(1 day, 7 hours ago)
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[R] Manuela Perteghella (Stratford-on-Avon) (LD)
I beg to move,
That this House has considered financial support for small businesses and individuals during the covid-19 pandemic.
I would like to thank the Backbench Business Committee for allowing us time to debate this important issue. I also thank colleagues across the House for their tremendous support when I applied for this debate and, in particular, my friend the hon. Member for Montgomeryshire and Glyndŵr (Steve Witherden), who is the chair of the all-party parliamentary group on gaps in covid-19 financial support, of which I am an officer.
I place on record my thanks to Excluded UK for its tireless and formidable campaigning. Without its work, many of these stories would never have been heard, and many people would have been left to suffer in silence. Its staff have shown persistence, compassion, and a commitment to justice.
This debate is about a national scandal during the covid-19 pandemic, which impacted millions of individuals and families, including mine; my spouse could only apply for a bounce back loan when everything stopped. I want to speak about three things today: first, why I am campaigning on this issue; secondly, the people behind the statistics, including my constituents in Stratford-on-Avon who contacted me in desperation, and who still feel the horrendous impact of a policy decision by the then Government to exclude them from any kind of financial support; and thirdly, what needs to change.
When covid struck, the message from the Government was clear: “Help will be there, and no one will be left behind.” The Chancellor at the time, the right hon. Member for Richmond and Northallerton (Rishi Sunak), vowed that
“no one will be left without hope.”
For many, that was true, but for millions of others, the promise rang hollow. They paid in, they followed the rules, and when they needed support, they were told that they did not qualify. People lost their income overnight. They lost their savings and their home, and some lost their life.
Chris Vince (Harlow) (Lab/Co-op)
I have a genuine question, because I have followed this campaign from afar. What were the reasons given by the Government at the time for these people being excluded in this way?
Manuela Perteghella
I thank the hon. Member, and I will get to that point. In Stratford-on-Avon and up and down the country, business owners ask a simple question: why were they excluded when they had paid tax for years? These were people running events businesses, training services or consultancies, freelancers in the arts, music or creative sectors, and small companies that formed the backbone of our local economy. That is the injustice that this debate seeks to address.
It is important to say at the outset that we do not deny the scale or urgency of the Government’s response in March 2020. The coronavirus job retention scheme and the self-employment income support scheme were introduced at a speed and on a scale never seen before. According to the House of Commons Library, the overall cost of covid-19 business support ran into tens of billions of pounds, and for many people and businesses it prevented immediate hardship and business collapse. That context matters, because it shows that the Government were capable of acting decisively, and that the state was capable of dealing with a suite of diverse and complex scenarios. The question is why, alongside that intervention, millions of people were left with nothing at all and simply abandoned.
Around 3.8 million UK taxpayers were excluded from meaningful financial support during the pandemic—a figure supported by analysis from His Majesty’s Revenue and Customs, the National Audit Office and research cited by the Library. They included company directors paid through dividends, newly self-employed people, new businesses, pay-as-you-earn freelancers, new starters, and those on maternity, adoption or parental leave or on carer’s allowance, whose circumstances placed them just outside rigid eligibility rules. They were a substantial part of the British workforce. The Government support schemes worked well for many, but excluded millions by design.
The problem was not the absence of data, but the choice made about how that data would be used. Company directors paid through dividends were told that their income could not be verified, despite their submitting annual self-assessments, corporation tax returns and company accounts to Companies House. New businesses were excluded simply because they had not traded for long enough. Mixed-income workers were penalised for having diversified their earnings. These people were not invisible to the tax system, but they were invisible to the support schemes. The decision to exclude them was not an administrative necessity; it was a policy decision, and for that alone, the 3.8 million people left out must have an apology.
These decisions are now rightly being examined by the UK covid-19 inquiry. Module 9, which focuses on the economic response, is considering how eligibility criteria were set, how fraud risk was assessed and how trade-offs were made between speed and fairness. That scrutiny is essential, because the consequences of exclusion were not abstract; they were human, financial and, in many cases, long-lasting. The inquiry must not simply catalogue what happened, but confront what it meant for those left outside the system.
Claire Young (Thornbury and Yate) (LD)
A 2021 University of Bristol report stated that women in their 40s with dependent children were disproportionately represented among the excluded. That raises concerns about child poverty, mental ill health and compounding the effects of the gender pay gap. Does my hon. Friend agree that research is needed into those and other longer- term impacts, so that they can be addressed?
Manuela Perteghella
Absolutely; I fully agree with my hon. Friend. In fact, that is one of our asks, so that we do not make the same mistake again.
My constituent Victoria, who is in the Gallery, ran an events business hosting exhibitions and award ceremonies. She was ineligible for any scheme. A bounce back loan was taken out simply for the business to survive. Five years on, the debt remains, the recovery never fully came, and the business is now closing. Another constituent of mine moved roles, and was informed that he would not be furloughed by his new employer, as the cut-off for furlough through payroll had passed. There was little consideration of people in that position.
Another constituent was a director of a small education consultancy. They were told that income as dividends could not be distinguished from unearned income, despite verified accounts and professional oversight. The effects of that decision did not end when lockdowns lifted. The financial impact of exclusion was severe, but the human cost was greater still. Campaign groups have documented widespread mental distress across those excluded from support, including cases of suicide linked to financial hardship during the pandemic. There were people who felt hopeless, abandoned and unseen. The mental health consequences of exclusion are still being felt, and they should weigh heavily on this House.
The excluded have three requests of this Government: an apology to the nearly 4 million workers who were abandoned; parity of support; and an acknowledgment of the loss of earnings and consequential losses. I ask the Minister to meet the all-party parliamentary group on gaps in covid-19 financial support, so that he can hear directly from those affected.
At the same time when millions of taxpayers were excluded from support, vast sums of public money were spent on dodgy personal protective equipment. The National Audit Office has confirmed that billions were lost through error and fraud across covid-19 schemes. The PPE MedPro case starkly illustrates that imbalance: a company fast-tracked through the Government VIP lane was paid £122 million for surgical gowns that were later ruled unfit for use, and has since been ordered to repay £148 million to the public purse.
This debate is not just about reflecting on what went wrong; it is about recognising and acknowledging the injustice, starting with an apology to the nearly 4 million workers who were abandoned under the Conservative Government. We also must prepare properly for the future. Public health experts have been clear that we should be talking about not if, but when, there is a future pandemic or national emergency. When the moment comes, this House will have a responsibility to ensure that no one slips through the gaps again.
Emergency support schemes must be designed around the reality of how people work in this country. Millions of people do not fit neatly into a single employment category. They combine PAYE work with self-employment, run a small limited company, take time out for caring responsibilities or build new businesses from scratch. That diversity is a strength of our economy, not a problem to be designed out of eligibility. The state already holds vast amounts of information through His Majesty’s Revenue and Customs, Companies House and other bodies. The lesson of covid is that the issue was not a lack of data, but a lack of willingness to use it flexibly and fairly.
Matt Turmaine (Watford) (Lab)
I worked in health and social care during the covid pandemic, so I did not experience furlough—in fact, we worked very hard indeed. Some of the excluded self-employed people that the hon. Member refers to are still suffering today. Does she agree that they are paying the price for the previous Government’s sheer incompetence in managing the process?
