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David Mundell (in the Chair)
I remind hon. Members that there have been some changes to normal practice in order to support the new hybrid arrangements. Timings of debates have been amended to allow technical arrangements to be made for this debate and the preceding debate. There will also be suspensions between debates.
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Owen Thompson (Midlothian) (SNP)
I beg to move,
That this House has considered eligibility for Government support during the covid-19 outbreak.
I am grateful to have the opportunity to move the motion, but I find it genuinely hard to believe that we are having to have this debate again. It is now 16 months since the Government should have filled the gaps on eligibility for their covid support schemes. In that time, I and countless other Members from across the House have raised the issue of the exclusion of 3 million people from Government support. I have personally asked five oral questions, made seven speeches, submitted dozens of written questions and led three debates, yet progress has been minimal.
At the start of the pandemic, I and many others could understand the Government’s argument that it was inevitable that some people would temporarily fall through the gaps during such an unprecedented time. Likewise, I accept and welcome the instances where the Government have taken constructive steps to plug the gaps. I do not dispute that some progress has been made, so I would be grateful if the Minister does not squander his valuable time by simply listing all the things that have been done. Perhaps we could focus on where the gaps still exist.
If it is the role of the Government to protect and improve the lives and livelihoods of citizens, it is incomprehensible that 10% of the working population can be accepted as collateral damage and left to be ground down by poverty and despair by a Government who claim to be business-friendly. Instead of looking backwards at what has already been done, I want to focus on where the gaps still exist and to look ahead to what can be done to tackle the long-term effects of the Government’s decision to let temporary gaps in support become a full-blown crisis of debt, poverty and mental health.
The Minister will be well aware that over 800,000 people have been unable to access the coronavirus job retention scheme due to last year’s real-time information cut-off date. He is no doubt champing at the bit to stand up and give the Treasury a pat on the back for the decision to amend the date to November, but those affected are telling us that this does nothing to support those who missed out on furlough because of their roles as pay-as-you-earn freelancers or annually paid limited company directors. Although the inclusion in March’s Budget of the 2019-20 tax returns for calculating eligibility for the self-employed income support scheme is welcome, the Treasury’s assertion that this will open eligibility to 6000,000 more self-employed people is categorically disputed by campaigners.
Likewise, the discretionary grant funds devised by the UK Government and the devolved Governments have been effective in plugging some of the gaps in places, but the eligibility criteria vary from council to council, keeping some groups excluded based on postcode alone—some because they do not have a premises, and some because they have too many employees. The list goes on. This is something that the Treasury could fix, either by issuing clear guidance on whom councils should consider to be eligible, or by distributing its own grant scheme rather than devolving the blame.
To save the Minister a bit of time later, I am well aware of the Government’s culture recovery fund, but the scheme does not do much at all to support many of my constituents who work in the supply chain—businesses in the events sector that have remained formally open but have been badly affected by the cancellation of live events. Only 3% of the fund went to supply chain businesses in the first round. That figure did rise to 12.5% in the second round, but only because of the campaigning efforts of groups such as We Make Events. Will the Minister explain how he intends to support the supply chain businesses excluded from this fund, rather than repeat the lines that we already know?
Finally on this point, as much as the Government point to universal credit as the last resort when all else fails, the reality is quite different. ExcludedUK estimates that about 60% of the excluded have been unable to access universal credit, often because they have partners working or savings set aside for business expenditures, such as tax bills, which is natural for any self-employed person.
I hope the Minister will be grateful that we have covered what the Government have already done and that we can focus today instead on the gaps that still exist. Some gaps have certainly been filled—I have no qualms about that, and I would certainly not try to detract from it. However, the onus is now on the Government to fill the rest, and not rest on their laurels.
Plenty of solutions have been presented only to end up being dismissed for spurious reasons; they have sat on a Minister’s desk while people who could have been helped languished in stress and deprivation. For instance, proposals for a directors income support scheme were dismissed by the Treasury because of concerns about fraud and an inability to gather data on dividends, despite the scheme using the Government’s own anti-fraud gold standard and avoiding dealing with dividends at all. Where there is political will, there is always a way, and the Government have displayed nothing but a lack of political will in this.
Throughout this sorry saga, the Treasury has shown that it believes that many Members, such as myself, sound like broken records and that the excluded are nuisances trying to swindle public funds. Perhaps there is a bit of projection going on. Time and again, the tone has been nothing but dismissive. The Treasury has used blatant straw-manning to paint limited company directors as fat cats and imply that the majority are actually just directors’ children and spouses.
With the Prime Minister pressing on with the ditching of all restrictions with trademark recklessness, I imagine that Ministers are rubbing their hands with glee at the chance to redirect attention to reopening and simply to dismiss or brush off the excluded as yesterday’s news. However, if the Government think that the end of restrictions will make the issue go away, they are very wrong; for many of the excluded, the hardest times are still to come. The fact that many jobs and businesses have survived until now does not mean that they are in the clear. Those who have been excluded from support have relied on the loan schemes, so by tapering off support now the Government are exposing them to an unimaginable crisis of toxic debt.
