Business Committee Chair calls on Government to learn lessons from gaps in worker & business support

Following a series of evidence hearings on the impact of coronavirus, with Ministers and representatives from businesses, trade unions, the self-employed, consumer and worker organisations, Darren Jones, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee, has written to Secretary of State Alok Sharma [see attached letter, also embargoed until 00.01 Wednesday] outlining a number of key issues for the Government to address in its approach to support for business and workers as the country emerges from the Covid-19 lockdown.

The correspondence to the Secretary of State recognises the efforts of many workers and businesses who rose to the challenges brought about during the pandemic. The letter also highlights a number of issues, including gaps in support for workers, the tapering of support for workers through the Coronavirus Job Retention Scheme (CJRS), and the treatment of workers during the pandemic and health & safety issues. The letter tackles a number of areas concerning the Government’s support for businesses, recommending the Government review the success of the various loan schemes and the behavior of banks, and also highlighting problems arising from unpaid business rent and the calls for targeted support for sectors that are likely to continue to be hit by restrictions which threaten their future revenue and viability.

Darren Jones, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee said: “The Business Department and the Treasury deserve significant credit for their efforts in addressing the unprecedented challenges faced by business and workers following the impact of Covid-19.

“Given the evolving situation around Covid-19, it’s inevitable that issues would emerge concerning the effectiveness of the Government’s support package and its impact on workers and businesses. However, it is also the case that the alarm over gaps in the Government’s support, such as for women, and those affecting freelancers and agency workers, were being raised repeatedly by those affected and yet these warnings continued to go unheeded.

“Rishi Sunak echoed a previous Chancellor in suggesting that the coronavirus has seen us all in it together. However, it’s clear that the reality of the economic lockdown is that its impact has not been shared out evenly and that it is falling very heavily on some parts of our economy. For example, we heard from sectors, including retail, the creative industries and manufacturing, who expressed concern over increasing redundancies in the wake of the furlough scheme changes coming in this weekend.

“It’s clear that some sectors of our economy will continue to face very challenging conditions. The shutdown of the aviation and aerospace sector will, for example, have a longer-term impact on these industries compared to others. In some parts of hospitality and in other sectors too, difficult trading conditions and continuing restrictions threaten future revenue and their viability.

“It’s important the Government quickly learns the lessons of recent months so that they can act in future with more policy sophistication and transparency and be able to step up and deliver the most effective support possible to workers and businesses. If we face the prospect of a second-wave and the likelihood of increased local lock-downs, it’s essential the Government looks again at its approach to sector support and to the additional measures which will be necessary to secure our economic recovery, help businesses prosper and enable workers to protect their livelihoods”.

The letter to the Secretary of State notes the examples highlighted by Which? of price-gouging, profiteering, and the inability of consumers to obtain refunds which they were legally entitled to when their holidays and flights were cancelled. The correspondence also notes the comments from Lord Tyrie, former Chairman of the Competition and Markets Authority, stating that the pandemic had revealed that the CMA needed new powers to deal with profiteering. The Committee calls for the Government to undertake a review of the powers and responsibilities of the CMA, and other consumer regulation enforcers, to address bad business practices and the effective enforcement of consumer law and the action needed to tackle market abuses, such as profiteering, that took place during the pandemic.

The letter to the Secretary of State highlights issues around the impact of late payments and the problems that many small businesses were experiencing throughout the UK’s supply chains because of cash flow problems. Following evidence from SMEs, the Federation of Small Businesses (FSB), and the Small Business Commissioner (SBC) on these issues, the Committee recommends the SBC be given additional powers to proactively investigate late payments, that the Prompt Payment Code be made compulsory, and that late payers should be excluded from government contracts.

Editor’s Notes

Details of evidence hearings and full list of witnesses for the Committee’s evidence hearings are included in the annex of the attached letter. At an evidence hearing on 18th June, the Committee’s inquiry looked at issues facing the workforce, including the self-employed, across a range of sectors, such as retail, engineering and manufacturing, energy, and the creative industries. The Committee heard from representatives of GMB Scotland and Unite, Equity, Usdaw, and Prospect unions. The Committee has held sessions for this inquiry on 4th June, focusing on the impact on the manufacturing and energy (specifically, electricity and gas supply) sectors, Thursday 14 May with Which?, TUC, and IoD, and a panel of international experts, and also with business representatives (on 17 March) and on the impact on small businesses and the retail sector (30 April). The Committee took evidence from the Secretary of State on 23 April on the Department's response to coronavirus.

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