government do increase taxes during the recovery and cut back on public services, it will damage demand and inhibit our recovery, she said, telling MPs that Labour was not calling for tax rises but calling for growth.

The Chancellor responded that the Shadow Chancellor had offered questions, opinions and even tests, but not any alternative plan to the Government’s.

Conservative backbench reaction

Treasury Committee Chair Mel Stride said he was concerned that the Chancellor is looking to businesses to grow the jobs of the future, yet we know that many hundreds of thousands of small and medium-sized enterprises will emerge from this crisis saddled with significant amounts of corporate debt. He added: “We will look to them at that moment to be investing in jobs and growth, rather than being concerned about de-leveraging and shoring up their balance sheets.” Sunak replied that he is looking at proposals from a range of people, including from Conservative MP Bim Afolami, TheCityUK and others on this matter.

Former Chancellor Sajid Javid commented that interest rates will not stay low forever and that we will eventually need to bring our national debt back under control in order to sustain recovery, continue to create jobs and keep taxes low. He encouraged Sunak to set out new fiscal rules in his autumn Budget with the aim of getting our national debt down as a proportion of our national income by the end of this Parliament.

John Redwood called on the Government to review the taxes, subsidies and public procurement regulations so that they can be amended to allow us to grow more of our own food, land and process more of our own fish, generate more of our own power, and supply more of the things that our health service and Ministry of Defence require, because it can be better made in Britain, and better made with British jobs.

Gareth Bacon asked the Chancellor to reject the Leader of the Opposition’s ‘hard-left’ call for a raid on people’s hard-won homes and savings in the form of a new wealth tax, and offer reassurance that the Government will continue to focus instead on policies aimed at creating wealth, rather than simply plundering it. Sunak replied that is ‘absolutely not the policy that we should be pursuing’.

The public sector target for apprenticeships is 2.3 per cent. Robert Halfon wants the raising of the target by five per cent, which would create 4,000 new apprenticeships in 2020-21, based on hiring 50,000 new members of staff in the public sector. Will the Chancellor also change procurement rules to ensure that any big company bidding for a public sector contract must have at least five per cent of its workforce employed as apprentices? Sunak said it was an interesting suggestion.

Chris Grayling wants the Treasury to look at whether aviation could be included in the VAT reductions, or look at other measures to support a sector that is vital to our economy but has been very badly affected.

Sunak told Lucy Allan that the Kick-start scheme will run at least until the end of next year.

Sir Graham Brady urged Sunak to reflect over the summer on whether a cut or suspension of Air Passenger Duty would be the best way to get the aviation sector back to health for next year.

Martin Vickers said: “May I also urge the Chancellor to consider yet again the freeport issue for Immingham and Grimsby? The consultation ends next week. Please do not waste time mulling over the consultation responses; deliver freeport status for Immingham and Grimsby.”

Labour backbench reaction

This week saw the first meeting of the ExcludedUK all-party parliamentary group. Margaret Greenwood explained that the ‘excluded’ include people on zero-hours contracts, the directors of small companies paying themselves through dividends, and many self-employed people. She wants the Chancellor to look again at providing support to the excluded. Sunak replied that because of the strengthening of the welfare system that the Government put in place and universal loan schemes, everyone has been able to access some form of support.

Sunak offered to meet with Yvette Cooper to talk about the Kick-start scheme. Cooper introduced the future jobs fund and the wider youth job guarantee as Work and Pensions Secretary in 2009, and was ‘appalled’ when they were cancelled a year later under the coalition.

Barry Sheerman welcomed the Chancellor’s emphasis on young people, employment and training but expressed disappointment ‘that he has not accepted my challenge to introduce a windfall profit tax like the one Mrs Thatcher introduced in order to pay for a massive green apprenticeship scheme.’ The Chancellor did not respond directly on a windfall tax but told Sheerman that he was very happy to take advice on how best to design the Government’s schemes and had just been talking to Frances O’Grady of the TUC.

Maria Eagle said it makes no sense to withdraw support from businesses that are viable but cannot work at all at present, or cannot work profitably because of the ongoing effects of health restrictions, such as in aviation, aerospace manufacturing and technical production companies.

