Sunak’s measures: What do they look like, where’s the money coming from and how do they compare to other countries’?

9 Jul

The public has fast become used to radical economic announcements from Rishi Sunak, starting with his budget in March, and yesterday was no different in terms of shock factor. Standing in the House of Commons, he laid out how the Government will further try to ease the economic damage from Coronavirus, in a £30 billion plan. “We need to be creative”, he said, and he did not disappoint.

In the immediate, Sunak wants to stop a wave of mass unemployment. To do this, the Government will incentivise firms to hang onto their employees – paying them a £1,000 bonus for every staff member kept on for three months after the furlough scheme ends (as long as they are paid a minimum of £520 on average each month between November and January).

Sunak’s employment measures are especially geared towards the young, who have already been badly affected by the Covid-19 fall out. The Government will spend £2 billion on a “kickstart” work placement scheme, to get up to 300,000 16 to 24-year-olds into employment, as well as paying firms a £2,000 apprenticeship bonus for each new apprenticeship they create over the next six months.

Sunak is also keen to breathe life into the hardest-hit sectors. To boost the hospitality industry, he has cut VAT on food, accommodation and attractions from 20 to five per cent from next Wednesday. The measure will remain in place for six months, will benefit an estimated 150,000 businesses and is said to cost about £4 billion

Perhaps the most memorable announcement from his budget is the “Eat Out to Help Out” scheme. It means that anyone visiting a restaurant or pub between Monday and Wednesday in August can get up to 50 per cent off their bill, with a maximum of £10 per customer. Businesses can then claim the money back from the Government.

How much will it cost?

None of this is cheap, of course. The Institute of Fiscal Studies (IFS) suggests that borrowing will exceed £350 billion as a combined result of previously-announced policies and the recession. The FT estimates that the deficit will reach 18 per cent of national income, and will be almost twice the size of the deficit at its peak in the 2008-09 global financial crisis.

Aside from borrowing, many details remain unknown as to how this will be paid back, and where Sunak’s plans are ultimately leading us. John O’Connell, Chief Executive of the TaxPayers’ Alliance, told ConservativeHome today: “Tax receipts have absolutely plummeted since the arrival of coronavirus. Total HMRC receipts in April and May 2020 were £45.2 billion lower than the previous year.

“At the same time, the OBR estimates that the total cost of the job retention scheme could exceed £50 billion by the time it ends in October. To pay for these massive shortfalls the Debt Management Office revealed that Britain is set to sell a record £275 billion of government debt in just five months between April and August. Incredibly, this is more than two and a half times the gilt sales for the previous financial year.”

He added: “As usual there have been calls for taxes to rise to balance the books but this isn’t sensible or feasible when the tax burden is already at a 50-year high. The last thing we need is to inflict austerity on taxpayers. It would be far better to eradicate wasteful spending and grow the economy by slashing taxes and cutting red tape.”

As ConservativeHome reported yesterday, centre-right think tanks have generally been concerned about the tax burden. Following yesterday’s announcement, Sunak was quizzed on LBC about whether there would be tax rises, which he did not rule out.

What do economic measures look like elsewhere?

While there are concerns about how enormous Britain’s payments will be, the UK’s stimulus actually puts the country “in the middle of the pack” of spending when compared to others across the world. Data from the Resolution Foundation measuring countries on the size of their fiscal response to coronavirus as a proportion of GDP (as of June 2020) puts the UK behind the US, Germany, Japan and Australia, but above Canada, France, the Netherlands and Italy.

Other data from Bruegel Datasets is around ‘discretionary fiscal measures adopted in response to coronavirus’ by June 15 2020, as a percentage of 2019 GDP, with UK standing at 4.8 per cent; the US at 9.1 per cent and Hungary at 0.4 per cent, alongside other countries.

So while Sunak’s measures look drastic, it’s worth remembering that the UK’s economic snapshot cannot be taken as a standalone, as others are taking serious action too. The eventual cost for the UK, and what happens next in the pandemic, is anyone’s guess.

Profile: Olive, sorry, Oliver Dowden, saviour of the arts, bedrock insider – and unknown to the public

9 Jul

By far the greatest power of a Prime Minister is the power of patronage. He or she decides who to appoint to ministerial posts, and the Government prospers or fails largely as a result of whether these people prove able to rise to the level of events.

In February, Boris Johnson made Oliver Dowden Secretary of State for Digital, Culture, Media and Sport.

Dowden is unknown to the wider public, and in ConservativeHome’s latest Cabinet league table is buried two-thirds of the way down the list, among a cluster of other ministers who have yet to become household names.

Leading figures in the arts had little faith he would be able to rescue their sector from the disastrous impact of Covid-19, and were getting ready to go mad at him with rage.

Instead of which he and Rishi Sunak astonished the world of the arts, at the start of this week, with a package of support for the arts which the leading figures queued up to praise.

As Charlotte Gill pointed out on ConHome, Dowden had been underestimated.

Here is a minister who knows how to get things done, including the tricky art of persuading the Treasury to part with the necessary funds.

Dowden is a professional politician, indeed a professional man of government: the kind of person at whom it is easy to sneer, but without whom nothing in Whitehall would move.

He succeeds partly because he does not seek to hog the limelight. There was no sense, as he announced the £1.57 billion support package for the arts, that this was being treated as something that would above all redound to the greater glory of the Secretary of State.

In photographs, it never seems this tall, friendly, fair-haired, respectable figure wants to outshine the other people in the picture.

In the words he uses, there is likewise a complete absence of any discernible urge to shine. “He is not an aphorist,” as one of his colleagues conceded, after ConHome remarked on the absence of a single memorable phrase in the Dowden record.

And yet those who know him well insist he is delightful company. One of them warned:

“I am sure you will not depict him as resembling in any way the dreary apparatchik that he might at first glance appear, having spent so much time behind the scenes at the Conservative Research Department and in the Cameron entourage before landing the safe seat that Cecil Parkinson once represented. He has a lightness of touch and charm that resemble Parkinson.

“His Canadian parents-in-law were at first reluctant to see their clever daughter married to an English politician; he soon won them round.

“He greets comments made to him with an infectious little laugh; I think this a most useful habit to have acquired or to be blessed with since birth: it creates an immediate impression of amiability and allows time to consider how best to reply.

“He is interested in bohemian ways without being drawn to participation in them. His best friend in the Research Department at the 2005 election was much given to cycling round London, drunk and naked, during the night.”

The safe seat in question, won by him in 2015 after he had defeated Sunak and others in the final of the contest to select the Conservative candidate, is Hertsmere, on the southern border of Hertfordshire.

In his maiden speech, he spoke with emotion of “the last unspoiled rolling hills of England before the home counties give way to London”, and said he is “absolutely determined to preserve them from soulless urban sprawl so that my children and grandchildren may enjoy them as I have done.”