Manuela Perteghella
I fully agree with the hon. Member. I hope that the new Labour Government will reflect on what went on, and will engage with all those who were excluded, so I look forward to the response from the Minister.
Next time, inclusion must be the starting point, not an afterthought.
Preparing for the future is not only about better scheme design; it is also about restoring trust in how public money is handled. During the pandemic, many legitimate taxpayers were denied support on the grounds of fraud risk while vast sums of public money were lost through waste, error and contracts awarded through so-called VIP lanes. The PPE Medpro case raises serious questions about how decisions were made and who benefited from them. While hard-working families and small businesses were pushed into debt and hardship, those connected to questionable contracts were fast-tracked and rewarded. Huge sums were handed out with little scrutiny and, in some cases, for equipment that put our brave doctors and nurses at risk, that could not even be used, or that ended up being incinerated. That imbalance matters because it corrodes trust.
If we fail to learn these lessons, we fail the very people who kept paying in even when they were left out. If we succeed, future emergency support can be fast, fair and trusted. That is what those who were excluded deserve, and that is what this House should commit to delivering.
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
Order. In the region of 10 Members wish to speak. If they restrict themselves to about five minutes each, I will probably get everybody in.
Steve Witherden (Montgomeryshire and Glyndŵr) (Lab)
I thank my friend the hon. Member for Stratford-on-Avon (Manuela Perteghella) for securing this incredibly important and long-overdue debate, and for being such a strong voice for those excluded from covid-19 financial support.
The gaps in covid-19 financial support all-party parliamentary group, which I chair, currently has 77 cross- party members, which demonstrates the strength of feeling across the House and the desire to represent constituents affected by this issue. We have just heard a powerful case for acknowledging that approximately 3.8 million people were wholly or partially excluded from meaningful covid-19 financial support. Years later, many remain burdened by unimaginable debt, some disgusting smears, declining mental health and the loss of homes, businesses and livelihoods.
I was an advocate for some of these under-represented people in my previous role as the NASUWT national executive member for the six counties of north Wales. Supply teachers, with no contracted hours at all and no guaranteed work from day to day, even before the pandemic, were placed in a terrible position. In four of the north Wales counties I represented, a furlough-type payment was arranged. In two, Gwynedd and Ynys Môn, a furlough payment was not arranged. That cohort of workers went through incredibly difficult times. In any capacity, professional or otherwise, when we speak with people who cannot pay their rent or are in mortgage arrears, or when we hear young, hungry children crying in the background over the phone, it leaves a deep and lasting impression.
During the run-up to the 2024 general election, I met campaigners for ExcludedUK and learned that this situation was far bigger than supply teachers in two counties in north-west Wales; it affected millions of people across the country and in many different industries. One of those campaigners was Ken, a small business owner and now a constituent of mine. He remembers the right hon. Member for Richmond and Northallerton (Rishi Sunak) promising to the nation that no one would be left behind, and then the shock of finding himself with no support. Not only was he left without support for day-to-day living, but he had to shoulder the ongoing costs of keeping a business afloat. The pandemic brought much to a halt, but software licences, professional fees and other essential overheads did not stop.
Ken began working at age 17 and is now 72. He describes the pandemic as the only time he needed help. The help was not there. That feeling has stayed with him ever since, and not only because of the toll on his mental health, but because of the monthly reminder when he has to repay the bounce back loan that he was forced to take out in order to survive the pandemic.
Ken’s is just one of many people still suffering from the after effects of being excluded. Forty known suicides have been directly linked to exclusion from covid-19 financial support, but hundreds more people have attempted suicide, and there is widespread clinical anxiety, depression and trauma. Those figures relate only to individuals known within the ExcludedUK membership, and are likely to represent only a fraction of the true number.
Will the Minister acknowledge that the exclusion of around 3.8 million taxpayers from meaningful covid-19 financial support was a serious policy failure? Will the Government publish an assessment of the continuing financial and psychological harm, including suicide risk, and set out the support pathway for affected people? Finally, what steps is he taking to ensure that future crisis support will be inclusive, with stronger parliamentary oversight?
I wish to put on the record my personal thanks to Jennifer Griffiths, head of member welfare at ExcludedUK and secretariat of the APPG—she is the backbone of this campaign, and without her tireless work, many more lives would have been lost—as well as to Tim Pravda, for his long-standing advocacy and indispensable voice in this ongoing fight for justice. I would appreciate it if the Minister agreed to meet the APPG, ExcludedUK and bereaved families of those who died by suicide linked to exclusion.
Esther McVey (Tatton) (Con)
I thank the hon. Member for Stratford-on-Avon (Manuela Perteghella) for securing the debate and the Backbench Business Committee for granting it.
There is no doubt that the hardship affecting families, businesses and communities as a result of covid-19 policies is ongoing. The depth of suffering is hard to read about. People have been pushed to their limits, mentally and financially, and have had to endure indignity and injustice through no fault of their own. I hope that we can now all agree that it should never have happened. It is something that we never want to see happen again.
The various Government financial support schemes that were set up helped many people, but for the forgotten businesses and individuals who, for one bureaucratic reason or another, were deemed ineligible, the situation was patently unfair and unjust. Some 3.8 million UK taxpayers were excluded from support, while the rest of the working population were paid to stay at home. Why were they excluded? The reasons were arbitrary. Financial support was not forthcoming if a person was newly self-employed, a PAYE freelancer, a director paid in dividends, starting a new job—the list goes on. The rules were random and confusing, and they pushed so many people into desperate situations.
Sadly, we should not have been surprised that that happened. Although some marvelled at the speedy roll-out of the Government’s schemes, the reality was that they were patchy, poorly thought out and full of gaps—of course they were. How could we ever expect to shut down our society and economy and be able to cover the gigantic financial cost of doing so while ensuring that every person was properly looked after? It was unrealistic —an unprecedented state intervention that was doomed to fail.
I totally agree with Members present who are pushing for assurances that that will never happen again, but if we cannot look back with honesty and clarity about what was done, we are doomed to make the same mistakes again. Lockdown was the mistake from which all that injustice and suffering flowed. It was an unknown and unevidenced imposition that should never have been inflicted upon the British people. Many experts predicted from the start that it would cause misery and, horrifically, cost hundreds of thousands of lives through unintended but very real collateral damage.
Iqbal Mohamed (Dewsbury and Batley) (Ind)
I thank the right hon. Member for her powerful speech. Our opinions on lockdown may differ, but does she agree that, had we not gone into lockdown, many more thousands of people would have lost their lives?
Esther McVey
I do not believe the evidence proves that. We can look to other parts of the world where that was not the case.
This policy had unwavering and enthusiastic support from across the House, with just a few of us in this House —too few—raising valid concerns, but we were shut down. It should be obvious that some people cannot be damaged in the name of protecting others with interventions such as lockdowns that we do not even know will work. The moral mathematics never added up.
And now we must live with the consequences of what we did. We spent in the region of £400 billion on the covid-19 response—a vast sum that will be clawed back through increased taxation and hardship for generations to come. Of course, the Conservative party had to put up taxes to pay for that £400 billion, and it was voted for by pretty much every Member in the House. For me, such a statist, socialist intervention would never work, and that is proving to be the case.
