Asked by: Baroness Burt of Solihull (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what consideration they have given to providing ‘top up’ income support for employees who are unable to work their full hours due to childcare commitments arising from school and nursery closures.
Answered by Lord Agnew of Oulton
The Government recognises it is a challenge for parents to balance paid work and childcare while schools and nurseries are closed. Schools remain open for children of key workers and the most vulnerable children, and the Government has put in place a national voucher scheme to provide free school meals for children while at home.
Families who see a fall in earnings may become eligible for support through the welfare system, including through Universal Credit (UC). Existing UC claimants are likely to receive a higher award as a result of a fall in earnings. For employed claimants this will be updated automatically using information from the PAYE system. In response to the crisis, the Government has strengthened the welfare system, including by increasing the UC standard allowance and the Working Tax Credit basic element by £20 per week. In addition, to protect people’s jobs and incomes as far as possible during the crisis, the Government has announced a Coronavirus Job Retention Scheme and a Self-Employment Income Support Scheme.
Asked by: Baroness Burt of Solihull (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the potential economic benefit of parents being allowed to undertake reduced hours on full pay rather than being furloughed whilst balancing work and care commitments during the COVID-19 pandemic.
Answered by Lord Agnew of Oulton
The Coronavirus Job Retention Scheme is designed to help those who otherwise would have been made unemployed and to provide support to businesses as quickly as possible. Allowing employers to move staff to part-time and claim the difference would have substantially increased the risk of fraud. However, there is flexibility in the scheme as employers can decide how many staff to furlough, and staff can be furloughed multiple times while the scheme is in operation, provided they are furloughed for a minimum of three weeks.
The Government recognises that it is challenging for parents to balance paid work and childcare while schools and nurseries are closed. Schools remain open for children of key workers and the most vulnerable children, and the Government has put in place a national voucher scheme to provide free school meals for children while at home. Families who see a fall in earnings may become eligible for support through the welfare system, including through Universal Credit (UC).
Asked by: Baroness Burt of Solihull (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether employees who cannot practically work because they are shielding themselves in line with the current public health guidance, or because of childcare commitments, can be furloughed. [T]
Answered by Lord Agnew of Oulton
To be eligible for the Coronavirus Job Retention Scheme, employees must have been on their employer’s PAYE payroll on or before 19 March 2020 and HMRC must have received an RTI submission notifying payment in respect of that employee on or before 19 March 2020. Employees who cannot work due to shielding or because of childcare commitments should speak to their employer about whether they plan to place staff on furlough. The grant will start on the day they were placed on furlough, and this can be backdated to 1 March 2020.
The Government recognises it is a challenge for parents to balance paid work and childcare while schools and nurseries are closed. Schools remain open for children of critical workers and the most vulnerable children, and the Government has put in place a national voucher scheme to provide free school meals for children while at home. Families who see a fall in earnings may become eligible for support through the welfare system, in particular Universal Credit (UC).
For shielding employees, if a firm chooses not to furlough shielding staff, they are entitled to Statutory Sick Pay as a statutory minimum, although many employers will pay more than that in occupational sick pay.
Asked by: Baroness Burt of Solihull (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government why HM Treasury has decided that existing lending will not be exempted from their policy of making HMRC a secondary preferential creditor in insolvencies; and what assessment they have made of the impact of this decision on the continued availability of existing business lending.
Answered by Lord Young of Cookham
This reform is designed to ensure that when a business becomes insolvent, more of the taxes paid in good faith by that business’s employees and customers will go to fund public services as intended, rather than being distributed to other creditors such as financial institutions.
This measure does not include a cap on the age of tax debts which will be eligible for secondary preferential status, nor an exemption for existing lending. Either proposal would introduce potential distortions into the lending market which the Government does not consider to be either fair or proportionate.
The Government does not expect this reform to have a significant impact on access to finance, the cost of borrowing, business rescue support in the UK or the UK’s ranking in the World Bank’s annual “Doing Business” report.
Consistent with the Government’s impact assessment, the independent Office for Budget Responsibility (OBR) did not make any adjustments to their economic forecast in response to this measure.