He touched also on his constituency’s position “at the heart of the British film industry”, thanks to Elstree film studios in Borehamwood. But he went on:

“What characterises Hertsmere, far more than its landscape or its industry, is the character of its people. They get up very early every morning and from Bushey, Potters Bar, Radlett and Borehamwood they cram on to commuter trains or set off along the M25 and the A1. They are hard-working men and women who make sacrifices to provide for themselves, their families and their community. They know that in this life, we do not get something for nothing; we have to work in order to get something out.

“Growing up locally, I was very much imbued with those values. My dad worked in a factory in Watford, my mum at a chemist’s in St Albans. They worked hard and were determined to give me the very best start in life. That started with the excellent education that I received at my local comprehensive school.”

He was born in 1978 and went to Parmiter’s School, founded in 1681 in Bethnal Green and now at Garston, near Watford. Its motto is “Nemo sibi nascitur”, “No one is born unto himself alone”, and from here he won a place to read law at Trinity Hall, Cambridge.

Dowden played no part in student politics, and decided not to be a lawyer. He taught English in Japan, had a stint at LLM, a lobbying firm set up by Labour figures close to Gordon Brown, and in 2004 became head of the Political Section in the Conservative Research Department.

Soon after his arrival, one of his colleagues recalls,

“He became known as Olive through a typographical error which he embraced with characteristic good humour. It almost sounds wrong to call him Oliver if you’ve known him of old.”

Another friend from that period said this week:

“I will call him Olive or I will call him Secretary of State, but I will not call him Oliver.”

Dowden, as he will continue to be called here, displayed an early flair for understanding how a story would play out in the press. He could see the weaknesses in both the Labour and the Conservative position, so could operate in an attacking role – spotting, for example, the potential of the cash for honours story to embarrass the Labour Government – and also defensively, briefing ministers on the line to take when they went on programmes such as Any Questions and Question Time.

He is an enormously experienced insider, who has helped prepare four successive leaders – Michael Howard, David Cameron, Theresa May and Boris Johnson – for Prime Minister’s Questions.

Cameron relates in his memoirs that in 2009, during the MPs’ expenses scandal,

“I set up an internal scrutiny panel, a so-called Star Chamber, including my aide Oliver Dowden, known as ‘Olive’, who I also called ‘the undertaker’, since he so frequently brought me the bad news.”

Another witness says:

“During the expenses scandal, CRD had to triage some of the cases, taking what The Telegraph was accusing people of and working out the truth. It was a long, gruelling period, relentless, it went on for weeks and it was bleak work, the team being set against itself.”

He became “a bedrock figure”, as one former minister puts it, “stable, sensible, unflappable, extraordinarily decent”, in the group which saw Cameron into Number Ten and then sustained him there, with Dowden as Ed Llewellyn’s deputy.

Few people understand better than Dowden how the government machine works, or fails to work. He is not an ideologue, or a bold political thinker, or a stirring orator, but he has sound judgement and knows how to get things done. As one colleague puts it,

“He’s one of the most impressive people I’ve ever been in a room with officials with. At the end he will establish what has been agreed and what we are going to do.”

As an MP since 2015, “he commutes in like his constituents – he puts in the long hours”. His website shows him defending their interests with tenacity.

In the 2016 EU Referendum he was a Remainer, but in the immediate aftermath he supported Boris Johnson for the leadership, which infuriated Theresa May’s team.

Not until January 2018 was he permitted to take his first step on the ministerial ladder, as Parliamentary Secretary to the Cabinet Office.

In the summer of 2019, Dowden, Sunak and Robert Jenrick interviewed Johnson for an hour at Jenrick’s house, after which they put their names to a joint piece for The Times Red Box, which appeared under the headline:

“The Tories are in deep peril. Only Boris Johnson can save us.”

This endorsement by three junior ministers, none of whom was suspected of maverick tendencies, helped convince many waverers that Johnson was on course for victory. Collectively they had become significant players, and all three of them are now in the Cabinet.

Dowden is only 41. Will he go higher? Lord Lexden, official historian to the Conservative Party and the Carlton Club, says of him:

“I am rather inclined to the view that he may well establish himself as the Rab Butler of his time, indispensable in any Tory government, but without Butler’s hesitancy if the chance of the premiership should arise.”

Stamp duty cut welcome, but concerns about “tomorrow’s taxpayers”. Centre-right think tanks react to Sunak statement.

8 Jul

Adam Smith Institute –  Matthew Lesh, Head of Research, said:

“Stamp duty is Britain’s worst tax. This temporary cut is the right move at the right time to get Britain moving. Temporary measures to get young people work experience, to build inwork skills, are also welcome in the face of an increased minimum wage.

“Furlough continues for a few more months but reality will hit eventually. In the forthcoming Budget, the Chancellor should cut the cost of hiring by permanently reducing the burden of employers’ national insurance, remove red tape like occupational licenses, and abolish the factory tax to get businesses investing in their futures.

“The stimulus proposals are very questionable. The VAT cut and subsidising restaurants will be expensive and provide limited benefit. People aren’t spending on food, accommodation and attractions because of safety concerns, not lack of demand or cash.”

Centre for Policy Studies – Robert Colvile, Director, said:

“We welcome the focus on jobs and training, which is what the CPS recently called for in our report ‘After the Virus‘, but the challenge will be how to support the economy as we transition to new ways of working in a post-virus economy.

“You can see the Government is trying to strike that balance with this package, but these measures are temporary, and will have to be paid for down the line. This is why we would like to see the sort of long-term structural change that will maximise growth, support businesses and encourage them to create new jobs without placing the burden on the taxpayer.”

TaxPayers’ Alliance – John O’Connell, Chief Executive, said:

“The chancellor announced a ‘plan for jobs’ but it’s tomorrow’s taxpayers who will have to work hard to pay for it all.

“While the jobs retention bonus will help ensure that the furlough scheme isn’t just an expensive pause on mass lay-offs, taxpayers will be concerned about how and when they will pay the bills for ever-more spending promises.

“It is cheering that the chancellor appreciates the economic benefits of cutting taxes and in particular lifting the stamp duty threshold will provide a boon to the housing market.

“That said, while easing the burden on taxpayers is always welcome, we must look at longer-term tax simplification and put a stop to temporary fiddles.”

Institute of Economic Affairs – Professor Syed Kamall, Academic and Research Director, said:

“We are in an unprecedented situation and there remains the issue that many individuals and families are fearful of leaving their homes to resume every day activities. The Chancellor can only do so much in terms of measures introduced to get the economy moving.

“The cut to Stamp Duty is welcome but why isn’t it permanent? It is a destructive, regressive tax that clogs up the housing market and limits labour mobility. Making it permanent would get the property market moving and encourage those who want to downsize as well as those looking for family houses, freeing up homes for first-time buyers.

