Thank you for contacting me about tougher measures to tackle the spread of coronavirus and their impact on the UK’s economy.
A survey of some of the measures the Government will take in order to stimulate and strengthen the economy can be found below.
It is important that any judgements take into account both the aims of protecting lives by management of the virus and protecting livelihoods through supporting the economy.
The prospect of further restrictions is naturally causing concern for the wellbeing of our economy, however, I can assure you that there is no one keener than me to avoid a second national lockdown, with the types of restrictions we had in March, and I know that my ministerial colleagues share this view.
We are in a fundamentally different situation to that which we faced in March, and we know much more about the virus than we did then. There is a now a general public knowledge of how to mitigate the risks associated with the virus. The NHS is better prepared, having significant new funding for PPE and for capacity. Over £12 billion has been provided for Test and Trace.
This is not to say the economy does not still warrant vital protections. Following a dramatic drop in output, the economy has seen three consecutive months of growth, and I know that my colleagues at the Treasury are doing everything in their power to protect this recovery, whilst acknowledging the importance of protecting public health against the resurgence of the virus.
As part of the £190 billion in support that was given to individuals, businesses, and public services, the furlough scheme protected over 9.6 million jobs. A vast number of furloughed employees have gone back to work, however, the new Job Support Scheme, coupled with the Job Retention Bonus, offer incentives to employers to get employees working again and to help the economy continue on its road to recovery through the winter months.
Thank you again for taking the time to contact me.
Craig Whittaker MP
October 2020
Post-Covid-19 Economic Recovery
The Government intends to pursue a policy of investment in both infrastructure and skills with the intention of fostering economic growth. This continues with the ‘levelling-up’ strategy outlined within the Budget and the Finance Act which received Royal Assent on 22 July.
The Prime Minister has clearly stated that there will not be a ‘return to austerity’ reminiscent of the economic response to the 2008 Financial Crisis.
In an interview with the Mail on Sunday, the Prime Minister said: “We're going to need a very committed, dynamic plan: not just for infrastructure, not just for investment but making sure that young people have the confidence they need that we are going to help them get into a place of work, to keep their skills up, to keep learning on the job and get a highly paid, highly skilled job that will stand them in good stead for a long time to come.”
On the 30th June the Prime Minister announced a “New Deal” which puts jobs and infrastructure at the centre of the government’s economic growth strategy. This will take the form of £5bn of capital investment projects, supporting jobs and the economic recovery, including:
• £1.5bn this year for hospital maintenance, eradicating mental health dormitories, enabling hospital building, and improving A&E capacity. This will improve patient care, make sure NHS hospitals can deliver world-leading services and reduce the risk of coronavirus infections.
• £100m this year for 29 projects in our road network to get Britain moving, from bridge repairs in Sandwell to boosting the quality of the A15 in the Humber region. Plus £10m for development work to unblock the Manchester rail bottleneck, which will begin this year.
• Over £1bn to fund the first 50 projects of a new, ten-year school rebuilding programme, starting from 2020-21. These projects will be confirmed this Autumn, and construction on the first sites will begin from September 2021.
• £560m and £200m for repairs and upgrades to schools and FE colleges respectively this year.
• £142m for digital upgrades and maintenance to around 100 courts this year, £83m for maintenance of prisons and youth offender facilities, and £60m for temporary prison places, creating thousands of new jobs.
• £900m for a range of ‘shovel ready’ local growth projects in England over the course of this year and next, as well as £96m to accelerate investment in town centres and high streets through the Towns Fund this year. This will provide all 101 towns selected for town deals with £500k-£1m to spend on projects such as improvements to parks, high streets, and transport.
After a record fall of 20% in April, UK GDP grew by 2.4% in May, 8.7% in June and 6.6% in July. As of these July figures, this leaves UK GDP 18.6% higher than its April low but still 11.7% below the high point seen in February.
The following briefing contains further sections on infrastructure, skills, and investment. This is followed by economic outlook data, as well as further policy research from a selection of third-parties.
Infrastructure
The long-awaited National Infrastructure Strategy (NIS) was due to be published alongside the Budget on March 11th but will now be published this Autumn.
The National Infrastructure Commission published its National Infrastructure Assessment in July 2018, a short summary of the Assessment is available at https://www.nic.org.uk/wp-content/uploads/NIC-A5-Handout-WEB-1.pdf.
In the context of COVID-19, more than 470 infrastructure projects in the UK worth £6bn remain on hold and the number of new contracts and tenders in the sector has plunged, according to research seen by the Financial Times. Many are in Scotland, where the Holyrood parliament ordered contractors to stop work on April 6. The Government intends to bring forward funding to accelerate infrastructure projects in Scotland, Wales, and Northern Ireland.
The Prime Minister has announced a new taskforce for ‘Project Speed’, cited as the ‘Infrastructure Delivery Taskforce’, which is aimed at accelerating infrastructure projects. It will reportedly be chaired by the Chancellor, and will be charged with accelerating the modernisation of schools, hospitals, road and rail infrastructure.
Key Points
- The finalisation of the Shared Rural Network agreement between the government and industry. The government will commit up to £510 million of funding, which will be more than matched by industry. This means 95% of the UK’s landmass will have high quality 4G mobile coverage by 2025.