Those businesses that did manage to survive after everything that was thrown at them in the name of covid are now having to face more gloom and doom from this socialist Government in charge of our country, with their two tax-rising Budgets and their removal of business rates relief without understanding it—
Madam Deputy Speaker (Caroline Nokes)
Order. The subject of the debate is financial support specifically during the covid pandemic. The right hon. Lady might want to make sure she stays within scope of that.
Esther McVey
Thank you, Madam Deputy Speaker. I added on that sentence because I felt it was very relevant that those who did manage to survive the pandemic are now not surviving, because of the extra taxes that are being put upon them and the removal of business rates relief that was introduced during covid, and it seems that the Chancellor does not even know how that works. Those businesses are suffering twofold, because some of that covid benefit is now being removed. It is no wonder Labour MPs are being banned from pubs, as we see mass closures of pubs.
I simply ask that we examine the bigger picture. Those 3.8 million people who were excluded from financial support suffered a terrible injustice, but so too did those who received support, because lockdown took from everyone: children denied education; mothers forced to give birth alone; people suffering heart attacks, strokes and sepsis but too frightened to burden the NHS; bereaved families unable to mourn the dead—the list of injustices goes on and on. None of it should ever have happened. The costs were always going to be too high, and worse, there appears to be no evidence that lockdown prevented covid infections.
The covid inquiry recently made two incredible assertions. One was that lockdowns were harmful but should have started earlier, and the other was that the modelling should not have been used to justify major policy but simultaneously proved that 23,000 lives could have been saved. Finally, lockdown was, as Professor Sunetra Gupta from the University of Oxford said—
Madam Deputy Speaker
Order. The debate is not about lockdown; it is about financial support. I hope the right hon. Lady is concluding her remarks.
Esther McVey
I am concluding my remarks. I am pleased to have been able to speak today as one of a handful of 650 MPs who stood by “the Forgotten Ltd” and by many of our constituents whose businesses went out of business. I was one of the few in the House who stood up for them.
Finally, as Professor Sunetra Gupta said, this was like taking a hammer to a fly on a pane of glass: you might or might not kill the fly, but you definitely shatter the window. It will take us a long time to pick up the pieces. Next time we face a similar crisis, let us not panic and reach for the hammer.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
I thank the hon. Member for Stratford-on-Avon (Manuela Perteghella) for securing the debate on this really important subject. The covid-19 pandemic was an incredibly difficult time for many people—healthcare and other key workers who served their communities courageously; people who contracted the virus and their loved ones; children and young people who missed out on education and social interaction; and anyone who had to isolate alone. It was also an immensely stressful time for people who lost their incomes but could not get financial support. As we have heard from other Members, that group included many different types of people. I would like to share the stories of two constituents who have faced financial repercussions as a result of the covid-19 pandemic.
One of my constituents was a journalist and table tennis coach when the UK went into lockdown in March 2020. She was unable to do either job, but received no Government support, as she was deemed a fraud risk because her earned income was less than her combined state and work pensions. She feels that she was
“abandoned by those who should have had some empathy for the small business entrepreneurs whose lives were so badly affected by lockdown”.
Another constituent of mine is a business owner who entered insolvency due to the pandemic, through no fault of his own. He had to close his worldwide travel risk management business because of the restrictions that were in place at the time. Despite having run a viable business before covid, he now finds himself subject to extremely high interest rates—up to 32% on loans that he is trying to secure to set himself back up in business. He is concerned that he is being penalised, as if his insolvency was the result of mismanagement or poor creditworthiness rather than extraordinary and unforeseeable external circumstances. That not only hinders recovery efforts but may discourage future entrepreneurship.
I would be grateful if the Minister would address the experience of both my constituents, as well as how the Government can recognise the financial hardship that many taxpayers across the UK suffered during the covid-19 lockdowns and ensure that similar experiences will never happen in the future?
Charlotte Cane (Ely and East Cambridgeshire) (LD)
I congratulate my hon. Friend the Member for Stratford-on-Avon (Manuela Perteghella) on securing the debate and I thank the Backbench Business Committee for making time for it.
As we approach the six-year anniversary of the first lockdown, I am sure that many colleagues will agree that the time of face masks, social distancing and self-isolation feels so very long ago. However, for millions of individuals and countless businesses, it has been an even more arduous six years. As we have heard, research now suggests that about 3.8 million UK taxpayers were excluded from any support and did not enjoy the security that so many of the rest of us did.
As we reflect on the ongoing fallout of the pandemic, it is vital that we take on lessons learnt, but the matter of groups excluded from financial support during the pandemic is not one we have learnt about only in retrospect. Issues were raised at the time—in real time—and the failure to listen and act is one that any Government must recognise and make efforts to rectify.
We all understood why the initial schemes were targeted to support the majority of people—employees and established self-employed people—but we waited in vain for the then Conservative Government to provide support schemes for the other 3.8 million people. One outstanding issue, as we have heard, was the unnecessarily rigid criteria for the self-employed income support scheme. The glaring issue was the exclusion of the recently self-employed, as entitlement required a tax return from the year 2018-19. That, combined with the 50% income rule, which hon. Members have mentioned, prevented many people from getting any help. We have heard too about women who may have kept their businesses ticking over for a few years while they were on a maternity break or caring for someone, who found that their support was based on a low-income year rather than more representative years.
Many small businesses were forced to take out bounce back loans. The Government have estimated that many such loans will not be recoverable because many businesses were forced to close. However, those that have clung on are still working to pay the loans off—all while working in an environment of spiralling energy costs and a business rates system that still does not work properly. I visited one such business in my constituency only last week. To manage current costs, the owners have reduced staff and taken on more of the work themselves. They have run through the figures for next year, and the expected rise in business rates plus their covid loan repayments mean that they are considering selling up or closing the business.
Bell Ribeiro-Addy (Clapham and Brixton Hill) (Lab)
While many small businesses in my constituency were grateful for the support they received, their main concern, which many repeated to me, was about the abrupt end to support measures. Almost overnight, small businesses found themselves having to repay loans, and cover staff wages and all those other expenses, even though the economy had not bounced back and their sales had not returned to pre-covid levels. Does the hon. Lady agree that we need to ensure that in the event of a future crisis, as well as not excluding those who need support, anything given to people to help them through such a period does not end with a cliff edge but is tapered to allow them to adjust to the post-crisis system?
Charlotte Cane
I agree. When we set up something to deal with an initial crisis, it is really important that we do not take it away too quickly when the crisis may be over but the economy, as the hon. Member said, still has not bounced back.
After facing the turmoil of the pandemic, small businesses, many of whose directors were also unable to claim financial support, have been afforded little by way of meaningful relief, all the while barely affording to cover their costs. Those small businesses contribute so much to our local economies and communities as much valued hubs. I see that time and again in the towns and villages across my constituency.
One of my constituents suffered particularly badly. He ran a specialist travel business whose income inevitably collapsed during covid. He got no support—he was actually told by a local Conservative that they saw
“no point in supporting those whose jobs won’t exist”.