“It is disappointing more was not announced to encourage private investment in infrastructure – such as reopening old railways or rezoning to allow homes to be built in places being vacated by shops, such as high streets.”

Resolution Foundation – Torsten Bell, Chief Executive, said:

“Today’s Budget in-all-but-name was a £30 billion top up to a pandemic response that is approaching 10 per cent of GDP and will push borrowing to around £350 billion this year.

“The focus on jobs and some, but not all, hard-hit sectors was very welcome. Kickstart jobs for young people represents a tried and tested policy, but the new Job Retention Bonus is poorly targeted at those jobs that are most at risk of being lost.

“The Chancellor is right to focus VAT cuts on food, accommodation and attractions. However, the lack of support for face-to-face retail means significant challenges for Britain’s High Streets. The innovative meal deal voucher scheme is far too small scale to make a significant difference.

 “The Chancellor, having previously announced huge measures to protect household incomes, has now set out much more normal demand support for the next phase of this crisis. That might be sufficient if the UK sees the V-shaped recovery we all hope fora. But given that this economic crisis is likely to be with us until a vaccine is found, he should expect to be returning with further measures to support the economy in the Autumn.”

Andrew Gimson’s Commons sketch: There is a place not just for smiles but for Samuel Smiles in the Chancellor’s vision

8 Jul

Rishi Sunak belongs in a Spy cartoon. He should be drawn in profile, thin, alert, dark-haired, immaculate in a sombre suit and white shirt, leaning forward slightly at the Dispatch Box, like a batsman about to play an elegant cover drive.

Behind the Chancellor of the Exchequer, at the end of the Treasury Bench, sat his captain, Boris Johnson, round, rumpled, genial, his own knockabout innings at PMQs just over, now content to watch his star player make some runs.

The Speaker, or umpire, Sir Lindsay Hoyle, decreed a three-minute pause between the end of PMQs and the start of Sunak’s statement, so the House could rearrange itself while obeying the laws of social distancing.

The Prime Minister held good-natured exchanges with passing backbenchers, a smile put on the face of each of his fielders, a smile on his face too. One felt one was watching a team who enjoy doing things together: an impression the media would consider it unprofessional to convey, for there the talk is always of splits, and Sunak is seldom mentioned without the suggestion that he will soon take Johnson’s job.

The Chancellor began by announcing that the Government is “unencumbered by dogma”, and motivated by “the simple desire to do what is right”.

The Prime Minister looked on with approval. He has a dog, but will never allow himself to become encumbered by dogma.

Sunak said that to extend the furlough scheme indefinitely would be “irresponsible”, for it would “give people false hope”. He instead announced “the kickstart scheme”, which will provide traineeships for “kickstarters”, defined as 16 to 24-year-olds at risk of long-term unemployment.

One can kick start a motorcycle, but whether the same applies to 16 to 24-year-olds at risk of long-term unemployment is not yet clear.

The Chancellor observed that the longer one is out of work, the harder it is to return to work, so he hopes to see “hundreds of thousands of new kickstarters”.

After this, his statement sagged a bit. Versions of the Green Homes Grant have been announced every year for decades.

As if recognising this, Sunak promised that his final measure has never been tried before. Members of the public who go out to eat at a restaurant, cafe or pub in August will be entitled to a discount of 50 per cent off, up to a maximum of £10 per head, including children.

The Prime Minister flushed with pleasure, patted his hand on the back of the Treasury Bench, jigged his knee up and down and nodded enthusiastically.

The Chancellor had put a smile on his captain’s face. Here was a Merry England gimmick, cheering everyone up.

Not that Sunak wanted to get carried away. “I believe in the nobility of work,” he added. There is a place not just for smiles but for Samuel Smiles in the modern Conservative Party.

The Shadow Chancellor, Annaliese Dodds, is a vast improvement on her tricksy, self-satisfied predecessor, John McDonnell. During her reply, she communicated complete honesty of intention as she reproached the Government for failing to overcome fear of the pandemic, which is what most damages the economy.

According to Dodds, Johnson has claimed the mantle of Franklin D. Roosevelt because he wants to avoid being compared to FDR’s successor, Harry Truman, whose desk bore the famous sign, “The buck stops here”.

She claimed Johnson’s motto is “The buck stops anywhere but here”.

Here is Labour’s attack on the Prime Minister: that he wriggles out of responsibility for the grievous mistakes made in the official response to the pandemic.

Incidentally, Truman’s desk carried another, less well-known sign, quoting some words of Mark Twain: “Always do right. This will gratify some people and astonish the rest.”

“Our plan has a clear goal: to protect, support and create jobs.” The Chancellor’s statement. Full text.

8 Jul

“I stood here in March saying I knew people were worried, and I know they are worried still. We have taken decisive action to protect our economy, but people are anxious about losing their job and about unemployment rising. We are not just going to accept that. People need to know that we will do all we can to give everyone the opportunity of good and secure work. People need to know that although hardship lies ahead, no one will be left without hope. So today, we act with a plan for jobs. Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire, to create jobs in every part of our country, to give young people a better start and to give people everywhere the opportunity of a fresh start. Where problems emerge, we will confront them. Where support is justified, we will provide it. Where challenges arise, we will overcome them. We entered this crisis unencumbered by dogma and we continue in that spirit, driven always by the simple desire to do what is right.

Before I turn to our plan for jobs, let me first outline the nature of the challenge. Our economic response to coronavirus is moving through three phases. In the first phase, beginning in March, the Government announced social distancing measures and ordered businesses to close, halting the spread of the disease. We put in place one of the largest and most comprehensive economic responses in the world. Our £160 billion plan protects people’s jobs, incomes and businesses. We supported more than 11 million people and jobs through the job retention and self-employment schemes, alongside billions of pounds for the most vulnerable. We supported over 1 million businesses to protect jobs through tax cuts, tax deferrals, direct cash grants and over 1 million Government-backed loans. And we supported public services, with new funding for the NHS, schools, public transport and local authorities. In total, we have now provided £49 billion to support public services since this crisis began.

Analysis I am publishing today shows our interventions significantly protected people’s incomes, with the least well off in society supported the most, and this crisis has highlighted the special bond which holds our country together. Millions of people in Scotland, Wales and Northern Ireland have been protected by the UK Government’s economic interventions, and they will be supported by today’s plan for jobs. No nationalist can ignore the undeniable truth: this help has only been possible because we are a United Kingdom.