Asked by: Baroness Burt of Solihull (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government why HM Treasury has decided to not introduce a cap on the age of tax debts which will be eligible for secondary preferential status in insolvencies from April 2020; and what assessment they have made of the impact of this decision on the costs of insolvency procedures and business lending.
Answered by Lord Young of Cookham
This reform is designed to ensure that when a business becomes insolvent, more of the taxes paid in good faith by that business’s employees and customers will go to fund public services as intended, rather than being distributed to other creditors such as financial institutions.
This measure does not include a cap on the age of tax debts which will be eligible for secondary preferential status, nor an exemption for existing lending. Either proposal would introduce potential distortions into the lending market which the Government does not consider to be either fair or proportionate.
The Government does not expect this reform to have a significant impact on access to finance, the cost of borrowing, business rescue support in the UK or the UK’s ranking in the World Bank’s annual “Doing Business” report.
Consistent with the Government’s impact assessment, the independent Office for Budget Responsibility (OBR) did not make any adjustments to their economic forecast in response to this measure.
Asked by: Baroness Burt of Solihull (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the impact that their proposal to make HMRC a secondary preferential creditor in insolvencies will have on the UK’s ranking in the World Bank’s annual "Doing Business" report.
Answered by Lord Young of Cookham
This reform is designed to ensure that when a business becomes insolvent, more of the taxes paid in good faith by that business’s employees and customers will go to fund public services as intended, rather than being distributed to other creditors such as financial institutions.
This measure does not include a cap on the age of tax debts which will be eligible for secondary preferential status, nor an exemption for existing lending. Either proposal would introduce potential distortions into the lending market which the Government does not consider to be either fair or proportionate.
The Government does not expect this reform to have a significant impact on access to finance, the cost of borrowing, business rescue support in the UK or the UK’s ranking in the World Bank’s annual “Doing Business” report.
Consistent with the Government’s impact assessment, the independent Office for Budget Responsibility (OBR) did not make any adjustments to their economic forecast in response to this measure.
Asked by: Baroness Burt of Solihull (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the impact that the proposal to make HMRC a secondary preferential creditor in insolvencies may have on business rescue support in the UK from April 2020.
Answered by Lord Young of Cookham
This reform is designed to ensure that when a business becomes insolvent, more of the taxes paid in good faith by that business’s employees and customers will go to fund public services as intended, rather than being distributed to other creditors such as financial institutions.
This measure does not include a cap on the age of tax debts which will be eligible for secondary preferential status, nor an exemption for existing lending. Either proposal would introduce potential distortions into the lending market which the Government does not consider to be either fair or proportionate.
The Government does not expect this reform to have a significant impact on access to finance, the cost of borrowing, business rescue support in the UK or the UK’s ranking in the World Bank’s annual “Doing Business” report.
Consistent with the Government’s impact assessment, the independent Office for Budget Responsibility (OBR) did not make any adjustments to their economic forecast in response to this measure.
Asked by: Baroness Burt of Solihull (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what economic analysis they used to support the decision in the 2018 Budget to make HMRC a secondary preferential creditor in insolvency.
Answered by Lord Bates
The government does not expect this reform to significantly impact access to finance or the cost of borrowing.
The independent OBR did not make any adjustments to their economic forecast in regard to this measure.
At Budget 2018, the Government published the following assessment:
Type of Creditor | Explanation and Examples | Current Average Percentage of Debt Recovered in Insolvency | New Average Percentage of Debt Recovered in Insolvency |
| Lenders to whom the business granted security, primarily financial institutions. When a fixed charge is provided, the company loses the right to sell or trade the item. These assets tend to be fundamental to the business; for example, machinery, property or vehicles. | 36% | 36% (unchanged) |
| Fees for overseeing the process. | As charged | As charged |
| Claims by the Redundancy Payment Service (RPS) and Financial Services Compensation Scheme (FSCS) on behalf of employees and customers (to statutory limits); and from 2020, HMRC will be a secondary preferential creditor (below the RPS and FSCS) for Value-Added Tax, Employee National Insurance contributions, Pay-As-You-Earn Income Tax and Construction Industry Scheme Deductions. | 83% | 83% (unchanged) for existing preferential creditors; 14% for HMRC |
| Lenders for whom the company is not granted security, primarily financial institutions. This tends t be the case in relation to assets that are not fixed; for example, stocks, raw materials, fixtures and fittings or cash. | 36% | Less than 36% |
| All remaining creditors, including HMRC debts levied directly on businesses; and debts owed to suppliers, contractors, landlords and customers. | 4% | Less than 4% |
| Only get paid if all the above creditors are paid in full. | N/A | N/A |
Asked by: Baroness Burt of Solihull (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the impact on lending to UK businesses of the announcement in the 2018 Budget of making HMRC a secondary preferential creditor in insolvency.