He had had hope because Labour in opposition criticised the Conservatives’ lack of support for the 3.8 million, but now he feels “disheartened and abandoned” in what he describes as the “tumbleweed” since Labour came to power. Through determination and hard work, he has rebuilt his business, but he wants to ensure that future self-employed generations do not suffer what he calls the same nightmare.
The pandemic has done deep and lasting damage, but we must recognise that simply learning a lesson does not go far enough. It is not too late for the Government to fill the gaps in pandemic financial support, relieve businesses of their burdens and provide meaningful support to those often financially vulnerable people who missed out unnecessarily. Will the Minister now recognise that covid-19 financial relief failed to provide fair and even support, and take steps to ease the ongoing burdens faced as a result?
Andrew Cooper (Mid Cheshire) (Lab)
I thank the hon. Member for Stratford-on-Avon (Manuela Perteghella) for securing this really important debate. When the covid-19 pandemic unfolded, it tested every part of our society. It pushed our health system, our communities and our economy to the brink. In that moment of crisis, emergency financial support was rightly created at unprecedented speed. Those measures protected millions, but despite the scale of that effort, far too many people were left behind. The ExcludedUK campaign emerged because an estimated 3.8 million individuals fell through the gaps in pandemic financial support. Those were freelancers, newly self-employed people, small business owners, PAYE short-term contractors and others whose circumstances simply did not fit the rigid eligibility rules. They were contributing members of society who paid taxes, built businesses and supported local economies, yet at the moment they needed help most, many found none.
That includes constituents in Mid Cheshire, many of whom contacted me ahead of the debate. They had done everything asked of them—they had built livelihoods and paid their taxes—but still found themselves excluded from support when the pandemic hit. People saw their livelihoods disappear overnight. Some were forced to drain life savings, sell belongings or take on unsustainable debt just to survive. They felt unheard, unseen and unvalued by the systems meant to protect them.
Tragically, for some, the emotional and financial devastation became unbearable. Each of those lives lost is a reminder that policy decisions are not abstract; they reach deeply into homes, families and futures. We must not only recognise and acknowledge the impact that exclusion had on those individuals but show renewed determination to ensure that such gaps never re-emerge. The pandemic has taught us something essential: economic resilience is public health resilience. There can be no effective emergency response if large groups of people are left without support. A society is only as strong as its most vulnerable moment.
As the UK continues to develop its preparedness planning for future pandemics and national emergencies, it is vital that support systems are designed with the flexibility to meet people where they actually are, not where policy assumes them to be. That means ensuring that any future emergency financial support schemes are properly stress-tested in advance against real-world employment patterns so that they reflect the diversity of modern working lives before they are ever deployed. No one contributing to the economy should face a crisis without a lifeline.
Mental health impacts must be treated as a central component of emergency planning, not an afterthought. Just as importantly, the voices of those previously excluded should be included in future policy discussions so that lived experience shapes the solutions of tomorrow. Preparedness must mean more than storing equipment or writing contingency documents; it must mean designing a compassionate, comprehensive safety net that recognises the full spectrum of working lives in the UK and ensures that the mistakes of the past are not repeated.
Matt Turmaine
Covid-19 clearly had an enormous impact on the economy of the world and the UK. In terms of preparing ourselves for any future threat under these circumstances, does my hon. Friend agree that the fraud and corruption facilitated by the previous Government was an absolute disgrace? It is up to this Labour Government to get our money back and solve those problems.
Andrew Cooper
The Chancellor of the Exchequer has done exactly the right thing by setting up the covid corruption commissioner. During the pandemic, there were those who saw it not as a moment of national emergency in which we should all get together, but as an opportunity to line their own pockets. The Chancellor is doing exactly the right thing by trying to root out those people and make sure that they suffer the consequences.
We cannot change what happened, but we can choose what happens next. Let us learn the lessons from past schemes that left too many people excluded, and move forward by building systems that protect everyone. Let us ensure that in any future crisis, we never again leave millions to face hardship alone. What specific steps will the Government take to ensure that any future emergency financial support schemes are designed with the flexibility, fairness and real-world applicability needed to prevent millions from ever again being excluded in their moment of greatest need?
Madam Deputy Speaker (Caroline Nokes)
There will now be a formal four-minute time limit.
Mr Paul Kohler (Wimbledon) (LD)
I congratulate my hon. Friend the Member for Stratford-on-Avon (Manuela Perteghella) on securing this important debate.
During the pandemic, the state quite rightly intervened on an unprecedented scale. Hospitality businesses received grants, employees were furloughed and billions were distributed through schemes that were fast, generous and non-repayable. Yet alongside that, there existed a shadow group who did not fit into neat categories: new starters, new businesses, PAYE freelancers, many directors of limited companies and numerous other groups, as we have heard. Millions of people saw their work vanish overnight. Their income collapsed, and when they applied for help, they were told bluntly, “Computer says no.”
Meanwhile, the Conservative Government’s handling of PPE contracts left taxpayers out of pocket to the tune of billions. An interim Government report found that defective PPE contracts cost the British taxpayer at least £1.4 billion. VIP lanes and fast-track deals with Tory friends and supporters led to waste, inefficiency and fraud. This was money that could have kept millions of small businesses and self-employed people afloat, yet it was instead mismanaged at the hands of well-connected insiders.
The vast majority of those excluded earned under £50,000 per year before the pandemic, working in trades, retail, education, the creative industries, hospitality and events. They were economically active, often running microbusinesses that supported local jobs and sustained vital supply chains. As we have heard, 3.8 million people were excluded—roughly one in 10 of the UK workforce. While their neighbours received thousands of pounds to stay afloat, they were left with nothing.
As a cabaret bar owner, I saw for myself what that meant in practice. My freelance artists, the musicians, the singers, the burlesque dancers, the drag queens and the self-employed performers received no help from the state. Years later, many are still living with the debts, which did not end when the lockdowns did. For those who were excluded, be they freelancers, sole traders or small businesses, survival often meant borrowing through bounce back loans, credit cards, overdrafts and personal loans.
Many are still repaying those loans today, at a time when rising energy prices, inflation, supply chain pressures and the cost of living crisis make every repayment a struggle.
What makes this hard to accept is that the exclusion was not inevitable; Treasury-ready solutions existed. Analysis by ExcludedUK shows that fully costed, low-fraud proposals based on HMRC data could have reached the vast majority of those excluded. Those solutions had backing from across the political spectrum and were supported by business groups and experts, yet Ministers in the Conservative Government chose not to act, unlike the Northern Ireland Executive, who worked with HMRC to deliver targeted grants to newly self-employed people and limited company directors who were excluded from UK-wide schemes. If it could be done in Northern Ireland, why could it not be done in the rest of the UK?
The Government are rightly pursuing the fraudsters where money was wrongly paid out, but they cannot ignore the money that was wrongly withheld. The recently published final report of the covid counter-fraud commissioner makes it clear that weakness in preparedness, data sharing and oversight was the reason why millions were excluded. It is incumbent on the House to acknowledge that those who were excluded were wronged; it was a serious policy failure with lasting consequences, and we must address its legacy. That means looking seriously at debt relief or redress for those forced into borrowing to survive. It means learning from what worked in Northern Ireland and ensuring that in any future crisis, support is inclusive by default, so that no group of taxpayers are ever again told, “The computer says no.”