Four months on, as we carefully reopen our economy, we are entering the second phase of our economic response. Despite the extraordinary support we have already provided, we face profound economic challenges. World economic activity has slowed, with the International Monetary Fund expecting the deepest global recession since records began. Household consumption—the biggest component of our economy—has fallen steeply. Businesses have stopped trading and stopped hiring. Taken together, in just two months our economy contracted by 25%, the same amount that it grew by in the previous 18 years. And the independent Office for Budget Responsibility and Bank of England are both projecting significant job losses, the most urgent challenge we now face. I want every person in this House and in the country to know that I will never accept unemployment as an unavoidable outcome. We have not done everything we have so far just to step back now and say, “Job done.” In truth, the job has only just begun.

If the first phase of our economic response was about protection and the second phase—the phase we are addressing today—is about jobs, there will come a third phase, where we will rebuild. My right hon. Friend the Prime Minister has set out our vision to level up, unite the country, spread opportunity, and repair and heal the wounds exposed through this crisis. I can tell the House that we will produce a Budget and spending review in the autumn.

And we will deal, too, with the challenges facing our public finances. Over the medium term, we must, and we will, put our public finances back on a sustainable footing. In other words, our plan for jobs will not be the last action, but is merely the next, in our fight to recover and rebuild after coronavirus.

Let me now turn to the detail of our plan for jobs. Central to our economic response has been the jobs retention scheme. Furlough has been a lifeline for millions, supporting people and businesses to protect jobs, but it cannot, and should not, go on forever. I know that when furlough ends it will be a difficult moment. I am also sure that if I say the scheme must end in October, critics will say it should end in November.

If I say it should end in November, critics will just say December. But the truth is, calling for endless extensions to the furlough is just as irresponsible as it would have been, back in June, to end the scheme overnight.

We have to be honest: leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before. The longer people are on furlough, the more likely it is that their skills will fade, and they will find it harder to get new opportunities. It is in no one’s long-term interests for the scheme to continue forever, least of all those trapped in a job that can exist only because of Government subsidy. So the furlough will wind down, flexibly and gradually, supporting businesses and people through to October.

While we cannot protect every job, one of the most important things we can do to prevent unemployment is to get as many people as possible from furlough back to their jobs. So, today, we are introducing a new policy to reward and incentivise employers who successfully bring furloughed staff back—a new jobs retention bonus.

If you are an employer and you bring back someone who was furloughed, and you continuously employ them through to January, we will pay you a £1,000 bonus per employee. It is vital that people are not just returning for the sake of it; they need to be doing decent work. For businesses to get the bonus, the employee must be paid at least £520, on average, in each month from November to January, the equivalent of the lower earnings limit in national insurance.

The House should understand the significance of this policy. We will pay the bonus for all furloughed employees. So if employers bring back all 9 million people who have been furloughed, that would be a £9 billion policy to retain people in work. Our message to business is clear: if you stand by your workers, we will stand by you.

The furlough was the right policy to support people through the first phase of this crisis, but now, in this new phase, we need to evolve our approach. Today, I want to set out for the House a new three-point plan for jobs. We need to: first, support people to find jobs; secondly, create jobs; and, thirdly, protect jobs.

Let me start with supporting jobs, in particular the help we want to provide for those who will be hardest hit by this crisis: younger people. Over 700,000 people are leaving education this year. Many more are just starting out in their careers. Coronavirus has hit them hard—under-25s are two and a half times as likely to work in a sector that has been closed.

We cannot lose that generation, so today I am announcing the kick-start scheme, a new programme to give hundreds of thousands of young people in every region and every nation of Britain the best possible chance of getting on and getting a job. The kick-start scheme will pay employers directly to create new jobs for any 16 to 24-year-old at risk of long-term unemployment. These will be new jobs, with the funding conditional on the firm proving that the jobs are additional. These will be decent jobs, with a minimum of 25 hours per week paid at least the national minimum wage, and they will be good-quality jobs, with employers providing kick-starters with training and support to find a permanent job.

If employers meet those conditions, we will pay young people’s wages for six months, plus an amount to cover overheads. That means, for a 24-year-old the grant will be around £6,500. Employers can apply to be part of the scheme from next month, with the first kick-starters in their new jobs this autumn. I urge every employer, big or small, national or local, to hire as many kick-starters as possible. Today, I am making available an initial £2 billion, enough to fund hundreds of thousands of jobs, and I commit: there will be no cap on the number of places available.

We can do more for young people. Traineeships are a proven scheme to get young people ready for work, and we know they work, so for the first time ever we will pay employers £1,000 to take on new trainees, with triple the number of places. What is more, to help 18 to 19-year-olds leaving school or college to find work in high-demand sectors, such as engineering, construction and social care, we will provide £100 million to create more places on level 2 and 3 courses.

The evidence says that careers advice works, too, so we will fund it, with enough new careers advisers to support over a quarter of a million more people. We will also expand our universal skills offer. Sector-based work academies provide training, work placements and a guaranteed job interview in high-demand sectors, and the evidence shows they work, so we will expand them, by tripling the number of places.

We know that apprenticeships work, too, with 91% of apprentices staying in work or doing further training afterwards, so for the next six months we will pay employers to create new apprenticeships. We will pay businesses to hire young apprentices, with a new payment of £2,000 per apprentice, and introduce a brand new bonus for businesses to hire apprentices aged 25 and over, with a payment of £1,500. I thank my right hon. Friend the Education Secretary for his support and commitment in developing these measures.

We know that the longer someone is out of work, the harder it is for them to return. Millions of people are moving on to universal credit and need urgent support to get back to work, so we are doubling the number of work coaches in jobcentres, increasing the flexible support fund, extending the rapid response service, expanding the work and health programme, and developing a new scheme to support the long-term unemployed. The academic and economic evidence tells us these are among the most effective things we can do.

For that reason, I am investing an extra £1.2 billion in the Department for Work and Pensions to support millions of people back to work, and I am grateful for everything my right hon. Friend the Work and Pensions Secretary and her incredible team have done. I am talking about £1 billion of support for the unemployed, more money for skills, traineeships, apprenticeships, and a new, good-quality job for hundreds of thousands of new kick-starters. That is the first part of our plan for jobs.

The second part of our plan is to support job creation, and that begins with historic investment in infrastructure to create jobs in every region and nation of the UK. At the Budget, I announced £88 billion of capital funding this year, and last week the Prime Minister announced our plans to accelerate £5 billion of additional investment projects. We are doubling down on our ambition to level up, with better roads, better schools, better hospitals and better high streets, creating jobs in all four corners of the country.

As well as investing in infrastructure, we want to create green jobs. This will be a green recovery, with concern for our environment at its heart, and as part of that, I am announcing today a new £2 billion green homes grant. From September, homeowners and landlords will be able to apply for vouchers to make their homes more energy efficient and create local jobs. The grants will cover at least two thirds of the cost—up to £5,000 per household—and for low-income households we will go even further, with vouchers covering the full cost, up to £10,000.