In a Westminster Hall debate in November last year, I raised warnings from TheCityUK recapitalisation group that UK businesses will have £100 billion of toxic debt by 2021, with £35 billion of that related to Government schemes. The report warned that up to 3 million jobs across the UK and 780,000 small and medium-sized enterprises are at risk. Now we are standing at the edge of that very precipice, with many having only just managed to scrape by in meeting the first repayment deadlines for coronavirus business interruption loans or bounce back loans. How does the Treasury expect entrepreneurs to reap the benefits of an open economy when the profits of so many are simply going to go straight to repaying ever-mounting debts? How many businesses that were saved through the pandemic will fold, collapsing in debt when the health crisis is finally over? Are the Government really content with giving some companies a competitive advantage by saddling others in the same sector with debt?
As we reopen, things are more uncertain than ever for the excluded, especially with the reopening process likely to be bumpy. As long as covid is still out there, cancellations and changes of plan can create deep uncertainty. Only last week, in my own constituency, Midlothian, a Tough Mudder event that had been planned over the space of seven months was cancelled at 6.30 pm on the night before it was due to start. While the health situation remains uncertain, there must at least be certainty in support, as well as quality decision making, which was sadly lacking in the Tough Mudder case.
The excluded are not a niche group. They are the backbone of our economy: business owners and risk takers. To take one example, the events industry demonstrates its incredible potential to build a world-beating sector that boosts both our economy and our spirits. It relies on the efforts of a diverse and highly skilled supply chain of around 1 million people. Those people’s skills should be used to boost the recovery, yet so many have taken such an economic beating that they literally cannot carry on in their current roles and sectors, with 1 million people leaving self-employment in the last year alone.
For all the Government’s talk of a strong economic recovery, we have been left with a looming toxic debt crisis and the decimation of key industries and sectors. The supposedly strong shoulders of the Treasury are quite happy to shrug off millions of livelihoods, and I have not even mentioned the human cost: poverty, hunger, and a serious mental health crisis. The Trussell Trust reports that gaps in social security have driven people to food banks and that universal credit has been totally insufficient in preventing the excluded from falling into food poverty. Many are already been forced to sell their homes to repay CBILS and bounce back debt. Tragically, some have already taken their own lives. It speaks volumes that groups such as #ForgottenLtd have established formal links with suicide prevention charities such as the Samaritans. I really hope the Minister will join me in expressing a deep appreciation for the work that those charities do in supporting the excluded.
In conclusion, never before has a Government been so complacent about a debt crisis, a mental health crisis and a grave injustice all rolled into one. Let us talk about solutions: backdated parity of support; eligibility for support as we come out of the pandemic; support for repaying CBILs and bounce back debt; delayed repayments; or perhaps even a student loan-style repayment scheme that kicks in only past a certain threshold. Those are just ideas, but they are ideas that the Government need to look at now.
Will the Minister recognise the graveness of the crisis we are about to enter and commit to exploring solutions as a matter of urgency? Doing so will require striking a new tone with campaigning Members and groups such as ExcludedUK and We Make Events, so will the Minister agree to co-ordinate a meeting between the various excluded groups?
It is worth noting that the people who have been excluded watch these debates, and the last thing they want to hear today is another generic list of the people who have been supported. Not only is that a waste of our time, it is an insult to them, rubbing their faces in the injustice of the situation. It is taunting to the level of trolling. I implore him to throw away the script and speak today as though he were speaking face to face with one of the excluded themselves. He should listen to their hardships and their stories and recognise the hurt that is out there, listen to those affected and commit to working constructively to resolve one of the greatest injustices of this generation.
David Mundell (in the Chair)
In order to allow all Back Benchers to contribute to the debate, I am imposing a three-minute time limit that will be enforced. I call David Warburton to speak now.
David Warburton (Somerton and Frome) (Con)
It is a pleasure to serve under your chairmanship, Mr Mundell, and to speak on this subject today. I congratulate the hon. Member for Midlothian (Owen Thompson) on securing the debate.
Like all of us, I have been contacted by constituents from a kaleidoscope of different situations who have been unable to access Government support in spite of having been hit hard by the pandemic and the lockdown restrictions. From visiting businesses in Somerset and talking to owners and managers and those in their supply chains, it seems the economy is like a pointillist painting with apparently discrete specks of colour, but when one steps back they merge into a cohesive picture. The Government have provided huge support to countless businesses and individuals—to many of those specks of colour. It has been unparalleled in peacetime, and the package of support has ended up costing more than £300 billion, with some 14 million people supported. However, some have not been able to access that.
I met the Chancellor a few days ago and talked to him about those people. I very much understand both his intention to try to help as many as possible and the challenges in bringing more into the safety net through proper assessment. Of course, restrictions on livelihoods are about to be lifted. Those who managed to keep the show on the road ought to be back in business very soon, but there will be challenging months ahead, and we should now look carefully at those who have had to struggle without support for the past 15 months.
The different types of ineligibility are numerous and complex. We have the newly self-employed, anyone earning over £50,000 and those drawing their salaries as a dividend. This is a common one in the music sector where I have been trying to get more support. There are those with mixed income and those on zero-hour contracts such as peripatetic music teachers. This is not academic or theoretical. It is tangible and real. I know my right hon. Friend the Minister is more than sympathetic to it. The impact means businesses going bust and mounting personal debt, and there is a particular impact on younger and older workers, new parents, parents of young children and their families. I will not go into the detail of specific cases or numbers. I am sure we will hear more about that and we can argue or dispute numbers. However, we are talking about millions of people.