Sir George Howarth said that local government faces a catastrophic loss of revenue next year as a result of COVID-19, and that that will have a ‘devastating’ effect on jobs and services. Sunak replied that the Local Government Secretary unveiled a comprehensive agreement with local government to provide loss sharing on income that has been forgone during this crisis.

Emma Hardy cited the IFS as saying that 13 universities could go bust as a result of COVID-19.

According to StepChange Debt Charity, 4.5 million people have lost income and accumulated £6 billion of debt in arrears on household bills during the pandemic. Jessica Morden called on the Chancellor to ensure that economic recovery plans also include a strategy to support people in unavoidable coronavirus-related financial difficulties.

Beth Winter said that Richard Murphy, a professor of political economy at City University in London, says that the Government have the potential ​to raise £174 billion a year if wealth was taxed at the same rate as income. She said that could cover the cost of the CJRS for over 12 months, according to the latest estimates from the OBR. She called for a ‘radical overhaul of our taxation system in order to fulfil the Prime Minister’s levelling-up promise’. Sunak replied: “I do not believe that now is the time, or ever would be the time, for a wealth tax.”

Liam Byrne said there was a gaping hole in the Chancellor’s announcement where support for manufacturing should be.

A nine-month cut to stamp duty is welcome, but without an injection of new houses it risks forcing up prices, making it harder, not easier, for first-time buyers to buy homes, said Clive Efford. Sunak replied: “The evidence we have both from economists and HMRC is that the majority of the benefit of a stamp duty cut last time around, in ’08-’09, accrued to the buyers.”

SNP reaction

SNP Treasury spokesperson Alison Thewliss urged the Chancellor to look at a package of investment with no less than £80 billion of new money, equating to approximately four per cent of UK GDP, the equivalent investment to that being made by Germany. The SNP seeks urgent devolution of the financial powers in these unprecedented times and to be able to have the flexibility to switch from capital to revenue spending. She asked the Chancellor what these proposals would mean for the block grant adjustment.

The SNP believes that the Chancellor must do more for people caught in gaps in CJRS and SEISS, and extend the furlough and SEISS for as long as each of the four nations require that, Thewliss continued. The Tories must also scrap the two-child cap, re-establish child poverty targets, introduce a real living wage for all ages and roll out an emergency basic payment plan to protect families, she urged.

“We want to see investment in a national debt plan to support businesses, families and individuals who have been struggling,” said Thewliss. She supports a temporary reduction in VAT and urged a two pence cut to employers’ national insurance contributions, to protect jobs and reduce the cost of hiring staff.

Sunak told Thewliss that the OBR will do final costings for these policies in the coming week, and then the block grant will be adjusted as quickly as possible. It should be done based on OBR costings, as is normal for these matters, he said. Thewliss had asked about the inclusion of different businesses in the VAT cut. The Chancellor referred her to principal VAT directive annex III, paragraph 7, where the existing legislation is drawn. He said guidance would be published the following day, for SIs to be laid next week and to come into force on Wednesday.

Brendan O'Hara said the temporary reduction in VAT does not go nearly far enough. Tourism and hospitality businesses need an extension of furlough to be able to retain their staff and to have access to grants, rather than having to rely on the business interruption loan scheme.

Lib Dem reaction

Sir Edward Davey
, Lib Dem Acting Leader, asked: “Why was there absolutely nothing serious for the self-employed? With unemployment rocketing—perhaps up to three million—and the climate emergency already hitting us, why is the Chancellor’s ambition for a green recovery so small?” The Chancellor replied that the UK’s self-employment scheme was one of the most comprehensive and generous anywhere in the world.

Alistair Carmichael asked the Chancellor not to close the door on the idea of extending the five per cent rate of VAT for the visitor economy or even making it permanent. He will have the best possible data now to test against previous studies that have shown that that rate could actually bring a better return of revenue for the Treasury, he said. Carmichael, who represents Orkney and Shetland, added: “I fear that, even for my constituency where we have a highly seasonal visitor economy, many of the businesses will not benefit from it, because they are not intending to reopen again until next spring.” Sunak replied that it is important that the VAT cut is time limited and that is in keeping with most other countries that have done something similar.