On top of the £2 billion voucher scheme, I am releasing £1 billion of funding to improve the energy efficiency of public sector buildings, alongside a £50 million fund to pilot the right approach to decarbonise social housing. Taken together, we expect these measures to make more than 650,000 homes more energy efficient; to save households up to £300 a year on their bills; to cut carbon by more than half a megatonne per year—equivalent to taking 270,000 cars off the road; and, most importantly right now, to support around 140,000 green jobs. A £3 billion green jobs plan to save money, cut carbon and create jobs.

One of the most important sectors for job creation is housing. The construction sector adds £39 billion a year to the UK economy. House building alone supports nearly three quarters of a million jobs, with millions more relying on the availability of housing to find work. But property transactions fell by 50% in May. House prices have fallen for the first time in eight years and uncertainty abounds in the market—a market we need to be thriving. We need people feeling confident—confident to buy, sell, renovate, move and improve. That will drive growth. That will create jobs. So to catalyse the housing market and boost confidence, I have decided today to cut stamp duty.

Right now, there is no stamp duty on transactions below £125,000. Today, I am increasing the threshold to half a million pounds. This will be a temporary cut running until 31 March next year, and, as is always the case, these changes to stamp duty will take effect immediately. The average stamp duty bill will fall by £4,500 and nearly nine out of 10 people buying a main home this year will pay no stamp duty at all. Stamp duty cuts, a £5,000 green homes grant and tens of billions of pounds of new capital projects—we are creating jobs: the second part of our plan for jobs.

The final part of our plan will protect jobs that already exist by helping some of our highest-employing but hardest-hit sectors: hospitality and tourism. Our economy relies on consumption, especially social consumption: the pubs, cafés, restaurants, hotels and B&Bs that bring life to our villages, towns and cities. Taken together, these sectors employ over 2 million people—disproportionately younger, women and people from black, Asian and minority ethnic communities. Many rural and coastal communities rely on these industries. Some 80% of hospitality firms temporarily stopped trading in April and 1.4 million workers have been furloughed—the highest proportions of any sector. So the best jobs programme we can do is to restart these sectors and get our pubs, restaurants, cafés and B&Bs bustling again.

I know people are cautious about going out, but we would not have lifted the restrictions if we did not think we could do so safely. I have seen in the last few weeks how hard businesses are working to make their premises safe, and if we follow the guidance and respect what they ask us to do, we can all enjoy summer safely. In turn, we need to give these businesses the confidence to know that if they open up, invest in making their premises safe and protect jobs, demand will be there—and be there quickly. So today, I am announcing two new measures to get these sectors moving and protect jobs.

First, at the moment, VAT on hospitality and tourism is charged at 20%, so I have decided, for the next six months, to cut VAT on food, accommodation and attractions. Eat-in or hot takeaway food from restaurants, cafés and pubs; accommodation in hotels, B&Bs, campsites and caravan sites; attractions like cinemas, theme parks and zoos—all these and more will see VAT reduced, from next Wednesday until 12 January, from 20% to 5%. This is a £4 billion catalyst for the hospitality and tourism sectors, benefiting over 150,000 businesses and consumers everywhere—all helping to protect 2.4 million jobs.

But we will go further. The final measure I am announcing today has never been tried in the UK before. This moment is unique. We need to be creative. So, to get customers back into restaurants, cafés and pubs and protect the 1.8 million people who work in them, I can announce today that, for the month of August, we will give everyone in the country an eat-out-to-help-out discount. Meals eaten at any participating business, Monday to Wednesday, will be 50% off, up to a maximum discount of £10 per head for everyone, including children. Businesses will need to register and can do so through a simple website, open next Monday. Each week in August, businesses can then claim the money back, with the funds in their bank account within five working days. Some 1.8 million people work in this industry. They need our support, and with this measure, we can all eat out to help out. A VAT cut to 5% and a first-of-its-kind Government-backed discount for all—that is the third part of our plan for jobs.

A £1,000 jobs retention bonus; new, high-quality jobs for hundreds of thousands of young kick-starters; £1 billion to double the number of work coaches and support the unemployed; more apprenticeships, more traineeships and more skills funding; billions of pounds for new job creation projects across the country; a £3 billion plan to support 140,000 green jobs; and, in this vital period, as we get going again, VAT cut, stamp duty cut and meals out cut—all part of our plan for jobs worth up to £30 billion.

Governments, much less people, rarely get to choose the moments that define them. What choice there is comes in how we respond. For me, this has never just been a question of economics, but of values. I believe in the nobility of work. I believe in the inspiring power of opportunity. I believe in the British people’s fortitude and endurance. And it is that value, endurance, more than any other that we need to embody now—a patience to live with the uncertainty of the moment and to find that new balance between safety and normality. We will not be defined by this crisis but by our response to it. It is an unambiguous choice to make this moment meaningful for our country in a way that transcends the frustration and loss of recent months. It is a plan to turn our national recovery into millions of stories of personal renewal. It is our plan for jobs, and I commend it to this House.”

Rainer Zitelmann: Wealth taxes would not be popular, or Conservative. Sunak must remember this tomorrow.

7 Jul

Dr. Rainer Zitelmann is a historian and sociologist. The data cited in this article is analysed in detail in his recently published book The Rich in Public Opinion

Over the past couple of weeks, UK Treasury officials have been contacting private bankers to sound them out on how the country’s richest citizens might help pay for the huge cost of Coronavirus relief packages. Ahead of Rishi Sunak’s big speech tomorrow, this should be worrying for many.

Austerity might be off the menu for the state, but it’s definitely the dish that is being prepared by civil servants to be served to everyone else.

Labour are getting in on the act too with Annalise Dodds, the Shadow Chancellor, stepping onto the Sunday shows to explain with zero detail that the burden of higher taxation ought to fall on those with the “broadest shoulders” and that taxes needed to reflect the “increase in income and wealth inequality over recent years.” She’d called for wealth taxes in the preceding week during a speech at the IFS, again with scant information on what this would actually look like.

Now, leaving aside the fact that a lot of income and wealth inequality is mostly a proxy for geographic inequality and restrictions on growth of jobs and homes outside of major centres of population, we should question what brings together the Shadow Chancellor and Civil Service. Especially when it looks a lot like trying to confiscate wealth and punish those that have worked hard to get on in life.

This isn’t Conservative. The Civil Service should be reminded of that fact, and the party should remember the benefit of providing some clear blue water between the reds in Labour and the Tories in power. Rishi Sunak on Wednesday should signal he’s going in quite the different direction to keep Conservatives and the country on side.

In fact the party of a low-tax dynamic free market that in December ruled out an increase in the rates of income tax, National Insurance or VAT – should also remember voters aren’t keen on the state coming for wealth either.

