York Press Column: Post-Covid Recovery is on Track, but Remains Fragile.
November 3, 2021
The message of last week’s Budget is that the post-Covid recovery is on track, but remains fragile. It is reassuring to see higher than expected economic growth predicted of at least 6% this year and next, although we cannot be complacent and must support workers and businesses to actually deliver this.
Given the potential for the pandemic to have a dire impact on employment, for young people especially, it is a big relief to see predictions of peak unemployment of some 12% revised down again, to just over 5%.
I have campaigned hard for assistance to help York’s large retail, hospitality and leisure sector recover from covid, and therefore warmly welcome the Chancellor’s introduction of a special 50% business rates discount up to £110,000 for 12 months for these industries, safeguarding jobs and small enterprises on local high streets.
The situation for many small businesses remains precarious. The UK has now lost over a quarter of the pubs that were open in 2001. While this long-term trend is in part due to a mixture of social changes and economic realities, the decline has been accelerated by a failure of successive governments to address the unreasonable tax burden most pubs face.
It is estimated that 1 in every 3 pounds spent in pubs goes straight to the taxman, primarily through beer duty, business rates and VAT on food. Despite repeated freezes, UK beer duty remains at three-times the EU average. Paired with the fact that pubs are suffering from an outdated business rates model that no longer reflects modern consumer practices, the Government cannot avoid the urgent need for reform any longer.
Before the Budget, I wrote to Rishi Sunak requesting a beer tax overhaul to help York’s pubs, which are still rebuilding after being badly hit by the virus, so was very glad to see his announcement of a targeted 5% duty cut on draught beer and cider, supporting these vital community centres and our region’s brewing heritage.
The Chancellor also announce large scale investments in our public services. For months I have been warning about the danger of a backlog in routine NHS surgery and procedures from Covid, so I really welcome the £5.9 billion of earmarked funding for new NHS operating theatres, facilities and equipment. This is part of a very significant wider funding commitment by the Government to the health service, with a budget increase of some £44 billion from £133 to £177 billion across 2019-24. We also saw a national increase in school funding of over £1500 per pupil. I am particularly happy to see the tripling of funding for Special Educational Needs, having previously successfully campaigned on the issue on behalf of local parents.
Universal Credit has been a lifeline for many hardworking families during coronavirus and I am glad to see the Chancellor adjust the taper rate and Work Allowance, assisting low income households by well over £1000 and effective in time for Christmas.
A bid to restore the 40-mile direct rail route between York and Beverley was also given an important boost. Co-sponsored by myself and the Beverley and Holderness MP Graham Stuart, the bid will now receive support from officials at the Department for Transport as well as funding for 75% of the cost of creating a business case, up to a maximum of £50,000.
This business case is the first step towards developing more detailed proposals, which may lead to the Government and the private sector providing financial support for the delivery of the project. With the reopening of the York to Beverley line being key to ensuring the feasibility of a new station at Haxby, it is no coincidence that the two proposals have both received Government backing and I look forward to continuing to advocate for both schemes as we enter the next phase.
Despite the very welcome announcements in the Budget, I have concerns that all these good measures could be marred if rising prices erode family budgets. The Chancellor said inflation is over 3% now and likely to average 4% next year, so I expect the Government to be vigilant and continue to focus on the fragile economic recovery.
My conservative instincts also add a note of caution. Whist the Chancellor’s spending plans may be appropriate for these unprecedented times, they should not represent a long-term ideological pivot. Our party has rightly prided ourselves on championing sound public finances, investing strategically when needed, whilst taking care to rebalance when prudent to do so. We have always preferred to stimulate economic growth by cutting taxes rather than increasing public spending. After all, investment decisions are best left with individual businesses rather than being centrally planned. The Chancellor hinted that by the end of this Parliament we will return to this ethos and I hope that he has the courage to follow this through.