Euan Stainbank (Falkirk) (Lab)
In the early days of the pandemic, the country came together in the worst of times, making unprecedented sacrifices in all of their lives so that they could collectively fight the pandemic and save lives. The pandemic also put the structure of governance and our public finances under extreme strain; there were undoubtedly difficult—sometimes impossible—choices that had to be made. Such is the responsibility of government, but as the covid inquiry and many of our constituents have told us, there were people who were failed.
Financially, individuals and small businesses in my constituency and—as we have heard powerfully—across the country found themselves excluded from support, as their lives did not map cleanly on to the fantasy of seamless transition from workplace to workplace and from business to business. They were told that their circumstances meant they did not qualify. They included new businesses, the newly self-employed, freelancers, those on parental leave, and company directors of small businesses who received their income from dividends and a salary, to name just a few. That point has been made powerfully by several Members, especially my hon. Friend the Member for Montgomeryshire and Glyndŵr (Steve Witherden).
Those who were in the most precarious employment were also hit hardest, with job opportunities limited. We saw youth unemployment spike during the pandemic, from 12.4% immediately before the lockdown to 15.2% only four months later. Many of those young people were made unemployed because of the high turnover and insecure nature of their workplaces—they were not on the payroll when 19 March 2020 came around. Just before the first lockdown, I and many other students were working seasonally in the hospitality sector, on zero-hours contracts, taking time off during February and March to complete the honours levels of our degrees. We expected to return to work that summer alongside pursuing our careers, but we were not given any support during the pandemic and found that our employment opportunities were limited, with no furlough available.
There was no restitution for the loss of income and opportunity many young people faced during the pandemic. The impact was that the generation most likely to be employed in those casualised or ad hoc employments were set back. Plans to move out of home, pay off their student loans and begin a career—the proof points of a successful journey through our economy—were delayed. For many, survival became the predominant need; the desperate need to pay their bills, feed their kids, and survive through any means possible. Although the pandemic was hopefully a once-in-a-lifetime event, this Government must be prepared for any such eventuality. What I have described is a good reminder of the harm of balancing the labour market in one direction.
One constituent who got in touch with me about this issue was a company director who was paid in dividends and a small salary, and who received no support because of that gap. They pointed out that not only was the lack of support hugely challenging, but colleagues and competitors in the same industry with a clearer definition of self-employment did receive support and were provided with a significant competitive advantage, which continues to this day. That is harmful to the economy, and is an injustice to my constituent and limited company directors like them. Years later, people feel like they are still trying to tread water with a weight chained to their ankle as they maintain businesses while paying back extensive loans that they took out to bridge the pandemic’s severe impact on their business.
I commend the Government on the very good work they have done to identify the clear waste and instances of fraud that occurred during covid. The covid corruption commissioner identified £10.9 billion in losses due to weak accountability, bad quality data and poor contracting under the previous Government. We can go further, and I would welcome an acknowledgement from the Minister that better design in the previous Government’s schemes could have averted those losses. That money should and could have been spent on deploying support that would have unchained many people, including my constituents, from the extensive consequential impacts they went through at the time. Those impacts should be recognised through a clear and unambiguous statement of support for those people by delivering an apology on behalf of the British state.
I commend the campaigners at ExcludedUK and its supporters, who have been relentless in advocating almost six years on from the start of the pandemic. They are fighting every day, chained financially to the circumstances caused by the pandemic—
Madam Deputy Speaker (Caroline Nokes)
Order. I call Iqbal Mohamed.
Iqbal Mohamed (Dewsbury and Batley) (Ind)
I refer Members to my entry in the Register of Members’ Financial Interests. I thank the hon. Member for Stratford-on-Avon (Manuela Perteghella) for securing this important debate. The covid pandemic was an unprecedented crisis that placed immense strain on ruling parties worldwide. Few, if any, could dispute that rapid, decisive intervention was necessary to prevent an utterly catastrophic collapse in the British economy. However, acknowledging the scale of the challenge does not absolve the Government of responsibility for how that money was spent, how their support schemes were designed and implemented, or how recklessly public funds were safeguarded.
While some degree of waste and fraud is inevitable in a crisis, the scale of loss during the pandemic was not inevitable, but the result of systemic failure within the UK Government. That failure remains unchecked under the current Labour Administration. The Office for Budget Responsibility estimates that covid support measures totalled somewhere between £169 billion and £192 billion. That included a variety of schemes, from furloughing individuals to protect them from unemployment to grants and loans intended to help businesses stay solvent.
However, the support system simply did not work for nearly 3.8 million freelancers and self-employed workers. Many were excluded altogether from financial assistance through rigid eligibility criteria, outdated data or the blunt distinction drawn between modern forms of work. That said, much of the covid-19 spending—for those to whom it was available—undoubtedly saved jobs and prevented mass insolvency. Departments and public bodies were forced into reactive policymaking, scrambling to design schemes in real time, often without effective oversight or proper safeguards against abuse. Nowhere was that more evident than in the scale of fraud committed against the Government support schemes.
According to the independent covid counter-fraud commissioner’s final report, published last month, some £10.9 billion of taxpayer money was lost to fraud and error across covid support schemes. Of that sum, only £1.8 billion has been recovered so far. The remainder, as the report makes clear, is likely beyond recovery, with fraud prevention efforts identified as falling short across Government. The causes of this failure are well documented in the aforementioned report, but one particular point that stuck out to me was that banks were instructed to suspend their usual due diligence, despite voicing explicit warnings about heightened risks of fraud.
Better design was possible. Britain appears to stand alone in the G7 on the scale of fraud experienced during covid. Other countries managed to move quickly while still embedding stronger checks. The lesson is not that speed and scrutiny are incompatible, but that the Government of the time chose not to prioritise the latter. That so few consequences have followed these failures only deepens public cynicism with democratic political processes. Keir Starmer was elected on a—
Madam Deputy Speaker (Caroline Nokes)
Order. We do not refer to the Prime Minister by his name, but as the Prime Minister.
Iqbal Mohamed
My apologies, Madam Deputy Speaker. The Prime Minister was elected on a platform that pledged to clean up politics and crack down on those who defraud the public purse. However, instead of introducing stiffer penalties for individuals and corporations that are illegally profiteering from a crisis, the Government are spearheading punitive legislation on alleged welfare fraud, criminalising innocent benefit claimants.
In conclusion, what unites all of what I have spoken about, as it does Members from all parts of the House, is that fraud, waste and cronyism are a failure of governance and a failure to adequately plan and properly design systems to protect the public purse. If we are serious about restoring—
Madam Deputy Speaker (Caroline Nokes)
Order. I call Olly Glover.
Olly Glover (Didcot and Wantage) (LD)
I thank my hon. Friend the Member for Stratford-on-Avon (Manuela Perteghella) for her passionate speech and for securing the debate, and the Backbench Business Committee for giving time to this topic. As many hon. Members have said, covid feels like a distant memory to so many of us, but it continues to have severe, long-lasting effects, including those we are discussing today. I will talk about a couple of constituents who have been affected by the issue of covid-19 financial support exclusion.