In a poll conducted in 2018 by Ipsos Mori across the UK, France and Germany, voters were asked their attitudes to the rich and to tax asks of them. They were presented with two statements:

The first was: The taxes on the rich should be high but not excessively high because they have generally worked hard to earn their wealth, and the state should not take too much away from them.

Over the UK as a whole, 29 per cent agreed. Of Labour voters, 20 per cent agreed. Of Conservative voters, 46 per cent agreed.

The second: The rich should not only pay high taxes, but they should pay very high taxes. In this way, the state can ensure that the gap between the rich and the poor does not become too great.

Of the UK population as a whole, 38 per cent agree. Of Labour voters, 53 per cent agreed. Of Conservative voters, 21 per cent agreed.

What the survey was designed to reveal is the proportion of the population in a given country that envies the rich (“social enviers”) and compared this with the proportion who do not (“non-enviers”).

While there is a section of the population in Great Britain that envies the rich, the number of enviers in Great Britain is much smaller than in the other countries. Much lower in fact.

The survey data was used to calculate a Social Envy Coefficient – the higher the coefficient, the higher the proportion of social envy.

The coefficient for France is 1.21, which means there are considerably more social enviers in France than non-enviers. Germany’s coefficient is 0.97, which means there is an even balance between social enviers and non-enviers. In the United States, the coefficient is significantly lower at 0.42. But the lowest coefficient is for the UK, at 0.37.

In other words, a clear majority of the British population are not envious of the rich.

There are significant differences between what Conservative voters and Labour voters think about the rich. Conservative voters say that society as a whole benefits from the existence of rich people (e.g. as entrepreneurs who create new products) but just a fifth of Labour voters think the same.

Despite a platform of envy and higher taxes on offer from the most far-left Labour leader in history, the British people decided to plump for the man opposed to them. Instead of thinking of the rich as a cash cow, when asked to describe the rich Conservative voters plucked for the following terms: industrious, imaginative, visionary, bold, intelligent, and ruthless.

Five out of six being positive traits ain’t bad. Labour voters under Corbyn plucked for the alternative, rich people to them were: materialistic, industrious too, ruthless, bold, self-centred, and greedy.

Starmer has done a good job of modernising his party, but he needs to win over Tory voters that thought of the rich as imaginative industrialists, not just pander to a coalition that thinks of them as ruthless greedy materialists that has failed twice to put the party into power.

Like throughout the pandemic, the UK is not the first to encounter the issues at play. When a few years ago the then socialist president François Hollande introduced a supertax on France’s highest earners, many wealthy people left France.

The tax was subsequently abolished. And France’s neighbour Germany found that the bureaucracy associated with levying a wealth tax is simply not worth it. As a result, Germany has waived its wealth tax since 1997.

Treasury officials and Tory strategists should realise: Britain is a low-envy country; a pro-growth country, and one that knows that imposing more envy taxes on wealthier people simply will not work.

Leave this idea to the Labour left and start pushing for growth by removing, rather than adding to, the burden of the state on businesses and families.

Ryan Bourne: Sunak should not and cannot try today to restore pre-virus Britain. It’s gone – and we must now adapt.

7 Jul

Ryan Bourne holds the R Evan Scharf Chair in Public Understanding of Economics at the Cato Institute. 

Rishi Sunak earned plaudits for his dealing with the immediate economic fallout from Covid-19. Yet today’s summer statement presents a thornier challenge than playing Emergency Santa, dishing out funds to keep businesses alive. For today requires taking steps to further facilitate the “normalisation” of economic life.

Boris Johnson waded into economics last week, arguing (rather conveniently) that the Coronavirus highlighted the need for his pre-pandemic “leveling-up” agenda. Exactly how Covid-19 proves the need for, say, HS2 is unclear. But underpinning the Prime Minister’s argument was an assumption that, post-lockdowns, we can get back to focusing on pre-virus priorities – in the Government’s case, state-led economic rebalancing.

Similar “back to our future” thinking underpins business representations ahead of this statement. From calls for taxpayer-financed high street spending vouchers, to VAT cuts for hard-hit sectors, the prevailing discourse appears to be “now the virus is less of a threat, let’s incentivise returning to normal activity,” with “normal” meaning “what happened in early March 2020.”

Perhaps it’s because I’m in the U.S. and so have been to this reopening BBQ before, but I bear bad news: while the UK can expect a relatively sharp bounce-back in things such as retail activity, “normalisation” will not and should not mean a return to the economy of March 2020.

Before a vaccine, consumers will go where they feel safe, businesses from restaurants to cinemas will be supply constrained by social distancing, and certain behaviors (from the demand shift from restaurants to supermarkets, to the supply shift to working from home) will partially remain. That will bring major reallocation costs: businesses will close and lay off workers, while other sectors grow.

It was understandable that the Chancellor, not knowing which businesses would be viable after lockdown, set up a furlough scheme to avoid companies and jobs perishing. This helped protect important “job-matching capital” and “firm-specific capital” – i.e. people doing jobs they are good at and firms as important bundles of productive relationships. But one risk was always that businesses would interpret support not as mere lockdown relief, but a commitment to ensure their survival through the whole pandemic.

Some aspects of the campaign for arts subsidies, rumblings by MPs for ongoing aerospace supply-chain support, and the Resolution Foundation’s gimmicky “high street vouchers” idea suggest that some now do believe the Government should support sectors, even after full re-openings, precisely because consumers would otherwise continue to reject them, preferring not to fly as much, attend as many in-person events, or go to fewer restaurants or stores.

This is a very different policy proposition. Attempting to keep the March 2020 economy preserved as some eternal truth would mean workers and funds not being where businesses and consumers actually value them given today’s circumstances, bringing large economic costs beyond the fiscal.

For example, if more professionals now work from home semi-permanently, then tastes will shift from buying lunches within cities to local delis, online, or at supermarkets. Hence why Pret is laying off workers.

But as Julian Jessop has said, the purpose of economic policy should not be to protect Pret jobs. What normalisation should instead mean is the return to a functioning market economy where the rise and fall of businesses depends on their ability to meet our wants and needs in today’s circumstances. Sunak’s aim, in other words, should now be “market-led adaptation to the virus.”

We want businesses to figure out how to serve us in safe, cost-effective ways. The alternative – having the government tilt activity towards our early 2020 preferences – would not only encourage activity worse from a public health risk perspective, but also inevitably subsidise much that would take place anyway.

So Sunak should today reject “painting by numbers Keynesianism” that sees industry spending collapses as holes taxpayers should help fill in. He should snub VAT cuts or vouchers. If, with the virus still around, people would rather spend money on food to cook at home, Netflix subscriptions, and a hot tub for the back garden over restaurants, cinemas, and trips to the Lake District, workers and capital should flow accordingly. Economic activity serves consumers, not vice versa.