Wendy Chamberlain wants the Chancellor to provide detailed figures so that we can assess exactly how much financial support has been delivered from the Treasury to the people and businesses in Scotland and the other devolved nations.

Other reaction

Sammy Wilson
, DUP Treasury spokesperson, is disappointed that sectors that are important to Northern Ireland in terms of their export potential, high-value jobs, tourism and connectivity with the rest of the UK are the aerospace and aviation sectors, were not mentioned by Sunak.

Green Party MP Caroline Lucas complained that the green measures announced in Sunak’s speech will cut just 0.14 per cent of UK emissions—not only that, but this is a Government who are still committed to spending £27 billion on new roads, she said. She said: “Will he start by cancelling the roads scheme, put the money into public transport and broadband, and introduce a new rule for the UK economy to ensure that all spending and taxation is in line with the Paris agreement and restoring our natural world?” Sunak replied the Conservatives have cut carbon emissions by 40 per cent in the last few years.

Ways and Means motion

At the end of responses to the statement the Chancellor moved a provisional collection of taxes motion related to the announcement on Stamp duty land tax (temporary relief).

The full debate is here.

The Economy debate

MPs also got a chance to respond to the Chancellor’s statement during a general economic debate, held the same day. Much of the comments in this separate debate by MPs related to the ‘mini Budget’.

Economy debate - Conservative frontbench speeches

Chief Secretary to the Treasury Steve Barclay opened the debate by saying £49 billion has gone towards the NHS, local authorities and others working to protect us from the virus. The UK’s economic response to COVID-19 is one of the most comprehensive and generous of any Government’s in the world. Conservative John Redwood intervened to ask when we will get some revised numbers on what the borrowing might amount to, to which Barclay replied that there are two issues within that. First, there are the revised numbers from OBR, which has set a timescale for when it will set those out. Then there is the more substantive issue of seeing the Plan for Jobs in the context of three phases.

Barclay insisted to Labour’s Lilian Greenwood that the Government has been flexible, citing the £1.57 billion of support to theatres. He did not give Labour’s Emma Hardy much hope of additional help for caravan industry other than the ‘mini Budget’ announcement of a cut to VAT for campsites and the tourism sector from 20 per cent to five per cent. He went through the Chancellor’s announcements and added that the Government will bring forward £8.6 billion of capital investment in infrastructure projects that will support thousands of jobs.

Lib Dem Tim Farron intervened to remark that 69 per cent of hospitality businesses are not able to open fully, so, with goods and services that they cannot trade, they will get no benefit whatsoever from a tax cut. Farron wants the Government to invest in a wages and grant package to see the industry through to spring next year. Barclay responded that the ‘eat out to help out’ programme will help.

When Barclay spoke of the Government’s ‘totemic ambition’ of achieving net zero carbon emissions by 2050, Green Party MP Caroline Lucas remarked the truth is that the £3 billion earmarked for green recovery is dwarfed by ongoing government funding for fossil fuels, whether it is the £27 billion road-building scheme or ‘blank cheque bail-outs’ for aviation.

Economic Secretary to the Treasury John Glen closed the debate, claiming that over the past few months we have seen the best of our economy: we have seen banks and building societies providing support with mortgage holidays; the important role of credit unions; businesses large and small turned over their production lines to the manufacture of ventilators, PPE and antibacterial sanitiser; and supermarkets, chemists, couriers and utility companies have also assisted; but we now need to move forward. As the Chancellor has unveiled a plan to protect, create and support jobs, everyone in this country has the opportunity for a fresh start, he said. The task is not yet done. It will take time, and there will be more to come from the Government in the Budget and spending review in the autumn.

Economy debate – Labour frontbench speeches

Labour’s Shadow Exchequer Secretary Wes Streeting highlighted that some in the services sector have been hit particularly hard, with the latest ONS figures showing a fall in output in accommodation and food of 92 per cent, compared with 20 per cent in professional services.