Fiona and her husband, Bill Bruty, ran a training and consultancy business called Fundraising Training from their bedroom. It helped charities, both here and abroad, to raise money by running training courses. Fiona and Bill were affected by the fact that no financial support was given to business owners whose income principally derived from dividends. Although they eventually received £2,000 from South Oxfordshire district council, they went through tremendous stress and financial struggles. In their words:
“Nobody has understood what happened and the mental anguish it caused to so many of us who had paid taxes and did not have business premises.”
For Fiona and Bill, face-to-face training has never recovered from the pandemic. Bill has suddenly had to put everything online, which has ultimately been good for them, as they have learned to adapt to our increasingly online lives, but that is an effect that we have seen in many other small businesses.
Rob is a limited company director who felt that he and other limited company directors were badly treated, as it was deemed too hard for HMRC to check where dividends came from. Limited company employees were also denied the right to earn income from other sources.
Where do we go from here? First, it would be interesting to hear from the Minister what redress he thinks should be considered, given the campaign that ExcludedUK has mounted. Secondly, it is important that we learn for the future. Of course, we all hope that the scientists are wrong, but many of them fear that it is only a matter of time before another pandemic, for a variety of reasons. Indeed, there may be other forms of economic hardship, which means that we will need to consider these matters again and come up with better processes in future.
This debate points to the fact that politics in this country has perhaps been more focused on larger companies, rather than on those who run their own businesses and are self-employed. That is something that we in this House should all think about. The issues that small businesses have raised with me more recently—many of them suffered during the pandemic—are a big concern, because they are being impacted by current decisions on business rates, alcohol duty and other taxation policies. I am proud that the Liberal Democrats were one of the first parties to call for support for self-employed people during the pandemic, and we secured an urgent question on the topic on 24 March 2020.
It is so important that we recognise the contribution that small businesses and the self-employed make to our economy. As well as learning the lessons of the pandemic, we really need to think about how we can support them so that they are better prepared in case of a future economic disaster like the one we all lived through between 2020 and 2022.
Susan Murray (Mid Dunbartonshire) (LD)
I thank my hon. Friend the Member for Stratford-on-Avon (Manuela Perteghella) for securing this important debate. The covid-19 pandemic was undoubtedly one of the most impactful and damaging events to unfold in our lifetimes. Being told to stay inside was incredibly difficult for everyone; people were unable to see loved ones and were uncertain about the future. Thankfully, that time is now just a memory for most—one that we would rather forget, and which we can put behind us as we move forward.
Sadly, though, covid is something that many people cannot move past, as we have heard. Across the country, people have lost businesses, lost their homes and, in the worst cases, lost loved ones to the financial stress that the pandemic caused. To add to that distress, the hard-working British people who fell through the gaps have had to watch on as numerous instances of fraud and PPE procurement mismanagement have come to light. Billions of pounds have been wasted and lost; had it been managed properly, that money could have saved people’s livelihoods.
In my constituency of Mid Dunbartonshire, we have seen local businesses close. One constituent, who still feels the impact, has told me that a complete lack of support forced their takeaway business, which they had built up from scratch, to shut, yet when they tried to move on, they found that they were at a disadvantage. Despite holding a personal taxi driver’s licence, they had to rent a taxi plate at a cost of more than £400 a week.
The absence of meaningful support during covid did not just cost them their business at the time; it continues to have a direct and measurable impact on their ability to rebuild their livelihood today.
My constituent is just one of the nearly 4 million people impacted, and these people deserve support, acknowledgment of the loss that they suffered, and an apology. Beyond that, we need to listen to the voices of those affected, and to learn from their experience, so that we can find and plug the gaps in our system that people have fallen through. As the world becomes more unstable, we must make sure that, at home, people and businesses have security. If we are serious about building resilience as a country, we cannot simply move on and hope that those left behind will do the same. We must recognise the harm that has been done. We must be honest about the failures that allowed people to fall through the cracks, and we must take steps to fix them.
Madam Deputy Speaker (Caroline Nokes)
That brings us to the Front-Benchers’ speeches. I call the Liberal Democrat spokesperson.
Sarah Olney (Richmond Park) (LD)
I thank my hon. Friend the Member for Stratford-on-Avon (Manuela Perteghella) for securing this debate and for her excellent opening speech, and I thank the Backbench Business Committee for giving us the time to debate this important topic.
Small businesses and self-employed people played a vital role in sustaining communities throughout the challenges of the covid-19 pandemic, often at significant personal and financial cost. The pandemic placed unprecedented pressure on people, affecting the livelihoods of millions from all walks of life. There were additional concerns for self-employed people and small business owners, who faced even greater uncertainty because of the lack of support from the then Tory Government. The Liberal Democrats have stood by those people from the get-go. We were the first party to call for support for self-employed people during the pandemic, and we helped to secure the support scheme for them.
The covid pandemic had a devastating impact on people across the country, and tens of thousands of people lost their life. We must never forget the tragedies of that pandemic, as people lost mothers, fathers, grandparents, siblings, friends, husbands or wives. People were left isolated, unable to see others for weeks on end. They were unable to visit sick relatives, attend the wedding of a loved one, or hug their family at funerals. It is possibly a measure of how much time has passed and how much has changed since then that only a minority of those in the Chamber were Members of Parliament during the pandemic; I think I am the only Liberal Democrat in the Chamber who was here then. Like many MPs during the pandemic, I received heartbreaking correspondence from my constituents. Their struggles will stay with me, and I will remember their suffering for as long as I continue to represent my constituency.
I reflect with gratitude on the bravery of the doctors, nurses and carers who did everything they could; they often worked incredible hours to save lives and support those around them, and often put themselves at risk. I think of the thousands of people who selflessly helped their communities, be it as vaccinators, by picking up prescriptions, or by shopping for elderly and vulnerable neighbours. We must not forget those who suffered, and those who made sacrifices to ensure that the suffering was limited as much as possible.
The strong sense of public service and neighbourliness shown by people across the country was not reflected by the Government of the day. The covid inquiry has confirmed that systematic and political failings worsened people’s suffering. A lack of scrutiny and accountability led to wrong decisions, often with catastrophic results—from the lack of preparedness for a pandemic to the failure to protect those in care homes, the cruelty and inflexibility of the isolation that people endured in the most desperate circumstances, including on their deathbed, and most shockingly of all, partygate. We must ensure that there can never again be such suffering or such a lack of preparedness.
It is particularly important that the Government continue to recognise the contribution made by small businesses and the self-employed during the covid pandemic. The Government should ensure that they have learned the lessons of that period, and keep under review its long-term impacts. Ensuring that people and businesses can leave behind the series of economic challenges that began with the pandemic—including the energy crisis, the rising cost of living and the growing tax burden—and remain resilient is essential to our long-term economic and social wellbeing.
The Government need to do more to recognise the value of the self-employed, contractors and small businesses to our economy. There is so much more that they could do to support them, and to show the value of what they contribute—the flexible working, the specialist expertise and so on. There is a range of ways that contractors, the self-employed and small businesses can support the broader economy. We need to do much more to recognise that value. The Liberal Democrats are calling for greater transparency and support for the self-employed in, for example, Making Tax Digital. That was originally intended to simplify the tax system, but it has created new burdens, costs and confusion. We must make sure that the self-employed are properly informed and supported through that reform.