I hope, as we climb out of the abyss of the pandemic, we have the perspective to take a breath, look closer at overcoming the technical assessment difficulties, which I fully appreciate, and fish more people out of the pond with a net that is slightly more tightly meshed. Without wanting to mix my metaphors, that would protect those specks of entrepreneurial colour that together make up our national economic picture.
Stewart Hosie (Dundee East) (SNP)
It is a pleasure to serve under your chairmanship, Mr Mundell, and I congratulate my hon. Friend the Member for Midlothian (Owen Thompson) on securing this important debate.
I raise the issue of the covid recovery loan scheme, described on the Government’s own website as supporting “access to finance for UK businesses as they grow and recover from the disruption of the covid-19 pandemic”. It also describes how businesses can receive up to £10 million and is clear the Government are guaranteeing 80% of the finance to the lender. Not all lenders appear to be engaged in this scheme, and those who are have varying degrees of enthusiasm—but I set that aside for the moment.
The rules say that eligible businesses must be trading in the UK, would be viable were it not for the pandemic, have been adversely affected by covid, but are not in collective insolvency proceedings—and there is the rub. There was, quite rightly, a large degree of forbearance during the crisis from the public and private sectors but many creditors are now calling in debts that result from covid before debtor companies have returned to pre-crisis cashflow and profitability levels.
I know of many otherwise viable businesses, who in normal times could perfectly well service their debts, now finding themselves financially distressed as a result. They may fall foul of the recovery loan scheme criteria or lenders’ risk management practices if they are subject to a Scottish decree or an English county court judgment. In short, they are being punished for being adversely affected by covid—one of the criteria to get the money in the first place—and are unable to apply for funds because of how that impact is being felt. Decisions by the lenders and banks are more irrational precisely because the Government are guaranteeing 80% of the loan.
I hope the Government will put pressure on the lenders to take part in the scheme and persuade them to analyse the underlying viability of a business, rather than issuing a hard no simply because of a CCJ or a decree. It would be irrational if a business meets the criteria of being adversely affected by covid, but is denied access to the help it needs at precisely the time it needs it the most because the financial distress caused has resulted in a court order.
I will briefly raise another problem. I have been told by a business finance brokerage that of the 60 businesses he has supported to make full applications for the recovery loan scheme, only a single, solitary one has received the money, and that is deeply troubling.
Kate Osamor (Edmonton) (Lab/Co-op) [V]
I am grateful to serve under your chairship for the second time in one day, Mr Mundell. I congratulate the hon. Member for Midlothian (Owen Thompson) on securing this debate.
In March last year, the Chancellor declared that the Government would do whatever it takes to support the country through the covid-19 crisis. While the furlough scheme, which the trade unions were central in establishing, and other financial support have provided a lifeline for millions, sadly far too many individuals and small businesses have still been excluded. I have countless constituents, most commonly the self-employed or owners of small businesses, contact my office saying they have gone a year without receiving any financial support, despite not operating at anywhere near their normal capacities. Time and again, the Government have ignored those excluded from financial support. To be clear, any policy that seeks to ensure financial security while tackling the pandemic must include, above all else, listening to the voices and experiences of people such as my constituents, and addressing their concerns.
When the Minister sums up, will he consider the following two proposals? First, will the Government expand the eligibility requirements for the fifth grant of the self-employment income support scheme. Millions of self-employed people have faced considerable hardship, which has left many of them in serious debt and poverty, struggling to make ends meet with little or no income. There are more than 1 million people who receive less than 50% of their income from self-employment or who have profits in excess of £50,000. They must receive a reprieve after facing uncertainty and financial insecurity for more than a year.
Secondly, the Minister cannot use the lifting of restrictions to wash his hands of offering financial support through this crisis. Some businesses will still be severely hampered despite the planned lifting of almost all restrictions. I am largely thinking of those in the aviation and travel sector, including an independent travel agent in my constituency. Sectors such as these may need long-term, targeted and tailored financial support to survive.
I will draw my remarks to a close. The pandemic disrupted many businesses, but the support offered by the Treasury failed to meet the needs of those small and medium-sized enterprises, including in my constituency, that no doubt will have, or have already had, no choice but to close, through no fault of their own.
Rachael Maskell (York Central) (Lab/Co-op)
It is a pleasure to speak with you in the Chair, Mr Mundell.
Since the first covid cases in the UK were identified in York 18 months ago, we have been inundated by businesses that are challenged. Although Government relief has been welcome, those ineligible for it have struggled. As covid cases soar again, we worry. This last year, those denied help have seen their life’s work slip through their hands. Many self-employed directors are an example, as are those in the tourism, theatre, events and travel sectors, and those in the supply chains. Even when safe solutions were offered, the Government simply said that they were unwilling to build the capacity to implement them.
Often, it has been the inconsistencies in Government guidance and support that have caused confusion and hardship. For instance, caravan parks with shared showers were open but holiday flats with shared hallways were closed, and those running them were not eligible for support.
As restrictions lift, we are already seeing infection levels spike in York, meaning staff isolating and businesses closing. It is set to get worse, given the Government’s illiterate plans. The economy is being hit and loyal customers are retreating into their homes, once more feeling unsafe. Reality and Government rhetoric are far apart in communities such as mine. The Government have seriously misjudged things and once again businesses and charities are calling for help, both for now and the longer term. Ineligible for support, they cannot depend on this season either. They urgently need a bridge to carry them through, so that they can then grow again.
