John McDonnell – 2020 Speech in Economic Update Debate

Below is the text of the speech made by John McDonnell, the Shadow Chancellor of the Exchequer, in the House of Commons on 17 March 2020.

There was an element of déjà vu about that statement. I thank the Chancellor of the Exchequer for providing us with an earlier copy of it. Of course, we recognise the immense threat that this virus poses to our country and the globe, and we want to work with him to ensure that we do everything we can to protect our economy and our people. But today, in some of our constituencies, people were being laid off—they were losing their jobs and their incomes, and their livelihoods are being threatened. People are worried, and I am disappointed that today’s package of measures does not really appreciate the urgency or the gravity of the situation for those individuals and their families.

Let us establish a principle throughout our discussions. To protect our people, the underlying principle must be that, wherever a person is sick, self-isolating or laid off from their employment, we will protect their income and give them security. I want to raise a number of questions about issues that the Chancellor failed to address and that I hope will be addressed urgently.

On those people who are sick, there is an urgent need for statutory sick pay to be available for everybody from day 1, and that means extending it to people on low pay, in part-time work and on zero-hours contracts, who at ​the moment do not qualify. Will the Chancellor now consider abolishing completely the lower earnings limit with regard to statutory sick pay, as called for by the CBI? May I also ask him to heed the call of the TUC and other groups to lift the overall level of statutory sick pay? The TUC has proposed that it should be raised to the level of the real living wage, and I think we should support that. Other countries are providing 100% protection of wages.

Other questions with regard to individuals remain unanswered. Will those workers who have been asked or required to self-isolate—teachers, health workers, nurses, carers and other essential public servants—be protected on full pay to ensure that essential services continue? Will the Government assure people of a right to work from home?

Other pressures felt by individuals relate to rents, mortgages and evictions. I really regret—I ask the Chancellor to consider this urgently this evening—that there was nothing in the statement to protect renters. It affects all our constituents. Will the Chancellor bring forward urgently now measures to protect renters, prevent evictions and enable rent holidays for those people unable to meet their costs? Will he put powers in the legislation now to follow the example of some other countries that have frozen or suspended utility bill payments and put that on a statutory footing because this is an emergency?

For those who have already lost their jobs, let us be clear: the level of and access to universal credit are unacceptable. The Chancellor has said that those receiving universal credit can receive an advance as a loan. This is pushing people into debt, some of them the poorest in our society. The Child Poverty Action Group has asked whether we can make that loan non-repayable as a grant. Can I urge him to consider that?

The Chancellor has said, and I welcome it, that he is going to bring the trade unions together to look at a more sustainable package. We need to do that within days, not weeks, and we will work with him to ensure that happens. I would cite other examples. In Denmark, the Government cover 75% of wages and companies cover 25%. It is true that workers give up some holidays in exchange, but there is a job guarantee for those workers.

We want financial support, but we want guarantees that these people, when this crisis is over, will have a job to go back to, particularly in those companies where there have been significant lay-offs. Unfortunately, we are now facing significant job losses, and a real sense of uncertainty for workers and businesses alike. I have to say that that uncertainty was made worse last night by statements with regard to the hospitality sector. I do not believe that the Chancellor’s statement today gives the clarity that is needed. Will he make it clear to the insurance companies that those in the hospitality sector—the pubs, the clubs, the theatres, the festivals—are closing on the instruction of the Government? In that way, most of them, even if they do not have “pandemic” in their insurance policies, will be covered.

I welcome today’s announcement of loan guarantees to businesses, but I notice in the small print—can the Chancellor clarify this?—that this is interest free for a period of six months only. I am not sure whether that gives the sufficient support and guarantee for the long term that many will want. I welcome the grants, but ​may I say to him that the response so far from a number of businesses has been that the scale of the grants needs reviewing? They are too small, and they do not relate to the costs that people are involved in at the moment.

I welcome what the Government have said about the business rates relief holiday, but last week the statement seemed to exclude nurseries and childcare. Can the Chancellor just clarify that that has been remedied now, because childcare and nurseries will be desperately needed in the coming period? A bit of concern has been expressed about the British Business Bank being asked last week to deliver the business interruption loan scheme. As of very recently there is little public evidence that the scheme has been established or developed.

I will turn quickly to individual sectors. On the aviation sector and other key transport sectors, I accept that there is a need now for support. I say gently, however, that I resent Mr Branson urging his workers to take eight weeks of unpaid leave, when he makes such a fortune, often by tax avoidance as well. If we are to give grants, loans and assistance to some of these sectors, we should consider whether to take an equity stake for the long term. That also relates to the rail sector. If any franchise fails, is there any planning to bring it under public ownership and management?

Another sector that has been mentioned—this is deeply worrying—is the fishing industry. It has been hit hard, particularly because of its inability to export. We have been told about the lack of insurance cover for boat mortgages. Can we look at that rapidly now to develop some form of legislative protection? Agriculture is now moving into the planting season. The sector was already facing a significant shortage of workers, but it now faces even bigger challenges. Will the Chancellor reassure the House that there will be support for agriculture throughout, because food supplies will be essential during this coming period, especially domestic food supplies?

I must also raise the issue of public services, which the Chancellor did not mention in any depth. The Opposition received well the commitment that whatever the NHS needs it will get, but can we be clear about the allocation of funding to enable testing to take place at scale? The £5 billion response fund did not earmark any particular funding for the NHS, let alone for testing. Clearly, the public now want reassurance that testing will be developed, and we need the funding. Also on the NHS, can the Government point to stronger steps that need to be taken to manufacture essential ventilators and provide personal protective equipment for frontline NHS workers? If we are harvesting our resources, Labour Members do not believe that we should be paying for private hospital beds at this time. Indeed, many of us believe that they should be requisitioned for the use of the whole community.

The overall system of caring for our population relies not just on the NHS but on social care. Will the Chancellor be absolutely clear now about the scale of funding that has so far been directed to social care, as there is uncertainty about that at the moment? What does he think is the best estimate for the level of funding that will be needed, given that we have already inherited 120,000 vacancies, and staff numbers may well dwindle because of the impact of the virus? In recent years, we have seen evidence that some care companies face threats to their financial viability. What plans have the Government developed to intervene if necessary in that sector? There ​is also pressure on family carers, who are relied on to support our social care system. We need proposals to support them financially as well.

One area of change that has been mooted is the possible closure of our schools. It is crucial that childcare support is provided in the event that any closures occur. We will work with the Chancellor on that issue and with local authorities, but it is crucial that children who depend on free school dinners receive support if the schools are closed. We cannot allow them to go hungry. School staff may be off for long periods and we would like an assurance that their incomes will be guaranteed. Pupils and students are being advised to study from home and most will require access to high-speed broadband. What will be done to ensure access to broadband for students? May I suggest to the Chancellor that it could be free? We all rely in our communities on the voluntary sector as well and it is being hit hard because of the temporary downturn in donations and staffing levels. What consideration has been given to grants to ensure that the voluntary sector can continue to carry out its important functions?

We need more clarity on the Barnett consequentials, and very quickly, because there is uncertainty about the scale of support that will be given to the devolved countries and regions.

With regard to international interventions, whatever people thought about Gordon Brown’s individual policies, in 2007 and 2008 he showed international leadership to tackle that crisis. I have expressed previously my disappointment that the Government did not act sooner in bringing countries together. I urge the Chancellor to follow up the teleconference with the G7 on Monday with engagement through the G20, the World Bank, the World Health Organisation and the UN, and to bring forward a global plan with his colleagues to ensure that we can give assurance not just to the markets but to those, particularly in the global south, who may well be hit hardest by this virus.