Asked by
To ask Her Majesty’s Government what plans they have to establish
a public wealth investment fund to support those businesses
affected by the COVID-19 pandemic.
The Minister of State, Cabinet Office and the Treasury () (Con) [V]
My Lords, the Government have announced unprecedented support for
public services, workers and businesses to protect them against
the current economic emergency. Our interventions have been
targeted to protect UK jobs while also protecting the taxpayer.
Our aim is to protect the productive capacity of our economy and
to enable a strong and sustainable recovery from this crisis. As
we move through this crisis, the Government will continue to keep
our economic response under review.
(Lab) [V]
To rebuild our economy, the Government should listen to the many
calling for our recovery through investment instead of paying
down debt, which is where they seem to be concentrating. These
are debts which some may never repay. Since I tabled my Question,
investment ideas such as Project Birch have been floated, but
will the Government make it clear that, in return for equity,
firms should work towards our social objectives of responsible
company behaviour, local levelling up and ensuring that all
benefit?
[V]
I agree with the noble Lord that social benefit is an extremely
important part of the recovery. To that end, we are consulting on
our rules for public procurement at the moment to include social
values as part of the scoring system.
(Lab) [V]
My Lords, bold and ambitious schemes, such as a public wealth
fund, will be necessary to support businesses in the medium term.
However, we are seeing an immediate surge in insolvencies and job
losses, and action is needed before such schemes can be
established. What targeted help can the Minister offer the
hardest-hit sectors of the economy, such as hospitality and
tourism, which will take longer to reopen and recover?
[V]
Our first priority as a Government has been to try to protect the
productive capacity of the economy, which is why we have one of
the most generous furlough schemes in Europe. On the hospitality
side, we have provided cash grants of £10,000 for properties with
small rateable values of under £15,000, and cash grants of
£25,000 for those with a rateable value of between £15,000 and
£51,000. We will continue to monitor how the leisure sector
recovers from this crisis.
(LD)
At the time of the Budget, the OBR forecast that taxpayer losses
in the RBS had increased to £4.7 billion compared to the
Government’s estimate of just two years ago. Would it not be
better for British businesses across the UK to think more
creatively about the use of our shares in RBS and to expand the
role of the British Business Bank, established by during the coalition, so
that we can see the early stages of a genuine UK-wide investment
wealth fund?
[V]
I agree with the noble Lord on the role of the British Business
Bank, which has played an extremely important part in the economy
over the last few years. It has given some £7 billion of finance
to almost 95,000 SMEs and has been part of the distribution for
much of the support over the last few months. We will continue to
review the greater part that it can play.
(Con) [V]
My Lords, I refer to my register of interests. There is no
question that we need some sort of public wealth investment bank
to replace CBILS—perhaps using the old model that 3i had.
However, the BBB is not the answer. It does not have the
mechanics, the experience or the expertise to make the direct
investments in SMEs that are badly needed. Would my noble friend
meet me and other practitioners to discuss the mechanics of how
we can get relatively small equity investments into SMEs in the
very near future?
[V]
I am very happy to meet my noble friend to discuss that, but I
stress that we expect the private sector to step up to the mark
in investing in these small businesses in future. We have the EIS
and the SEIS, and we will continue to review them.
(CB)
[V]
My Lords, given the heightened and highly appropriate focus on
justice and opportunity for black and minority communities, what
considerations has the Treasury given to working with existing
black business finance networks, such as the number one black
lending and investment agency, Lendoe, led by Mr Demi Ariyo? Will
the Minister chase a reply, due a month ago, to Mr Ariyo’s letter
to the Chancellor of 12 May, setting out practical and detailed
advice on how to boost black business recovery?
[V]
I certainly commit to chasing up a reply to the letter that the
noble Lord mentioned. Businesses run by the BAME community are of
course vital to our economy.
(Lab) [V]
My Lords, I want to press the Minister on the key point of
principle in my noble friend Lord Haskel’s excellent Question. Do
the Government accept the need to set up a mechanism whereby the
state can take equity stakes in overindebted companies? Do they
accept that this is vital to what the Minister describes as
safeguarding our productive capacity and to a strong and
sustainable recovery? Does the Minister accept that the debate is
not about whether this should happen but about how it should
happen? The sooner we start talking about this, the better.
[V]
There are two parts to that question. First, on 20 May, we
announced the future fund of an initial £250 million for
co-investment with businesses. There has been enormous interest
in that; some 460 applications have been made up to the end of
May. On the noble Lord’s reference to overindebted companies, we
have to deal with the issue that the shareholders and management
of those companies have contributed to that problem. They need to
resolve the substantial concessions that they will have to make
to their own equity, and to the lenders who have lent—and
possibly overlent—to these businesses. There are two separate
strands to this, but both will be active in future.
(LD) [V]
My Lords, the Government have put millions of pounds aside to
help businesses struggling due to Covid-19. How do the Government
monitor the take-up of these funds by black and minority-ethnic
businesses?
[V]
I will have to write to the noble Lord to provide specific
information on that.
(Con)
My Lords, if the Government were to establish a sovereign wealth
fund, might one of its objectives be to invest in major
infrastructure projects, such as the currently suspended Horizon
Nuclear Power project at Wylfa, Ynys Môn?
[V]
Infrastructure is a vital part of rebuilding from this crisis. I
am unsure at this stage whether it will be done through the
mechanism of a sovereign wealth fund. At the moment, we have the
opportunity as a national Government to borrow cheaply, which, if
invested well in infrastructure, could be a simpler approach than
a sovereign wealth fund.
(Con) [V]
My Lords, we have a tremendous challenge but a real opportunity
for an economic bounce out of Covid. It needs a whole-government,
whole-economy approach. Will my noble friend salute the
consultation currently being undertaken by the Bank of England
around a central bank digital currency, and note the positive
impact that this potentially could have for the whole of the
country and the economy?
[V]
I certainly agree with the noble Lord that it is an extremely
important consultation. As he implies, any serious crisis such as
this gives the country a chance to look beyond the normal way of
dealing with problems. I am very hopeful that initiatives such as
he has mentioned will be much more evident over the next few
months.
(Con) [V]
My Lords, I declare my interests and congratulate the Government
on the establishment of the future fund. Would my noble friend
consider encouraging the use of pension funds, as well as
expanding the EIS and the SEIS, so that we can boost investment
in smaller companies via equity, rather than debt, and increase
the emphasis on social values?
[V]
I agree with the noble Baroness that pension funds in this
country could play a much greater role in investing in early days
businesses. The noble Baroness will know better than I that how
we change the investment allocations that pension funds are
allowed to take is a very complicated business, but I hope that
we will continue to push the boundaries on that, because there is
enormous potential.