That’s not to say government cannot make this process less painful. But we need to be clear about the challenge we face: a supply-side shock we hid with relief. New realities mean workers in the wrong jobs, businesses serving customers in the wrong ways, and capital in the wrong places. Government policy should focus on removing barriers that gum up businesses, landlords, workers and entrepreneurs adjusting.

Sunak appears to get this on the worker side. He is tapering the furlough scheme gradually to give businesses breathing room, but inevitably those with newly uneconomic business models will make some permanent layoffs.

It’s crucial to try to get workers reallocated into new roles quickly to avoid the scarring effects of unemployment. Direct financial incentives for new hiring, even beyond subsidies for traineeships trailed in the papers, would encourage this. The reported plans for expansions of jobcentre capabilities are important too to try to speed up the matching process of unemployed workers to new roles, as would re-training efforts be. Some U.S. states are rolling back licensing restrictions on people shifting to different jobs too. With child-care difficult to come by, now would be a good time to review the UK’s oppressive childcare regulations, for example.

Yet the Conservatives should do more to facilitate the adaptation of businesses as well. Repurposing premises to earn consumers’ confidence often requires upfront investments that the Chancellor should write-off entirely for the basis of tax, through full expensing of investment. The planning law reforms should have an eye to business activities too – if more out-of-town activity is demanded, let it bloom.

The case for allowing existing businesses and property owners more flexibility – on how they operate, opening hours, what premises can be used for etc– is overwhelming as well. With apologies to my Editor, when we are seriously discussing throwing billions at retailers such as John Lewis or Topshop through vouchers, it seems daft to consider it beyond the pale that such retailers open beyond 6pm on a Sunday. Give freedom to businesses to adjust to what customers want: what barriers exist to entrepreneurs developing drive-through cinemas, for example? These are the sorts of supply-side questions that should animate government.

As always with fiscal events, any financial support to industries will be heralded as ‘good news’  and absence of it denounced as throwing sectors to the wolves. But it’s time for Sunak to be bold and honest: his task is not to “normalise” activity by resuscitating the composition of the March 2020 economy, but to “normalise” the market-led economy that makes us rich by meeting our demands.

Ryan Bourne: Sunak should not and cannot try today to restore pre-virus Britain. It’s gone – and we must now adapt.

7 Jul

Ryan Bourne holds the R Evan Scharf Chair in Public Understanding of Economics at the Cato Institute. 

Rishi Sunak earned plaudits for his dealing with the immediate economic fallout from Covid-19. Yet today’s summer statement presents a thornier challenge than playing Emergency Santa, dishing out funds to keep businesses alive. For today requires taking steps to further facilitate the “normalisation” of economic life.

Boris Johnson waded into economics last week, arguing (rather conveniently) that the Coronavirus highlighted the need for his pre-pandemic “leveling-up” agenda. Exactly how Covid-19 proves the need for, say, HS2 is unclear. But underpinning the Prime Minister’s argument was an assumption that, post-lockdowns, we can get back to focusing on pre-virus priorities – in the Government’s case, state-led economic rebalancing.

Similar “back to our future” thinking underpins business representations ahead of this statement. From calls for taxpayer-financed high stcororeet spending vouchers, to VAT cuts for hard-hit sectors, the prevailing discourse appears to be “now the virus is less of a threat, let’s incentivise returning to normal activity,” with “norma”l meaning “what happened in early March 2020.”

Perhaps it’s because I’m in the U.S. and so have been to this reopening BBQ before, but I bear bad news: while the UK can expect a relatively sharp bounce-back in things such as retail activity, “normalisation” will not and should not mean a return to the economy of March 2020.

Before a vaccine, consumers will go where they feel safe, businesses from restaurants to cinemas will be supply constrained by social distancing, and certain behaviors (from the demand shift from restaurants to supermarkets, to the supply shift to working from home) will partially remain. That will bring major reallocation costs: businesses will close and lay off workers, while other sectors grow.

It was understandable that the Chancellor, not knowing which businesses would be viable after lockdown, set up a furlough scheme to avoid companies and jobs perishing. This helped protect important “job-matching capital” and “firm-specific capital” – i.e. people doing jobs they are good at and firms as important bundles of productive relationships. But one risk was always that businesses would interpret support not as mere lockdown relief, but a commitment to ensure their survival through the whole pandemic.

Some aspects of the campaign for arts subsidies, rumblings by MPs for ongoing aerospace supply-chain support, and the Resolution Foundation’s gimmicky “high street vouchers” idea suggest that some now do believe the Government should support sectors, even after full re-openings, precisely because consumers would otherwise continue to reject them, preferring not to fly as much, attend as many in-person events, or go to fewer restaurants or stores.

This is a very different policy proposition. Attempting to keep the March 2020 economy preserved as some eternal truth would mean workers and funds not being where businesses and consumers actually value them given today’s circumstances, bringing large economic costs beyond the fiscal.

For example, if more professionals now work from home semi-permanently, then tastes will shift from buying lunches within cities to local delis, online, or at supermarkets. Hence why Pret is laying off workers.

But as Julian Jessop has said, the purpose of economic policy should not be to protect Pret jobs. What normalisation should instead mean is the return to a functioning market economy where the rise and fall of businesses depends on their ability to meet our wants and needs in today’s circumstances. Sunak’s aim, in other words, should now be “market-led adaptation to the virus.”

We want businesses to figure out how to serve us in safe, cost-effective ways. The alternative – having the government tilt activity towards our early 2020 preferences – would not only encourage activity worse from a public health risk perspective, but also inevitably subsidise much that would take place anyway.

So Sunak should today reject “painting by numbers Keynesianism” that sees industry spending collapses as holes taxpayers should help fill in. He should snub VAT cuts or vouchers. If, with the virus still around, people would rather spend money on food to cook at home, Netflix subscriptions, and a hot tub for the back garden over restaurants, cinemas, and trips to the Lake District, workers and capital should flow accordingly. Economic activity serves consumers, not vice versa.

That’s not to say government cannot make this process less painful. But we need to be clear about the challenge we face: a supply-side shock we hid with relief. New realities mean workers in the wrong jobs, businesses serving customers in the wrong ways, and capital in the wrong places. Government policy should focus on removing barriers that gum up businesses, landlords, workers and entrepreneurs adjusting.

Sunak appears to get this on the worker side. He is tapering the furlough scheme gradually to give businesses breathing room, but inevitably those with newly uneconomic business models will make some permanent layoffs.