- The next seven areas that have successfully bid for funding from the third wave of the Local Full Fibre Networks Challenge Fund: North of Tyne (£12 million), South Wales (£12 million), Tay Cities (£6.7 million), Pembrokeshire (£4 million), Plymouth (£3 million), Essex and Hertfordshire (£2.1 million) and East Riding of Yorkshire (£1 million).
- Over £27 billion in funding for English strategic roads between 2020 and 2025, enough funding to fill in around 50 million potholes across the country, and £4.2 billion for five-year, integrated transport settlements for eight city regions
- Record funding of £5.2 billion for flood defences between 2021 and 2027, offering better protection from flooding for 336,000 homes and non-residential properties. Additional funding of £200 million will help communities most at risk of flooding recover faster in cases where they are affected by flood damage
- The Department for Transport has established a ‘Restart, Recovery and Engagement’ unit designed to work alongside the aviation industry on the immediate issues around restart as well as the sector’s longer-term growth and recovery. As part of this work, an aviation restart and recovery expert steering group has been formed, consisting of representatives from across the sector, including airports, airlines and ground handlers, industry bodies and unions.
- A £10.9 billion increase in housing investment to support the commitment to build at least 1 million new homes by the end of the Parliament, and an average of 300,000 homes a year by the mid-2020s
- £3bn invested in retrofitting public and private properties with energy-saving features
- In July, the Geospatial Commission published the UK’s Geospatial Strategy which set out the state’s vision of a coherent national location data framework and how best to utilise this data to improve the delivery of infrastructure and enable innovation.
Skills and Employment
- Over £1bn will be provided to fund the first 50 projects of a new, ten-year school rebuilding programme, starting from 2020-21.
- £560m and £200m will be available for repairs and upgrades to schools and FE colleges respectively this year.
- Later this year government will launch a competition for further funding to ensure that all of England is covered by Institutes of Technology, this will make sure that “everyone has the chance to gain higher technical skills and helping unlock growth across the country”.
- Institutes of Technology are unique collaborations between universities, Further Education colleges, and leading employers including top firms Nissan, Siemens and Microsoft. They specialise in delivering quality higher level technical training (at Level 4 and 5) in STEM subjects, such as digital, advanced manufacturing and engineering that will provide employers with the skilled workforce they need.
- The National Living Wage will be increased by 6.2% from £8.21 to £8.72 in April 2020, and is projected to meet its current target of 60% of median earnings by 2020.
- The NLW will reach two-thirds of median earnings and extending this to workers aged 21 and over by 2024 – “provided economic conditions allow”.
- Following recommendations made by the Low Pay Commission, the NLW will apply to workers aged 23 and over in April 2021, with a target for it to apply to workers aged 21 and over by 2024. Alongside the Budget, the government published its remit to the Low Pay Commission (LPC) for 2020.
- The Budget confirmed the government’s commitment to increase the thresholds at which employees and the self-employed start paying National Insurance contributions (NICs) to £9,500 from April 2020.
- The Budget restated the government’s ambition to increase these thresholds to £12,500, which would save a typical employee over £450 per year.
- With c.700,000 young people are set to leave education and enter the job market this year, the £2bn Kickstart scheme was launched at the beginning of September to provide young people aged 16-24 on Universal Credit with the opportunity of six-month work placements and wages paid by government.
Investment
- The Budget set out plans to increase public R&D investment to £22 billion per year by 2024-25, taking direct support for R&D to 0.8% of GDP.
- The government will increase the rate of R&D tax credits and consult on widening the definition of qualifying expenditure to include data and cloud computing.
- The Chancellor has announced new £1.25 billion coronavirus package to protect firms ‘driving innovation’ in UK.
- £500 million of investment funding will be available for high-growth companies impacted by the COVID-19 crisis through the Future Fund.
- SMEs focusing on research and development will benefit from £750 million of grants and loans.
- Corporation tax rate will remain at 19% in 2020
- Increase in the annual rate of the structures and buildings allowance to 3% will provide over £1 billion in additional relief for businesses by the end of 2024-25.
- Energy Minister Kwasi Kwarteng has announced nearly £80 million of government investment to help cut carbon emissions from homes and energy intensive businesses.
- £30 million towards the first phase of the Industrial Energy Transformation Fund (IETF), which supports energy intensive manufacturers, like car factories and steel plants, to cut their carbon footprint
- £25 million for heat networks, which reduce carbon and cut heating bills for customers, including one which will harness geothermal water sitting in disused mines to heat 1,250 homes
- £24 million for innovative projects to help develop energy efficient homes by installing green tech and insulation in houses.
- Almost £200 million will be available through the Sustainable Innovation Fund boost to help businesses across the UK “drive forward cutting-edge new tech and recover from the impacts of coronavirus”.
- Government investment through the Sustainable Innovation Fund will support innovations ranging from AI systems managing city traffic flows to the latest reusable packaging materials.
- Research and development (R&D) intensive businesses urged to apply for funding to turn ingenious ideas into new technologies
- The government increased the Employment Allowance from £3,000 to £4,000 from April 2020, such that businesses will be able to employ four full-time employees on the National Living Wage without paying any employer National Insurance contributions (NICs).
- The government pledged to meet its commitment to introduce a National Insurance holiday for employers of veterans in their first year of civilian employment.
- In life sciences, the government will provide the British Business Bank with additional resources to launch a dedicated £200 million investment programme.
- Through the Manufacturing Made Smarter Challenge, BEIS and UKRI are investing £147 million to increase the productivity of UK manufacturing by 30%.