The Liberal Democrats strongly supported the expansion of workers’ rights during the passage of the Employment Rights Bill, and we pushed for some of those benefits to be extended—
Madam Deputy Speaker (Caroline Nokes)
Order. I appreciate that the hon. Lady is referring to the self-employed and small businesses who were impacted by covid-19 financial support, but I am not convinced that Making Tax Digital and the Employment Rights Bill fall within the scope of this debate.
Sarah Olney
Thank you, Madam Deputy Speaker. I wanted to reflect the value of the self-employed to our economy, and to reflect on how, as we learn the lessons from covid, that group of workers can be supported more broadly. That is a pressing issue for now, but I accept that we are debating what happened six years ago.
The extremely challenging period that small businesses and self-employed people went through just a few years ago makes it even more important that the Government address the major challenges that they are experiencing here and now. For many, those challenges include repaying the loans that they took out to maintain their business. Today, as they face increased cost challenges, that continues to be a huge burden. I sincerely hope that the Government will listen to the impassioned speech of my hon. Friend the Member for Stratford-on-Avon and think about how they can do more to support self-employed people, contractors and small businesses, who contribute so much to our economy.
James Wild (North West Norfolk) (Con)
I, too, congratulate the hon. Member for Stratford-on-Avon (Manuela Perteghella) on securing this important debate. I thank all hon. Members who have spoken—I think more than 10 did—about what their constituents suffered and continue to suffer. They set out some very powerful examples.
It is almost six years since the first cases of covid were recorded in the UK, after two Chinese nationals travelled here from Wuhan. As has been said, these were some of the most challenging times for our nation. Some 230,000 people tragically died, and there is a very powerful memorial just across the river to remind us; we see it every day. Lockdowns and restrictions were imposed. Choices were made that no Government would want to make. As a newly elected MP, I was faced with the need to vote for and support measures restricting people’s freedom—something that I did not expect to have to do when I came into this place.
Clearly, not every decision taken was right. Mistakes were made, as they would be in a pandemic, but overall this unprecedented challenge was met with unprecedented action. On the economy, the subject of this debate, the actions taken by the then Conservative Government protected millions of jobs, and supported businesses and those most in need. When the pandemic struck, the Government acted swiftly. The coronavirus job retention scheme—the furlough scheme—which protected 11 million jobs at a cost of £70 billion, was announced on 20 March. Shortly afterwards, the first lockdown was announced. At its peak, nearly 9 million people were on furlough, preventing widespread unemployment. For the self-employed, a topic covered in most contributions, the self-employment income support scheme was set up and delivered nearly £30 billion, across five rounds of grants, to nearly 3 million individuals. Those schemes provided a lifeline to those whose livelihood was threatened through no fault of their own.
Beyond the employment support schemes, eight grant schemes saw £23 billion paid to small businesses. They were administered by local authorities. I pay tribute to the work they did to put in place systems and mechanisms for processing those payments rapidly and getting the support to people who needed it. Through three loan schemes, nearly £80 billion-worth of loans were approved. The bounce back loan scheme supported 1.5 million businesses with nearly £50 billion of funding.
It was not only loans that provided crucial support. Some £10 billion was made available in business rates relief to nearly 370,000 premises in the retail, hospitality and leisure sector, and we are now seeing the consequences of unwinding some of that support. VAT for the hospitality sector, which was particularly affected by the restrictions and rules that were put in place, was cut to 5%. I supported the campaign for that cut, as did many Members across the House. That unprecedented package supported jobs and livelihoods across the UK.
The Government also acted to help certain groups who faced particular challenges. A £20-a-week uplift was put in place for people on universal credit to help those on the lowest incomes, and rules about eligibility for benefits were relaxed. Additional support for jobseekers through the kickstart and restart schemes was also rolled out.
Of course, as the hon. Member for Stratford-on-Avon and other hon. Members have said, the support did not reach everyone. ExcludedUK was established in May 2020 to represent individuals and small business owners who fell outside the main financial support schemes. As has been set out, the group estimates that around 3.8 million people were unable to access full financial support, despite losing their income. Those individuals included the newly self-employed, company directors paid in dividends, and those whose self-employment income was less than half their overall earnings.
I know the genuine hardship faced by my constituents in that situation from my time in this House, and from raising constituents’ issues with Ministers. Hon. Members from across the House will remember the constant Teams and Zoom meetings with Ministers, in which we put forward the position of those people, as well as the debates held in the House and the reports by the Treasury Committee and others drawing attention to the situation.
The response that was consistently provided was about the challenges in identifying workable solutions for HMRC’s system, which, as the hon. Member for Didcot and Wantage (Olly Glover) said, was unable to differentiate dividends coming from an individual’s company from money from other sources. The cut-off points—the £50,000 threshold—for self-employed people also led to real difficulties and unfairness. The fraud risk, which has been referred to by a number of hon. Members, was one of the reasons given by the then permanent secretary to the Treasury as to why schemes put forward by the Federation of Small Businesses were cited as not being possible. There were changes through the five self-employment income support scheme grants. Frankly, though, the restrictions created the impact on the people to whom hon. Members have referred. The ongoing concerns raised by the campaign merit serious consideration—and the covid inquiry will give them that consideration during the module referred to by the hon. Member for Stratford-on-Avon.
Looking to the future, we should ensure that if and when the next pandemic strikes, we have better data, and better systems to put in place support, if needed; Making Tax Digital may help in that regard. We should ensure that rules do not exclude people unfairly. Equally, we must learn the lessons from the pandemic, particularly around the damaging impact of lockdowns, as my right hon. Friend the Member for Tatton (Esther McVey) said; if we do not put those restrictions in place, such huge financial firepower will not be needed.
In the pandemic, the pressure for action to help people and businesses was incredibly intense. There were trade-offs relating to time and the checks that could be implemented on support schemes. I recall vividly the clamour for support for small businesses, which I was part of. That led to the bounce back loan scheme, which had limited checks, leading to consequences involving fraud. That scheme, however, enabled lots of businesses to survive that would not otherwise be here today. The Government could have spent months designing the perfect scheme while businesses collapsed and families struggled; instead, they acted to protect lives and livelihoods. Some £410 billion was spent on covid measures—an extraordinary sum that added greatly to our debt. However, predictions by the Bank of England that unemployment would reach 9% were prevented. Unemployment peaked at 5.2%, before falling back to 3.7% two years after the first lockdown.
However, a lot of people clearly missed out on full financial support. While there will continue to be debate about the decisions taken and lessons to be learned, undoubtedly our country would be in a far worse place today were it not for the decisions taken at the time.
The Chief Secretary to the Treasury (James Murray)
I, too, congratulate the hon. Member for Stratford-on-Avon (Manuela Perteghella) on securing this debate. I thank hon. Members from both sides of the House for their powerful contributions. Although much of the debate has rightly focused on the detail of the financial support made available by the then Government during the pandemic, we have also heard many deeply personal stories about businesses and individuals who were directly affected.