I will turn to charities. On 8 April, the Government provided support lasting just 12 weeks. Charities have been ineligible for much Government funding. Many have had nothing at all and have had to cut back, yet all the while demand for their services has increased. Understanding of this sector, which forms a crucial part of our social infrastructure, has been severely lacking from the Treasury, which fails to recognise the role that charities have played throughout the pandemic and will play throughout the recovery. Generic schemes simply do not work for them. Will the Minister at least meet the sector’s leaders and listen to their calls for the support they need right now?
Perhaps the most frustrating thing of all has been how impervious the Treasury team have been when they have been written to. We hold the future of local companies in our hands, but we have been given a stock response, often unrelated to the issues that we have been trying to resolve. Businesses have been ignored; support has been denied. Recovery funds for businesses and charities are needed. While the Government are trying to race on, covid infections are racing up. Businesses and charities that have worked so hard to cling on feel that the rope is being cut. We have called for help; we have offered solutions. All we need is for the Government to engage, to rebuild socially and economically. That need has never been greater than it is now.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD) [V]
It is a pleasure to share in this debate under your chairmanship, Mr Mundell. We go back a long way. I congratulate the hon. Member for Midlothian (Owen Thompson) on securing this important debate.
I wish to talk about a subject that I have mentioned before: insurance for live events. Even those who have been eligible for support will struggle in the recovery phase if they are unable actually to stage live music events. Many events cited by the Government as examples of cultural recovery fund support have been unable to go ahead this year due to a lack of insurance, including huge events such as the Glastonbury festival.
Why are they cancelling? Because they cannot get commercial covid insurance cover, or not at a competitive rate. Since January, I and others in all parties have been calling for the Government to put in place a Government-backed covid cancellation insurance solution. I have said it before, but such a scheme is not unprecedented. It has been done before with insurance for terrorism losses and—I point out yet again—the Government made a profit on that, which is worth remembering. I have said that repeatedly to Ministers and I hope that they will heed my call.
If we do not get events back up and running again, I fear that, in addition to losing good events in this country, we will erode something that is very important to Britain. Our culture and music are part of our soft power and, as we know, people come from all over the world to attend such events. Again, that is exactly why it would be helpful if insurance could be put in place.
Before I conclude, as Members know, I have the honour of being the joint chair of the gaps in support all-party parliamentary group. I want to put on the record my sincere thanks to my joint chairs and all the many Members who pulled together to form the APPG. I think it is the biggest in the history of the House of Commons. That shows just how important the issue that the hon. Member for Midlothian has brought to our attention today is.
David Mundell (in the Chair)
Thank you, Mr Stone. It has been a pleasure to chair you for once.
Patricia Gibson (North Ayrshire and Arran) (SNP)
I echo the thanks and appreciation to my hon. Friend the Member for Midlothian (Owen Thompson) for securing this debate and for the comprehensive way in which he set out the challenges faced by too many people. More than 3 million people went to work every day to pay their bills and to look after their families, only to find that when coronavirus took hold, the Government built a lifeboat called furlough—but they were not allowed a place on that lifeboat. In what at times appeared to be an act of random cruelty, they were left without support for themselves or their families.
When those people complained about their concerns, or their elected representatives did so on their behalf, the Government simply responded by pointing out all the support that was available for other people, as though the excluded could be comforted by the fact that their exclusion from support would be made more bearable by knowing that others had received support. I sincerely hope that the Minister does not repeat that bizarre cycle when he gets to his feet.
In fact, the self-employment support scheme failed to help most self-employed workers, with many left out in the cold. As the Government gradually withdraw furlough support—too early in my view and that of many others—it is clear, and has been for some time, that the excluded are to remain so. They have been left to manage as best they can.
On 25 March 2020, the Prime Minister promised to put his
“arms around every single worker”.—[Official Report, 25 March 2020; Vol. 674, c. 334.]
But he did not and he has not, despite all entreaties to do so. Now, we face a summer of redundancies, as furlough has started to be eased back before firms have had the time to scale up. Families will fall further into debt and many will fear losing their homes, while we see the scandal of lucrative covid contracts for pals without formal processes, as well as all the other questionable practices that were set out in the House of Commons in a debate earlier this afternoon.
It makes no economic sense to force people on to benefits rather than support them with assistance that might just enable them to keep their businesses and their jobs up and running, helping them to reach a point where they can again start to generate tax revenues. It is bad enough that millions were excluded from Government support, but if the purpose of furlough was to save jobs, as we were told, removing it before businesses have had time to scale up their operations runs counter to that aim. The Minister should reflect on that. I urge him to urge the Chancellor to tread carefully and realistically when people’s livelihoods are at stake.
Taiwo Owatemi (Coventry North West) (Lab)[V]
It is a pleasure to serve under your chairmanship, Mr Mundell. I thank the hon. Member for Midlothian (Owen Thompson) for securing this important debate.
It is excellent that more than 10 million people in the UK have been able to benefit from the extended furlough scheme throughout the pandemic. However, for many people, access to much-needed funds was marked by one bureaucratic nightmare after another. For one group in particular, the challenge of receiving financial support is ongoing. The Government have repeatedly failed to reconcile the glaring imbalance in access to covid-19 support for the self-employed. Many self-employed workers continue to be unfairly marked as ineligible for Government support schemes.