It’s crucial to try to get workers reallocated into new roles quickly to avoid the scarring effects of unemployment. Direct financial incentives for new hiring, even beyond subsidies for traineeships trailed in the papers, would encourage this. The reported plans for expansions of jobcentre capabilities are important too to try to speed up the matching process of unemployed workers to new roles, as would re-training efforts be. Some U.S. states are rolling back licensing restrictions on people shifting to different jobs too. With child-care difficult to come by, now would be a good time to review the UK’s oppressive childcare regulations, for example.

Yet the Conservatives should do more to facilitate the adaptation of businesses as well. Repurposing premises to earn consumers’ confidence often requires upfront investments that the Chancellor should write-off entirely for the basis of tax, through full expensing of investment. The planning law reforms should have an eye to business activities too – if more out-of-town activity is demanded, let it bloom.

The case for allowing existing businesses and property owners more flexibility – on how they operate, opening hours, what premises can be used for etc– is overwhelming as well. With apologies to my Editor, when we are seriously discussing throwing billions at retailers such as John Lewis or Topshop through vouchers, it seems daft to consider it beyond the pale that such retailers open beyond 6pm on a Sunday. Give freedom to businesses to adjust to what customers want: what barriers exist to entrepreneurs developing drive-through cinemas, for example? These are the sorts of supply-side questions that should animate government.

As always with fiscal events, any financial support to industries will be heralded as ‘good news’  and absence of it denounced as throwing sectors to the wolves. But it’s time for Sunak to be bold and honest: his task is not to “normalise” activity by resuscitating the composition of the March 2020 economy, but to “normalise” the market-led economy that makes us rich by meeting our demands.

Richard Holden: On Wednesday, Sunak needs to display as much confidence in Britain as local publications are showing in North West Durham

6 Jul

Richard Holden is MP for North West Durham.

The Dairy Barn Cafe, North Bitchburn

As Saturday approached, you could feel the febrile excitement and demand for “the story” across the media. Television news and radio bulletins boiled over with predictions of carnage on Saturday night. The broadcasters and papers were eagerly anticipating Freshers Week-esque scenes of drunken debauchery as the public decided to get wasted in a post-lockdown bacchanal.

In North West Durham, I spent Saturday evening visiting the: Duke of Wellington, Consett Rugby Club, the Wheatsheaf in Leadgate and finally the Black Lion, my local in Wolsingham. I’m afraid that I must report that calm and friendly were the orders of the evenings – as it appears were the scenes across the rest of the country too.

Tog, the landlord of the Duke, four doors down from my office on Medomsley Road, took me to his beer garden to show me a mural he’d commissioned during lockdown from a local artist. Sarah-Jane, at the Black Lion, had me take a peak at how she’d transformed her beer garden from a flagged smoking area to a lively and welcoming garden of tables, tasteful lighting and colourful plants and flowers.

It was superb to see responsible local businesses at the heart of their communities investing in their businesses, and ensuring a safe and socially distanced experience for their customers. This hope of better things to come from local firms, with small but significant investments in themselves, is really welcome at a time when I know so many people are not only worried by the virus, but also about their jobs and their incomes.

However, in many sectors of the economy the broad economic impact of the global Coronavirus pandemic is coming through hard, and is reflecting just how interconnected demand is across our economy.

To give one example: at first as the crisis broke, I had travel agents and their staff get in touch. Then came had pilots and crew from Easyjet and British Airways based at Newcastle airport, as the airlines cut back. More recently, I’ve been in touch with a local manufacturing firm which makes inner parts for the wings of Airbus planes, and which is having to lay off half its staff (some of their factories across the UK have closed completely and will not re-open).

Very quickly, the lack of ability to – and demand for – travel has led to manufacturing job losses well down the chain. It’s clear that some sectors have been far more badly affected than others, and that base consumer demand is having a rapid knock-on effect.

Looking out of the panoramic window of the just re-opened Dairy Barn Café, I can see right up Weardale, and am reminded of a conversation I had early in the last election campaign. “Remember, we’re the working dale, Richard” a man in late middle-age in local authority housing in Stanhope had said to me.

At the time it made me think of where I grew up on the other side of the Pennines – walking up Pendle Hill in Lancashire 20 years ago, and looking south to the mill towns of East Lancashire nestled in the valleys below. Working towns like Burnley, Colne and Accrington which have since switched to electing Conservative MPs.

As the furlough scheme, which protected so many jobs at the height of the lockdown is wound down, we’ve got to do everything we can to help return demand to the economy – the demand that comes from confidence in the future. Demand that means work for decent working people up and down the seats of the ‘Blue Wall’.

This confidence and positive view to the future is not something anyone’s hearing from the Labour leadership under Keir Starmer. The best thing he could muster last week was to suggest that the Government was giving “mixed messages” by saying, “get out and about, have a drink, but do so safely”.  Which shows that he’s struggling to get cut-through – especially when the man in the village pub in County Durham is by and large is doing exactly what the Government has suggested.

Labour’s shambolic response to getting children back to school, by saying one thing nationally and another in Labour-run local authorities, certainly inspires no-one with confidence – except a growing confidence that Sir Keir is a political opportunist. He was, after all, remarkably quiet on anti-semitism under Jeremy Corbyn, in order to keep hold of Momentum votes for the leadership. And he tried to play both sides with Labour’s disastrous “we’ll accept the result, but negotiate a new deal, and then have a second referendum” policy on Brexit.

Perhaps most interestingly, this weekend marked the first time that any constituent has mentioned the Labour leader to me unprompted. She was a former Labour voter who switched to the Conservatives in 2017 (and had managed to convince her husband to do so in 2019), and it was clear that, after being initially open-minded, the new Labour leader was leaving them increasingly cool.

The Government has done well in giving support to business and jobs – Rishi Sunak has certainly won fans across the country for that. But without wanting to pile too much pressure on the Chancellor ahead of his statement on Wednesday, we’re all only as good as our most recent decisions in politics.

As we move out of the initial stages of lockdown, Rishi’s decision must be to put confidence as much confidence and therefore demand back into the economy – especially in hard hit sectors – as he can. Everyone knows that it’s going to a difficult time and no-one expects the Government to get everything a hundred per cent right, but voters do expect us to really try.

And in doing so over the next few weeks and months, the Government has got to show the confidence in Britain that my local publicans in North West Durham are showing. And, as they press ahead with “levelling up” their pubs, we must also keep that long-term goal in mind too for the North.

Confidence is the thing that underlies every relationship with the state that we have – from policing with consent to the value of the fiat currency in our pocket. Confidence that governments have the people in mind and the ability to deliver is what keeps them in office.

The electorate here in County Durham and in the mill Towns of East Lancashire took us into their confidence and bestowed their votes upon us. Despite the difficulties of the pandemic, the Government has supported people. Now our task is to give our businesses the confidence to look to the future positively, which will in turn give the people who work for them the confidence to invest and spend in a virtuous circle, bouncing forward out of the fear of recent months and towards the hope of a brighter future.