Streeting said without an effective track and trace system, the risk to public health and to our economy are that much greater. He said the success of Labour’s future jobs fund (which he claimed was the precursor to the new Kick-start scheme) was in no small part thanks to the hard work of the third sector and local authorities in delivering it. Today, those local authorities are in far worse shape after a decade of cuts from a Conservative Government and the double whammy of rising costs and lost revenues as a result of this crisis. He hopes that the cut in VAT and the limited ‘eat out to help out’ scheme will be of some assistance to our tourism and hospitality industries, but this falls far short of what Labour called for and what was promised, which was a ‘New Deal’.

He said it is ‘completely unreasonable’ for some businesses to see government support beginning to wind up before they can actually open their doors to business. The Chancellor’s refusal to accept a more flexible and tailored sector-by-sector approach to business support and job retention is a failure of judgment that will be reflected in higher unemployment figures, he said. Those who will benefit from the cut in stamp duty will, by definition, be [the] better off, he added.

The Conservative manifesto promised £9 billion for energy efficiency. Today the Chancellor announced just £2 billion, said Streeting. The ‘ideological dogma’ that underpinned the last decade of Conservative economic policies has made this a lost decade—a decade of low productivity, stagnant wages, rising poverty and mounting debt, the slowest growth since the war and, perhaps the most damning indictment of all, child poverty rising on their watch.

Shadow Chief Secretary to the Treasury Bridget Phillipson said we should have had a more targeted furlough strategy that addresses the fact that some sectors that are not at full capacity should not be treated in the same way as those that are. We need ongoing, targeted support. A plan on job creation should have moved in lockstep with our commitment to tackling the climate emergency, but again, ministers have fallen short, she said.

Economy debate - Conservative backbench speeches

John Redwood said we need plenty of money and credit for a ‘jobs recovery’ and there is no need for the Bank of England to go for negative interest rates. He added: “Value for money and competition are good, but let us make sure that the purchasing goes to home purposes, just as they do in other countries abroad, where they look after themselves first.”

Robert Largan said the rest of the country is not less productive than London because the people are less intelligent or do not work as hard; it is because our public transport systems are decades behind the capital’s. We need to turbocharge the roll-out of fast and reliable broadband, especially to rural areas, he said. He welcomes the Chancellor’s announcements on training schemes and apprenticeships, but we should be thinking more carefully about how they can be targeted to the industries that we need to build infrastructure.

Mark Eastwood said the measures announced in the statement will be a huge boost for apprenticeships.

There are three areas in which Jacob Young can see the start of a jobs revolution. The first is focused decarbonisation, secondly fast-tracking Teesside as a freeport pilot without the need for the lengthy competition process, and thirdly, reform of public procurement to help to support local businesses and ensure that UK jobs are supported.

Theresa Villiers welcomed the Government’s determination to invest in infrastructure, better transport, better broadband, better flood protection and better school buildings. The current situation does not require a rush to austerity, she added.

Chris Clarkson said that this needs to be a national recovery, driven with a ‘one nation’ approach.

The COVID-19 crisis is the stimulus for a new, accelerated revolution involving a new economy with new jobs in tech, data and the life sciences, said Lucy Allan.

Jerome Mayhew said we should consider a carbon tax, together with a scheme for broader adjustment payments. Today, the full cost to the economy of carbon emissions is not included in the price of purchase, creating a false exchange. A carbon tax, which adds in that missing part of a transaction, would remedy that. Such a tax would make the decision to take advantage of today’s grants for insulation even more attractive, and, rather than costing the taxpayer, could raise significant sums for the Treasury.

Nickie Aiken, whose constituency includes much of London’s West End, claimed that for every £1 spent in theatres, another £5 is spent in the local economy.

On apprenticeships, Caroline Nokes said this must be about reaching across the age ranges and across the gender divide.

As the Chancellor prepares for the autumn Budget, Greg Smith urged him to ensure that we keep taxes low on both individuals and businesses, because no high-tax economy has ever successfully come out of a financial crisis. Aylesbury Vale enterprise zone is due to expire in March 2021. He said it would be ‘life-changing’ for that enterprise zone status and tax relief period to be extended by at least a year, or perhaps through to 2024.

Richard Fuller asked the Government to please bear in mind the impact of government policies on freelancers, particularly in the entertainment and theatre sector, by coming up with a specific date on which the theatre and live entertainment sectors can reopen.