Throughout the pandemic, I have received distressing emails and phone calls from constituents excluded from funding because of the obscure eligibility rules for the self-employment income support scheme. One such constituent started a business five years ago and in that timeframe experienced one year of minimal profit. Because of the initial year’s lack of return, they were deemed ineligible for funding. This constituent’s appeal to the Government to discount their start-up year fell on deaf ears and their appeal was rejected without due consideration of their circumstances. If the Government are to ensure that the process of granting SEISS funds is fair, they must do a much better job of providing transparent guidance for this seemingly arbitrary system of eligibility.
Although circumstances vary in detail, my self-employed constituents have collectively faced needless obstacles in trying to access grant money that they deserve. The difficulty, and often inability, of many of them to access Government funds has become the rule, not the exception. The Government must do better at offering accessible support to the self-employed instead of blocking them through non-uniform exceptions.
As we discuss continued access to covid-19 relief refunds, I also urge the Government to consider the devastating consequences of cutting off overall grant access too quickly. Over the past 18 months, businesses—particularly small, independent businesses—have faced a devastating financial fall-out from covid-19. They have seen their savings depleted, taken on massive loans and bent over backwards to accommodate safety restrictions, often at great expense. UK businesses have borrowed more than £75 billion during this pandemic, and it will take many small businesses decades to pay back loans.
This month, banks will begin to ask for the first repayments, and if the Government withdraw financial support completely, small business owners will need to grapple with repaying huge debt, often with little savings, with no safety net. The Government simply cannot throw small businesses under a bus. Instead, they must be prepared to provide greater flexibility on repayments and to consider what grants should continue to be made available for the self-employed and small business owners over the coming months as the economy recovers from the pandemic. Simply cutting away all existing support and then demanding repayment is a recipe for disaster.
Alyn Smith (Stirling) (SNP) [V]
It is a pleasure to see you in the Chair, Mr Mundell. I warmly congratulate my good and hon. Friend the Member for Midlothian (Owen Thompson) on securing the debate, on his consistent leadership on this topic and on looking after small businesses and folks in Midlothian and elsewhere. That has been really important. I also pay tribute to ForgottenLtd and ExcludedUK, two great organisations that have worked cross-party to represent people who really have needed a voice throughout this process.
There is strong representation from the SNP in the debate because a lot of people are being let down by the UK Government at present. I pay tribute to the UK Government for what they have done, but we have to engage with them because under the current constitutional arrangements—and contrary to our worldview—the UK Treasury holds most of the purse strings. The Scottish Government have some flexibility, as does local government in Scotland, but they do not have most of the levers that we have needed, as we have seen throughout this crisis. It is important that we make sure that decisions taken on Scottish taxes mean that they are spent well—or, in this case, that the debt taken on our behalf is.
The UK Government have not been idle—I acknowledge that. A lot of these decisions had to be made at speed, and the situation has moved very fast. However, as we heard from my hon. Friend, the excuses for excluding people in the early days do not wash any more. Deliberate policy choices have excluded millions of people from Government support. We have seen corporate welfare for big organisations and organisations that were already in the system, but a lack of flexibility has meant that a lot of people have been missed out. That is curious and I find it difficult to conceive the logic, because one would have thought that the real lifeblood of the economy—the entrepreneurs, the pram shops, the company directors, the music shops and the gym owners—would have been prioritised a while ago by the Conservative party, but that is not what we have seen in reality.
I am conscious of time, but I want to make a plea of the Minister. We are very far from out of this crisis. There has been a lot of cross-party work and I am doing my best not to score party political points here. We need to find solutions for a lot of people who will need long-term support in the future. I am thinking in particular of hospitality businesses and event businesses—businesses that will struggle with the transition from furlough to non-furlough. The idea that we will be out of this crisis in a matter of weeks is for the birds. We must keep these doors open and we must be flexible about better targeted means of support for organisations. If that is the way the Minister will go forward, he will find a ready ally in the SNP, because we must find solutions. It is too important for party politics.
Barbara Keeley (Worsley and Eccles South) (Lab) [V]
It is a pleasure to speak in this important debate with you in the Chair, Mr Mundell, and I congratulate the hon. Member for Midlothian (Owen Thompson) on securing it.
Over the past 18 months, the people of this country have made extraordinary sacrifices to control the spread of coronavirus and to protect one another. At every turn, they have done what was required of them, but the Government have not been as reliable or committed. The financial support schemes put in place have often fallen short of what was needed. As we have heard, more than 3 million people have been excluded from Government support throughout the pandemic. Be it zero-hours workers who have been denied furlough by their employers, or sole traders who were excluded from self-employment schemes because of their registration status, the Government have consistently failed to plug the gaps in their support packages.
The greatest impact on many people in my constituency has been the gap between furlough and the self-employment income support scheme. For those working in the creative industries, it is common to work across a mix of short-term, pay-as-you-earn contracts and self-employed contract work. Unless more than half their income came from self-employed work, they could not get any support through the self-employment income support scheme. However, unless they happened to be working on a pay-as-you-earn contract at the start of the pandemic, they could not be furloughed.