In two months’ time, the country will come together to mark the sixth anniversary of the start of the pandemic. That will be an opportunity for us all to remember and reflect, and to pay tribute to all those who died, whose loss is still so keenly felt in all our constituencies. The pandemic cost over 227,000 lives in our country, and I know that loss and grief are still felt by families whose loved ones were lost during that difficult period.
As the hon. Member for Richmond Park (Sarah Olney) said, reflecting on the pandemic is also a moment to express our gratitude, once again, to all those who worked throughout the pandemic to provide vital and, in many cases, lifesaving services to all of us across the country. It is also a moment to recommit to learning the lessons of what happened during that time, so that we are better prepared for future crises. The Government are committed to learning those lessons and doing all we can to protect businesses and individuals across Britain in future.
As well as having a huge impact on the lives of people and their families across the country, as we have heard today, the pandemic was a huge economic shock. GDP fell by a record 19.4% and thousands of businesses faced closure, so it was necessary to support businesses and individuals affected. We supported putting in place the measures mentioned by the shadow Minister, the hon. Member for North West Norfolk (James Wild), including the coronavirus job retention scheme, the self-employment income support scheme, and various business grants and Government-backed loan guarantees. It is right, however, that we as a country now reflect on how those schemes were implemented by the Government of the day.
As we have heard from many hon. Members, a number of people experienced genuine hardship and distress because they were excluded from the available schemes. Many of those experiences have been described powerfully in today’s debate, including by the hon. Member for Stratford-on-Avon in her opening speech and by my hon. Friend the Member for Montgomeryshire and Glyndŵr (Steve Witherden). We also heard a number of other stories about individuals and businesses across the country from my hon. Friend the Member for Truro and Falmouth (Jayne Kirkham), the hon. Member for Ely and East Cambridgeshire (Charlotte Cane), and my hon. Friend the Member for Mid Cheshire (Andrew Cooper), who also spoke about the significance of economic resilience and preparedness for the future—an important topic that I will return to in a moment.
We also heard from the hon. Members for Wimbledon (Mr Kohler) and for Dewsbury and Batley (Iqbal Mohamed), and my hon. Friend the Member for Falkirk (Euan Stainbank), who spoke about the impact of the pandemic on young people, which has had a lasting effect, as we are all keenly aware. The hon. Members for Didcot and Wantage (Olly Glover) and for Mid Dunbartonshire (Susan Murray) also spoke about their affected businesses and constituents. One of the themes of those contributions was about what we as a country are doing to prepare for the future, to ensure that if a similar crisis happened again, we would be better prepared. As a Government, we are considering how we might better target and reach excluded groups in future, including through better real-time data collection.
As hon. Members know, the official covid-19 public inquiry is considering how future emergency schemes could be better tailored to the modern labour market. The inquiry recently held public hearings focused on economic support for people and businesses during the pandemic, and it will publish its final report in due course. The Government, including the Treasury, fully participated in those hearings and provided a substantial amount of evidence. We will carefully study and consider any recommendations, mindful of our responsibility to vulnerable groups and our commitment to value for money.
As hon. Members have also made clear, no assessment of the previous Government’s record during the pandemic can ignore the fact that billions of pounds of taxpayers’ money was lost to fraud. That was a failure of monumental proportions, and we are all continuing to pay the price. That is why, on taking office, we took action to recoup the money owed, including by appointing Tom Hayhoe as the covid counter-fraud commissioner. In December he published his report, and the findings are shocking.
According to the commissioner, covid fraud cost the taxpayer a staggering £10.9 billion—that is enough to fund daily free school meals for the UK’s 2.7 million eligible children for eight years. Of course, we recognise that our predecessors in government were responding to a crisis, the nature of which demanded acting at speed, but the cynical exploitation of pandemic support was foreseeable.
Last year, an arrest was made following an HMRC investigation into a company, Luxe Lifestyle, which was awarded a £25 million PPE contract, having been referred to the procurement VIP lane by a Conservative Minister and a party chairman. The company won that contract despite having no employees, no assets, no turnover and £9,000 of debt. While Luxe Lifestyle did end up supplying some items, they were all inadequate and unusable. That is just one example. It does not begin to scratch the surface of covid fraud, but we have heard no apology today from the Conservatives for their actions—no apology to this House, and no apology to the British people who have been left to pick up the bill.
We cannot allow this ever to happen again. That is why the Government introduced tougher sanction powers in the Public Authorities (Fraud, Error and Recovery) Act 2025 to help recover stolen funds, and why we have rolled out specialist fraud recovery teams to track down suspected fraudsters and recover taxpayer cash. Since coming to office, the Government have recouped almost £400 million paid in error or that was obtained illegally through covid fraud. As the Chancellor has made clear, this fraud is a fraud against the British people, and we will leave no stone unturned, leave no question unasked, and leave no fraudster unchallenged until we have cleared up the mess we inherited.
While we work to fix those problems, we are also turning towards the future, making sure our country is well prepared to face future crises. Much has been learned already from the covid-19 pandemic, but the scale of the economic emergency facing the country nearly six years ago underlines the need to continue embedding these learnings into the Government’s systems and processes. As I have already set out, we have taken tough action to track down the fraudsters who profited on the previous Government’s watch. We are improving and enhancing the Government’s analytical and modelling capabilities, to ensure that we can better target support schemes in future. We have launched the National Situation Centre, enabling us to identify and plan for a range of risks and improve our crisis response.
We have conducted, through Exercise Pegasus, the largest cross-Government pandemic simulation in British history, helping to make sure we are better prepared than before, that our plans are battle-tested, and that we are ready to adapt. As the official covid-19 inquiry draws to a close, we stand ready to study any recommendations and to take action where needed.
The economic implications of the covid-19 pandemic for this country were profound. In response to this unprecedented crisis, it was of course necessary to act quickly for our economy and for our communities. But we know that mistakes were made, and the British people were defrauded to the tune of over £10 billion. That is money that should have been spent on schools and hospitals but which has instead gone into the pockets of fraudsters and criminals. There will also undoubtably be wider lessons to draw from the design of support schemes and the impact those schemes had on various groups across the economy.
As a Government, we will continue to enhance our resilience to future shocks. We have set to work on that since the election, and our efforts will intensify after the official covid-19 inquiry publishes its final report. We will do whatever is necessary to build a safer and more secure country for the future. I will end by again thanking all hon. Members for sharing the experiences of their local businesses and individual constituents in the debate.
Manuela Perteghella (Stratford-on-Avon) (LD)
I am grateful to all hon. Members who attended today’s debate to support their constituents. The people we have talked about today ask not for special treatment, but for fair and equitable treatment. They paid in and followed the rules, but when the crisis came, they were left behind, with heartbreaking consequences. I hope that the Minister will meet the APPG in the near future.
In conclusion, if we are serious about learning the lessons of the pandemic, recognition, redress, accountability and change must follow. Otherwise, the next time a crisis strikes, we risk repeating the same injustice.
Question put and agreed to.
Resolved,
That this House has considered financial support for small businesses and individuals during the covid-19 pandemic.
Business of the House
Ordered,
That notices of Amendments, new Clauses and new Schedules to be moved in Committee in respect of the Medical Training (Prioritisation) Bill may be accepted by the Clerks at the Table before it has been read a second time.—(Nesil Caliskan.)