Bim Afolami suggested the UK maintain a loose fiscal policy and loose monetary policy, adapt its financial system to make sure we can get more equity into businesses and reduce the debt burden, and improve the ability of labour and capital to move from sectors and companies that are declining into those that are growing.

Richard Drax said: “Never, in my view, has there been a better opportunity radically to overhaul the taxation system in this country. It is outdated, punitive and bureaucratic. I welcome the announcements made today on VAT and stamp duty. That is a start, but let us get rid of them altogether. Let us go much further—capital gains tax, inheritance tax. Look where our poll rating went when, if I recall correctly, George Osborne raised the threshold to £1 million. It is people’s money, and we have no right to take money off people unfairly.”

Laura Trott remarked that the VAT cap for the tourism and hospitality sector as well as the ‘eat out to help out’ scheme will disproportionately help women. That is ​very important and has been overlooked in the narrative we have had to date, she said.

Economy debate – Labour backbench speeches

Karin Smyth has written to the Education Secretary suggesting an approach by Bristol City Council to retain some levy funds to be able to support public sector recruitment for apprenticeships.

Catherine McKinnell said we cannot let this crisis entrench regional, intergenerational and gender inequalities even further. McKinnell said we need short-term support for businesses that will continue to struggle. A one-size-fits-all approach is leaving too many people falling through the gaps. The package for the creative sector is welcome, but we also need a longer-term strategy as venues remain shut and capacities limited. The MP added that the long-promised review of business rates and online taxation is desperately needed for our high streets and town centres, because their long-term transformation has been accelerated by this crisis. She put in a special plea for business rates relief for our regional airports. It is a major fixed cost that is simply not reflected in the current passenger numbers or the projected numbers for quite some time.

Olivia Blake remarked that ten years of anaemic growth have seen wages stagnate in real terms, and people’s rights at work have been eroded. The £3 billion for home retrofits and energy efficiency in public buildings is welcome, but it is not a green new deal, Blake said. On struggling universities, she fears we risk having a lost generation of researchers in this country, and that will serve only to make us weaker in the future and reduce our productivity.

Matt Western complained that UK business rates are 60 per cent more than in, say, France and other countries, which is a ‘huge disadvantage to our businesses’. Likewise, our energy costs are 68 per cent higher than the European average.

We should take the opportunity to clamp down on poor working conditions and poor tax practices, and encourage businesses to hit environmental targets, said Emma Hardy.

Gerald Jones complained that he has waited since 2018 for a consultation on how the shared prosperity fund is due to work and what share Wales will get.

Working people have faced a decade of public service cuts, stagnating wages and rising rents [while] the super-rich and big businesses have enjoyed a decade of tax cuts and corporate giveaways, said Zarah Sultana. This was the economy before coronavirus hit—rigged, unfair and unsustainable, and charging us towards climate catastrophe. We need to take on the billionaires, dismantle the fossil fuel industry, tax the super-rich, and crack down on the tax dodgers, she said.

Economy debate - Lib Dem speeches

Sir Edward Davey, Acting Leader of the Lib Dems, said the Chancellor will have to produce a much more coherent economic strategy if we are to deal with unemployment in the medium term and with inequality and climate change. There was nothing for the self-employed; they have been left behind—they have been excluded—and that is just not good enough. The kick-start programme for young people looks good, but why only six months of training? He does not think the stamp duty measure is going to be a huge boost to people. For a start, the housing market is already picking up now that people are able to buy again, as demand was already there. Secondly, this tax cut will get capitalised in the price. He would rather have seen help for renters, help for homeless people, and building homes. If we really want a fiscal stimulus, we should be talking about the longer term and about the new industries, he argued.

Daisy Cooper urged the Government to reform the apprenticeship levy, so that it supports the ecosystem of freelancers who serve the creative sector, which was one of the fastest growing sectors before COVID-19 hit. We need to ‘turbo-charge’ the business rates review, she says, and we must level the playing field on VAT for the long-term between the on-trade and the off-trade. She urged the Minister to keep an open mind on one-off, tailored, bespoke extensions of furlough where they are needed, because some of our pubs are being asked to renew leases for five or 10 years.