People trapped in that situation have been left without support for 18 months, causing immense financial stress and leaving them trying to make impossible choices. Savings have been used up and I have heard from constituents who simply do not see how they can continue to pay their bills. I want to put it in their words and express their hurt. A constituent of mine who is self-employed and normally works in the entertainment industry described their situation:
“Through no fault of my own I’ve had no income since the grant in late November…It has been incredibly difficult trying to get through the last few months…All I want to do is earn a living in the way I have for the last 20 years. I’ve never asked for help and over the years I’ve had many ups and downs, but I need help now. The bills are mounting up and the wolves are at the door…I’ve had no option of work for 8 months out of the last 11.”
Another constituent described how they now owe money to HMRC:
“After being excluded and denied furlough for over a year, I now find myself somehow owing HMRC”
a sum of thousands. They continued:
“There has been no work, and schemes and jobs I applied for were suspended. I have no idea how I am going to be able to pay it back. I feel it is so unfair how I am being treated as a taxpayer. For me it’s like I’m being blamed for what the government did which isn’t my fault”.
As we move forward, my constituents and others excluded from the schemes need real financial support to make up for the debts that they have built over the last year. I hope the Minister can confirm that support will be offered as soon as possible.
Catherine West (Hornsey and Wood Green) (Lab) [V]
It is a pleasure to serve under your chairmanship, Mr Mundell, and I thank the hon. Member for Midlothian (Owen Thompson) for securing the debate.
The increase in debt as a result of the coronavirus has been significant, and it has been particularly bad among groups of people who have fallen into the gaps of various furlough and other schemes. There seems to be an enormous lack of balance in who has been helped during the coronavirus pandemic. For example, if your name is David Cameron and you have a few handy phone numbers, you seem to have managed to do much better, by lobbying the Department for Business, Energy and Industrial Strategy eight times, whereas if you are a single parent living in Wood Green, you have been much more disproportionately affected by debt.
There are a number of options I believe the Government should look at to address some of the issues raised in this afternoon’s debate. First, they should review their decision, or impending decision, to take back the £20 per week top-up that they wisely gave to universal credit recipients earlier in the crisis. Now would be absolutely the wrong time. If we were to take a vote in this room, I am sure the answer would be that it was the wrong thing to do right now.
Secondly, the Government should take up the recommendations of the Excluded UK all-party parliamentary group, which the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) has already mentioned—he has very much led from the front on that. We have heard from a number of people, particularly in the creative sectors and in travel and aviation, about the uncertainty and the increase in rent. For example, in my constituency, a poor travel agent has been hit with a rent bill that has increased by 45% during this terrible time.
I would also like the Government to ensure that every single citizens advice bureau in the country is properly funded and that there are sufficient volunteers. I pay tribute to Daniel Blake, chief executive of my own CAB, and Lorna Reith, the chair. Other Members, too, will have excellent CABs.
Finally, the impact on many of the terrible ineligibility for schemes has led to an exponential growth in food banks and 1.3 million more children eligible for school meals—1,700 in my own local government area. We live for a future where there are no food banks. That rise shows the terrible situation for many who work in the informal economy and for small and medium-sized businesses. I look forward to the Minister’s speech.
David Mundell (in the Chair)
I call the SNP spokesman. Your time, Mr Grant, is trimmed to four minutes. We have been able to allow everyone to participate.
Peter Grant (Glenrothes) (SNP)
Thank you, Mr Mundell. I am pleased to sum up for the Scottish National party this evening. I commend my hon. Friend the Member for Midlothian (Owen Thompson) for securing the debate, and, as others have mentioned, for his tenacity in refusing to let the excluded become the forgotten. I commend everyone else who has contributed.
I summed up in a Petitions Committee debate on the same subject in December 2020. Most of what has been said today was said in December 2020. It was ignored then. It cannot continue to be ignored. What did not happen in December 2020 did not happen today either. Nobody has made a fulsome defence of the Government’s action, or inaction. In 2020, eight Conservative MPs spoke. None of them defended the Government. In 2020, we got platitudes and fake sympathy from the Minister who responded. I hope that that is one thing that will not be repeated here tonight.
There is a saying much loved by a certain type of business analyst, which is, “If you fail to plan, you are planning to fail.” That is exactly what the Government did in the 10 years between knowing that a serious potentially lethal viral pandemic was coming and it actually appearing. They planned for the public health implications. There was no planning at all as to what they would do in the almost inevitable situation where significant sections of the economy would have to be shut down to protect public health from the ravages of the virus.
It is safe to say that when the Prime Minister made his famous, or infamous, “Don’t go to the pub” speech, neither he nor the rest of the Government had any idea what they were going to do to protect those in the hospitality sector from the immediate and inevitable collapse of their businesses, or indeed, to help anybody else in any other sector. An indication of how hasty and ill-thought-out the Government’s response was is that one of the mainstays of that support, announced on 11 March 2020 —the business interruption loan scheme—had to be completely rewritten 23 days later.
It would be tempting to assume that that same chaotic, shambolic approach is the reason that so many self-employed people and small business owners got overlooked, but that would be wrong because it was not a mistake. It was not an oversight. It was not an accident. It was absolutely deliberate.
The Chancellor told the House in his 11 March Budget statement last year:
“There are millions of people working hard who are self-employed or in the gig economy. They will need our help too.”—[Official Report, 11 March 2020; Vol. 673, c. 280.]
He knew—the Government knew—that those people did not fit into the packages of support that had already been identified, but he went on to announce that the help they were getting was being allowed to apply for universal credit—a benefit that has been deliberately designed to be not enough to live on for any sustained period.
