House of Lords discuss ramifications of badly affected economy by Covid-19

  • Lord Agnew lists govt measures to support the business community
  • Lord Zameer refers SME sector, disproportionately impacts on BEAM
  • Lord Qurban details how much Luton has suffered severe economic hit

Nation special report

LONDON: House of Lords discussed the Covid-19 horrendous affects on British economy in a lengthy virtual debate on Thursday (June 4). Some members out of 51 heavily criticised the government for what they said negligible action by the government to tackle this challenge whereas rest of the House appreciated various measures taken by the government. Lord Eatwell and others raised the issue of public sector spending and investment in the NHS.

Lord Agnew of Oulton

Concluding the debate, Conservative leader Lord Agnew of Oulton, the Minister of State, Cabinet Office and the Treasury summarised the government’s steps being taken to minimise the ramifications of the pandemic. He said that the coronavirus is the biggest threat that this country has faced in decades and this country is not alone. All over the world, we see the devastating impact of this invisible killer.

“The Government’s action plan aims to slow the spread of the virus so that fewer people need hospital treatment at any one time, protecting the NHS’s ability to cope. That is the right thing to do, but people are also justifiably concerned about their livelihoods during this difficult time.

“We recognise the extreme disruption that the necessary actions are having on people’s lives, businesses and jobs. Just as we face a health emergency, so we face an economic emergency too. There can be no doubt about the seriousness of the situation. It is important that we are honest: it will have a very significant impact on our economy.

Lord Qurban Hussain

He said that the Government have announced unprecedented support for public services, individuals and businesses to protect against the current economic emergency. That includes the Coronavirus Job Retention Scheme, which has already helped businesses to keep millions of people in employment and has been extended until October, and the Self-employment Income Support Scheme, which benefits 95% of people who are mainly self-employed. To support firms and businesses through the crisis, the Government have announced unprecedented support, including government-backed loans for businesses of all sizes and grants for small businesses and highly innovative firms.

He listed various measures to boost the badly affected economy. Through the Coronavirus Business Interruption Loan Scheme, over 45,000 facilities have been approved so far, worth more than £8.9 billion, and 700,000 loans, worth more than £21 billion, have been approved through the new bounce-back loans scheme, supporting the very smallest businesses. Over £10 billion-worth of grant payments have been made to over 800,000 business premises so far.

Lord Zameer Choudrey

Turning to the insurance sector, the Government are working closely with the FCA to ensure that the rules are being upheld during this crisis. They recognise that businesses that do not have appropriate insurance cover will require support from elsewhere. As such, businesses should explore the full package of support.

Going further into the recovery, as the Chancellor has said, it is premature to speculate about the future public finances. First and foremost, we are thinking about protecting people’s health and jobs and supporting businesses.

Lord Zameer Choudery

Addressing the House, Conservative leader Lord Zameer Choudery asked; “Do the Government plan to extend the life insurance scheme to the SME sector, and specifically to black and minority ethnic individuals employed in the SME sector who have been defined as key workers but are not covered by the current scheme?​

He referred that people from the BAME community make up 14% of the UK’s population, and this is expected to increase to 18% by 2021. There is a huge body of evidence to suggest that BAME workers are being disproportionately impacted by Covid-19. Many factors contribute to this, but one of the main ones is the nature of the work performed. They are overrepresented in sectors that the Government have allowed to remain open, such as food retail, healthcare and transport. For example, they make up 44% of NHS staff, 70% of the workforce in public administration and education and 26% of workers in the transport sector.

Lord Zameer Choudrey said that some of these professions are covered by the Government’s life insurance scheme but others are not. “I personally feel that these members of the BAME community are playing an essential role in keeping the country moving and are going above and beyond the call of duty in providing essential services to their local community in these unprecedented times”, he added.

Lord Zameer Choudrey told the House that the Government has already categorised them as essential workers. It necessarily follows that the Government must have considered including some if not all of these groups in the Government’s own life insurance scheme. Is the Minister able to shed any light on what was considered and whether anything is currently being considered?

“I believe that when we look back on this episode in the years to come, this is an area that will be under the microscope. If it is economically viable to undertake this, I am sure it will be well received”, he concluded.

Lord Qurban Hussain

Addressing the House, Lib Dem leader Lord Qurban Hussain said that his hometown, Luton, has also taken a severe economic hit from Covid-19. This has resulted in a devastating projected shortfall of more than £49 million in Luton Borough Council’s finances this year. As a matter of fact, Luton is the second worst-hit town in England.

He revealed that the leader and the chief executive of Luton Borough Council have written a letter to the Prime Minister regarding this, a copy of which was forwarded to me. The letter points out that part of the commercial income increase is income through Luton Borough Council’s ownership of London Luton Airport. Luton Borough Council has invested heavily over the last six years to enable the doubling of the size of the airport to 18 million passengers.

He said that last year, the airport delivered to Treasury around £116 million in air passenger duty alone. Covid-19 is decimating, and will continue to decimate, passenger numbers, with the operator currently forecasting an annualised reduction of at least 66% in 2020-21. With passenger numbers catastrophically impacted, the council’s airport company, London Luton Airport Ltd, is no longer receiving air passenger income. That makes it impossible to pass on dividends to the council, which relies heavily on them to fund many vital front-line services.

Lord Qurban Hussain went on to say that will mean an in-year revenue reduction for Luton Borough Council of around £40 million in 2020-21. Taking into account the forecasted reduction ​in business rates, council tax, rents and fees and charges, there will be a shortfall of working capital in the region of £50 million in 2020-21. This shortfall will have a devastating effect on delivering our much-needed statutory services that protect and support the residents of Luton. Luton Borough Council is therefore urgently seeking emergency revenue funding from the Government of £50 million for 2020-21 in addition to the welcome Covid-19 response funding.

Lord Qurban Hussain asked will the Minister support with sympathy Luton’s application to bridge this financial gap as a special case?