Answered by Lord Bates
The government does not expect this reform to significantly impact access to finance or the cost of borrowing.
The independent OBR did not make any adjustments to their economic forecast in regard to this measure.
At Budget 2018, the Government published the following assessment:
Type of Creditor | Explanation and Examples | Current Average Percentage of Debt Recovered in Insolvency | New Average Percentage of Debt Recovered in Insolvency |
| Lenders to whom the business granted security, primarily financial institutions. When a fixed charge is provided, the company loses the right to sell or trade the item. These assets tend to be fundamental to the business; for example, machinery, property or vehicles. | 36% | 36% (unchanged) |
| Fees for overseeing the process. | As charged | As charged |
| Claims by the Redundancy Payment Service (RPS) and Financial Services Compensation Scheme (FSCS) on behalf of employees and customers (to statutory limits); and from 2020, HMRC will be a secondary preferential creditor (below the RPS and FSCS) for Value-Added Tax, Employee National Insurance contributions, Pay-As-You-Earn Income Tax and Construction Industry Scheme Deductions. | 83% | 83% (unchanged) for existing preferential creditors; 14% for HMRC |
| Lenders for whom the company is not granted security, primarily financial institutions. This tends t be the case in relation to assets that are not fixed; for example, stocks, raw materials, fixtures and fittings or cash. | 36% | Less than 36% |
| All remaining creditors, including HMRC debts levied directly on businesses; and debts owed to suppliers, contractors, landlords and customers. | 4% | Less than 4% |
| Only get paid if all the above creditors are paid in full. | N/A | N/A |
Asked by: Baroness Burt of Solihull (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the impact of the announcement in the 2018 Budget of making HMRC a secondary preferential creditor in insolvency on (1) secured creditors, (2) floating charge holders, and (3) unsecured creditors such as pension funds and small businesses.
Answered by Lord Bates
The government does not expect this reform to significantly impact access to finance or the cost of borrowing.
The independent OBR did not make any adjustments to their economic forecast in regard to this measure.
At Budget 2018, the Government published the following assessment:
Type of Creditor | Explanation and Examples | Current Average Percentage of Debt Recovered in Insolvency | New Average Percentage of Debt Recovered in Insolvency |
| Lenders to whom the business granted security, primarily financial institutions. When a fixed charge is provided, the company loses the right to sell or trade the item. These assets tend to be fundamental to the business; for example, machinery, property or vehicles. | 36% | 36% (unchanged) |
| Fees for overseeing the process. | As charged | As charged |
| Claims by the Redundancy Payment Service (RPS) and Financial Services Compensation Scheme (FSCS) on behalf of employees and customers (to statutory limits); and from 2020, HMRC will be a secondary preferential creditor (below the RPS and FSCS) for Value-Added Tax, Employee National Insurance contributions, Pay-As-You-Earn Income Tax and Construction Industry Scheme Deductions. | 83% | 83% (unchanged) for existing preferential creditors; 14% for HMRC |
| Lenders for whom the company is not granted security, primarily financial institutions. This tends t be the case in relation to assets that are not fixed; for example, stocks, raw materials, fixtures and fittings or cash. | 36% | Less than 36% |
| All remaining creditors, including HMRC debts levied directly on businesses; and debts owed to suppliers, contractors, landlords and customers. | 4% | Less than 4% |
| Only get paid if all the above creditors are paid in full. | N/A | N/A |