Let us look at one group of excluded workers: people who were persuaded in the past, by previous Governments, to set up their self-employed business as a limited company with themselves as the only shareholder and themselves as the only director, or perhaps with a close family member as another director. When the Government claimed in May 2020 that they had not had time to work out proper eligibility criteria to apply to that massive group of workers, that was tenuous, two months into the pandemic. It is beyond ludicrous to continue—to keep saying that 16 months in—but that is exactly the excuse the Government are using. The other excuse is that it is too hard to tell the difference between a shareholder of a company who actively works in the company and a shareholder whose only involvement is to take the dividends at the end of the year.
This is not difficult; it is not rocket science. It is easy. If only Governments and Government agencies were as willing to use data-matching technology to help people through a crisis as they are, quite rightly, to use it to catch benefit fraudsters and other crooks fleecing the finances of the public sector. That is all it needs; it needs only the will. If the Minister, as I expect, is going to defend the Government’s inaction, all I ask of him is that he do the excluded the courtesy of admitting to them that the reason the Government are doing nothing is that the Government do not care.
David Mundell (in the Chair)
I call the shadow Minister. Again, if you could stick to four minutes, that would be extremely helpful.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is a pleasure to serve under your chairship, Mr Mundell. I congratulate the hon. Member for Midlothian (Owen Thompson) on securing this important debate and thank all hon. Members for their contributions. My hon. Friends the Members for Edmonton (Kate Osamor), for York Central (Rachael Maskell), for Coventry North West (Taiwo Owatemi), for Worsley and Eccles South (Barbara Keeley) and for Hornsey and Wood Green (Catherine West) all made passionate speeches on behalf of their constituents. I hope the Minister will address their specific points.
For nearly 16 months, Labour has argued that public health measures and economic support must go hand in hand. We have called on the Government to address the gaps in support and ensure that no one is left behind. We have called on the Government to do more to support businesses and workers in the most affected industries. Time after time, we have called on the Government to fix the broken self-isolation system and ensure that no one is financially penalised for doing the right thing. Too often during the past year and a half, the Government have either ignored those calls or acted too slowly.
We are at a critical moment in the pandemic and the economic recovery. Thanks to our scientists and NHS staff, the vaccine roll-out is providing a route back to normality. We all hope that that will arrive sooner rather than later. In the meantime, businesses and working people face an uncertain future. Many companies worry about how they will clear covid debts over the coming years. Workers on furlough worry about whether they will have a job to return to. Millions of people who have gone without support simply worry about how they will make ends meet.
As hon. Members have said, a variety of groups have been repeatedly left out of the various covid support schemes. Those groups include people who make less than half their income from self-employment, company directors of small businesses, and people who regularly move between jobs in common creative industries. I want to use this opportunity to pay tribute to the many organisations that have made their voices heard on the issue—ExcludedUK and the trade unions, including Community, Prospect and the Musicians’ Union. Many of those excluded face mounting debts, which have been building during the pandemic. Therefore, will the Minister set out the Government’s plans to address both personal and business debt?
When asked what support is available for people who have been unable to access various covid schemes, Ministers have pointed to universal credit and the £20 uplift, but the Government propose to cut that very uplift completely in September. On Monday, six former Work and Pensions Secretaries—all Conservatives—called on the Government to rethink cutting universal credit for 5 million households. I truly hope that the Government will think again about that disastrous decision.
Let me turn to the winding down of the covid support schemes for businesses. Last week, the House of Commons Library produced new analysis showing that just under 400,000 businesses in England—400,000 businesses—will be affected by the cut in business rates relief for retail, hospitality and leisure businesses from 1 July. Many of those businesses will face significant restrictions on their ability to trade until 19 July. At the very moment those businesses need support, the Government are sending them a bill.
We have called on the Government to learn lessons from the Welsh Government, who have given the majority of businesses 100% rate relief for the financial year. At the same time, the Government have increased employer contributions despite the fact that many businesses remain closed and most people who are still on furlough are employed in the sector affected by ongoing restrictions. I urge the Government not to repeat the mistakes of the past, when too many people fell through the gaps, and to introduce a comprehensive system of self-isolation support without delay.
The Financial Secretary to the Treasury (Jesse Norman)
It is pleasure to serve under your chairmanship, Mr Mundell. I am grateful to the hon. Member for Midlothian (Owen Thompson) for bringing the debate to Westminster Hall and to colleagues across the House for their comments and remarks.
I have been very struck by the difference in tone among the contributions made. There has been a lot of denunciation, but there has also been a rather fair-minded strand of discussion that acknowledged the extraordinary circumstances in which we as a nation have been placed, and the scale and effectiveness of the Government’s interventions. I particularly thank my hon. Friend the Member for Somerton and Frome (David Warburton), the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) and the hon. Member for Stirling (Alyn Smith) for their fair-minded engagement with the issue.
If I may, I will talk a little about where we are and then come to the questions raised by colleagues. Let me be perfectly clear—it is important, as the hon. Member for Midlothian and others mentioned, for us to be tonally clear—that the Government absolutely understand the depth and difficulty of the situation that people have faced throughout the pandemic. That is why we have tried to support as many people and businesses as we possibly can, and to do so as quickly and as effectively as possible. The hon. Gentleman was highly dismissive of that, but actually, I am pleased to say that other hon. Members were not; they recognised that the Government provided a very wide-ranging package of national financial assistance worth over £350 billion, and that international commentators have recognised that. I think of the International Monetary Fund, which described it as
“one of the best examples of coordinated action globally”.
