Employment Allowance (Increase of Maximum Amount) Regulations 2020

Baroness Neville-Rolfe Excerpts

Tuesday 5th May 2020 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, as this is the first debate in which we have spoken together, I start by congratulating my noble friend Lady Penn on her appointment, and on starting her new career so well in the virtual Chamber. I must say that I cannot wait to be back on the red Benches, enjoying the repartee that makes Parliament famous everywhere—but every cloud has a silver lining.

I support these simple regulations. They increase the employment allowance paid without fuss through payroll software to businesses and charities which made employer national insurance contributions of less than £100,000 in the previous year. That, as we have heard, is up from £3,000 to £4,000. It is double what it was when the Conservatives introduced it in 2014, as my noble friend said. It is a targeted measure to help small business, the backbone of Britain, and small-scale civil society.

The Red Book for 2020 stated that it should help over 500,000 small operators, taking 65,000 out of employer contributions altogether—so less to pay and less red tape. HMRC research, which our wonderful Library unearthed in this lockdown, revealed that three out of four small employers who had claimed the allowance would recommend it to other employers. Even more importantly, as the economy recovers and small business eventually rebounds or new ones spring up, it would mean that a qualifying business could employ four full-time employees on the national living wage without paying employers’ national insurance. I note also, although it is not relevant to today’s debate, that there was a Budget commitment to introduce a national insurance holiday for employers of veterans in their first year.

On these occasions there is always some debate about those not covered by the allowance: bigger companies and charities, whose interests my noble friend Lady Anelay highlighted well; domestic and personal staff; and those operating under IR35 off-payroll-working rules. I am not going to carp about those, but I was pleased to see from yesterday’s committee report from the Deputy Speaker that the Economic Affairs Finance Bill Sub-Committee had concluded that IR35 had not worked properly throughout its 20-year history and that the Covid-19 deferral of plans to extend off-payroll changes to the private sector should be changed by legislation. I declare my interests in the register, in case businesses with which I am associated might benefit, but this seems to be a common-sense move—and, as my noble friend Lord Wei said, it must be entrepreneur-friendly.

The most important thing about the employment allowance is totemic: it backs small business and enterprise and keeps people working. Since 2010, that has been one of our greatest achievements. It has been particularly pleasing to see jobs created in the private sector bring dynamism and creativity, especially to sectors where we are strong, such as digital and tech, research-based start-ups, food and drink, entertainment and, of course, financial and business services.

To deal with Covid-19, the Chancellor has bravely introduced temporary support: furloughing, loans and his new bounce-back variant. However, I worry that millions of small businesses will be destroyed if we allow the lockdown to be extended for much longer. The Government’s messages, in creating fear, have been too successful. They urgently need to find the right language to explain to the British people that some risks must be taken with coronavirus if we are to head off a recession that will financially cripple the country for decades to come. It is no coincidence that there is no economist on the SAGE committee despite the impact of income and job loss on health and well-being.

May the employment allowance be a small flame of inspiration that we can build on as we work together to get out of the current crisis and as state rules become less bureaucratic and interfering when the Brexit transition period ends.