Alistair Carmichael said studies in the past would claim that the take from the visitor economy would be greater with a lower rate of VAT. He wants the VAT cut to last longer than six months.

Munira Wilson said we need an ambitious green recovery package that seeks to insulate every home in the next 10 years and massively expand renewable energy and new air quality standards.

Wendy Chamberlain has asked the Government to publish a breakdown of the amount of money that has been paid directly by the UK Government to people and businesses in Scotland. Making those figures visible will help to inform all MPs and those in Holyrood when we debate the merits of the UK.

Economy debate – SNP speeches

Alison Thewliss, the SNP’s Treasury spokesperson, repeated the calls SNP has made for an £80 billion stimulus to protect household incomes and grow the economy.

Scotland should have greater financial powers, for example, over borrowing, so that they can shape their own targeted response to this pandemic, meeting Scotland’s specific needs, she said. The Scottish Government have spent £4 billion on covid-19 and more than £2.3 billion to help businesses, well above the Barnett consequentials. The fiscal framework could not have envisaged COVID-19 and must now be reviewed, as a matter of urgency, to allow the Scottish Government the flexibility to respond to this crisis, she argued.

Thewliss highlighted the demand from the Convention of Scottish Local Authorities for a 12-month payment holiday from the Public Works Loan Board. Local authorities, along with other employers, would also benefit from a reconsideration of the winding up of the furlough scheme, which NIESR has said would result in a 2.5 per cent reduction in the UK’s GDP—a not insignificant sum.

We cannot rely merely on the private sector to stimulate the economy; the Government must take the lead, Thewliss said. A cut on VAT on building repairs would be welcome, she said, as that would encourage people to invest in their properties, in energy-efficiency measures and other types of such activity. Policies such as a 2p cut to employers’ national insurance contributions would also protect jobs and reduce the cost of hiring staff. We also want to see a national debt plan to deal with the debt that businesses and individuals are suffering, in a way that promotes fairness as well as economic recovery, she said. She is keen to see the pilot on no-interest loans for people on particularly low incomes, which has previously been considered by the Treasury, because it would provide alternatives to high-cost credit. The single most effective policy in reducing child poverty would be to increase universal credit payments, she argued, and SNP members are calling for an increase of £20 a week in universal credit and child tax credits as part of any stimulus package.

Owen Thompson said the Government need to commit to turning loans into grants instead of debt, to protect jobs and to ensure the survival of those businesses.

The Transport Secretary spoke last week about 4,000 buses. This is welcome, but completely lacking in the kind of ambition that we need now, said Gavin Newlands. A firm commitment from the Government to order at least 10,000 low and zero-emission buses would be a transformational policy, he added.

Economy debate  - other speeches

Ben Lake, Plaid Cymru, said the fundamental challenges facing the UK economy, including low productivity and regional inequality, have been exacerbated by the COVID-19 crisis. Lake says that an opportunity has been missed to increase R&D credit, as well as to review reliefs such as the enterprise investment scheme to ensure that taxpayers’ money is adequately supporting private investment in the marginalised areas of the UK. The MP notes that 46 per cent of public R&D funding is spent in the ‘golden triangle’ between London, Oxford and Cambridge. He said we need to explore ways to introduce targeted furlough schemes and business support schemes to support local lockdowns. His concern is that with statutory sick pay at less than £100 a week, many people will face a difficult decision if they are asked to self-isolate.

The New Economics Foundation released a new report that suggested that by investing £8.6 billion a year in whole-house retrofit, we could create more than half a million jobs, reduce household emissions by more than 20 per cent and cut affected household bills by £418, all within the remainder of this Parliament. That is what an energy efficiency programme worthy of the moment would look like, charged Green Caroline Lucas. The so-called green recovery is a drop in the ocean of what is needed, she said.

Jim Shannon, DUP, said: “Northern Ireland has lower rates and a highly skilled labour force. It is a perfect place for investment. I say to everyone in this House that if they have a company that wants to invest, come to Northern Ireland.”

The full debate is here.

By Hamant Verma