Those packages and bits of concentrated but wide-ranging support include the coronavirus job retention scheme—CJRS—which has supported 11.5 million jobs since its inception, and the self-employment income support scheme—SEISS—which has so far provided grants to almost 3 million people.
Jesse Norman
I am not giving way; I am sorry. I have no time whatever and I want to respond to all the comments made in the debate.
It is understood that the schemes continue to be the most generous of their kind in the world, and it is recognised by all fair-minded people that as restrictions start to ease, economic activity and demand will pick up. The Government need to tailor support accordingly, and that is why—I refer to the hon. Member for Edmonton (Kate Osamor)—we have announced that the fifth and final SEISS grant will have the value of the grant determined by a turnover test. That is because of the need to target support towards those most affected by the pandemic. I do not think that is a principle that people should wish to contest, given the overall financial impact of the crisis on taxpayers. For that reason, in relation to CJRS, we have also introduced an employer contribution.
Let me focus for a moment on the effects of that set of interventions. In its May forecast, the Bank of England projects the economy to return to its pre-crisis level by the end of the year—significantly earlier than previous forecasts. At the start of the crisis, forecasts suggested that unemployment would reach 12% or more. The numbers are now close to half that, which could mean almost 2 million fewer people losing their job than originally feared. We hope it must be so.
The five SEISS grants combined will have provided individual claimants with support of up to £36,570. That makes clear the scale of the support. I recognise, of course, that some people have not been eligible or not been able to receive support from those schemes. That is why so many other aspects of the interventions, including the support for local authorities, have been put in place.
If I may, let me pick up on some of the points made by colleagues. It was suggested by the hon. Member for Midlothian that the Government were somehow dismissing solutions that have been put in front of us by reputable independent groups for, as he put it, “spurious reasons”. Nothing could be further from the truth. As the hon. Member for Caithness, Sutherland and Easter Ross recognised in another context, we have leant into all those debates.
We carefully scrutinised the TIGS and DISS—target income grant scheme and directors’ income support scheme—proposals. In different meetings, I have met groups including the Federation of Small Businesses, ForgottenLtd, ACCA—Association of Chartered Certified Accountants—the gaps in support group, the Refused Furlough Group, the maternity petition campaign, Forgotten PAYE and a host of others. We will continue to entertain, and we very much welcome, thoughtful interventions designed to help us, recognising the constraints under which we operate.
The trouble, as I think colleagues understand, is that we are caught by the need to put in place schemes that respect fraud and error concerns. Let me remind colleagues, including the hon. Member for Glenrothes (Peter Grant) who raised this, that the very people who would denounce the Government for failing to extend support would themselves be the very ones to denounce the Government if it turned out that the fraud and error incurred by overly expensive support were to lead to a loss of revenue to the taxpayer. People cannot have it both ways. We are trying to bend over backwards to support those groups, and in many respects we are doing so.
Let me pick up a few other words. The hon. Member for Midlothian talked about “straw-manning”, but nothing could be further from the truth. There is no suggestion on my part that any limited company director is a fat cat—absolutely not. We recognise that in many cases those are extremely effective individuals. What we are trying to do is find an effective way to meet all the constraints I have described when supporting the wide range of people who have been affected.
The hon. Gentleman talked about debt management. Let me remind him that we have put in place a pioneering VAT deferral new payment scheme and that HMRC has made it clear that it is trying extremely carefully to manage the impact of different tax schemes and tax reliefs, and the withdrawal of those reliefs, on different groups.
The hon. Gentleman talked about whether the Government will show appreciation for the charities that support people through the crisis. Of course we will. We have expanded support for voluntary and charitable groups with HMRC. We very warmly support and recognise—and, as I said in another context, I work closely with—the Low Incomes Tax Reform Group, specifically trying to support people on low incomes. Of course we are working as hard as we can, and we have been for 15 or more months, to make things work.
Let me pick up a couple of important points made by other colleagues. The hon. Member for Stirling kindly referred to the work that the Government have done. He acknowledged, rightly, that the devolved Administrations and local authorities do have resources in part—they are heavily resourced by UK Government. In many cases, they have the capacity to amplify and extend their resources through local taxation of their own. That flexibility is one that they may wish to use in support of local people. I would support and welcome that as an exercise in devolved responsibility. With that, let me sit down.
Owen Thompson
I thank all hon. Members for their contributions. Clearly, across the board, there is a recognition that those gaps still exist and a frustration that, again, we are not hearing anything about how they can be addressed. I played out a hope that we could look forward, instead of backwards, but that has clearly not happened. The record will show that I was very welcoming of the support that has been provided to those who have it, but that is no comfort to those who have been left out.
In July 2020, the Chancellor said that although hardship lies ahead, “no one” will be left behind; he did not say “as many people as possible”. In October 2020, the Prime Minister said:
“We are wrapping our arms around the country to give people the support they need to get through this.”
That has not happened. On that basis, it is safe to say that this is clearly not the last time that we will have this conversation.
Question put and agreed to.
Resolved,
That this House has considered eligibility for Government support during the covid-19 outbreak.