Coronavirus: Job-Support Schemes

Dan Carden Excerpts

Tuesday 7th July 2020 Commons Chamber

[Dan Carden (Liverpool, Walton) (Lab)]

I am delighted to be taking part in this debate on behalf of the Opposition Front-Bench team, with this being my first time at the Dispatch Box opposite the Financial Secretary. Let me start by thanking the Treasury Committee for its important work in preparation for this debate. This is by no means a run-of-the-mill estimates debate; these are exceptional times, and the schemes put in place by Government, called for and supported by the Opposition and the trade unions, are incomparable to anything we have seen before, with £42 billion for the coronavirus job retention scheme and £10 billion for SEISS.

Since March, communities up and down the country, families, workers, the self-employed, traders and business owners have had their way of life changed beyond recognition. A public health crisis became an economic crisis. The lockdown meant that businesses had to close, work dried up and all but essential parts of the economy came to a standstill. From the beginning, the Government have been too slow: too slow to take the threat seriously; too slow to lock down; and too slow to test, track and isolate. The key aspects of the response required Government to communicate public health messages clearly and to earn public trust for their actions. They have, regrettably, without question, failed on both those measures.

I turn now to the schemes. More than 9 million jobs have been furloughed and more than 2.5 million claims have been made for self-employed income support. Where improvements are needed, we have made suggestions, plugging gaps and ensuring flexibility, and we are still calling on the Government to abandon their one-size-fits-all winding down of these schemes. It was a shame to see the Chancellor dig his heels in on this earlier today. And we are still calling for changes to sick pay so that people are not forced to choose between their health and their income.

There have been problems and missed opportunities with these schemes. All of us will have dealt with the heart-breaking situation of constituents being laid off, despite their employers being eligible for the scheme. The scheme was made available to all employers, but early communication failed to make it clear that firms were expected to furlough staff, not lay them off. New starters were not covered by the scheme. There was a lack of clarity to ensure that employers furloughed staff who needed to shield at home even if businesses continued to function. Agencies, including umbrella agencies, too often chose not to furlough staff, but rather to keep them on their books without work.

[Meg Hillier]

We were shocked in the Public Accounts Committee to discover that, despite planning for a pandemic, there had been no planning for what to do with the economy in a pandemic, which rather goes to the point that my hon. Friend was making about the muddled advice and the changes to the scheme as it was being implemented.

[Dan Carden]

I thank my hon. Friend for that intervention. She is absolutely right that far too little preparation was done. We saw that with the stocks of PPE at the beginning of this crisis.

Too many did fall through the gaps. We have heard that it was as many as 3 million, according to ExcludedUK, and upwards of 1 million, according to the Treasury Committee. Perhaps most shamefully, some companies, such as British Airways, have used lockdown and the job retention scheme not to protect jobs, but as cover to plot mass redundancies and drive down the pay, terms and conditions of their workforce. That is a situation that could have been avoided had our Government followed the example of Denmark by making support schemes conditional on jobs being retained. So why did the Chancellor fail to act in the interests of workers? There were also missed opportunities to change corporate tax behaviour, to secure environmental gains, to drive up employment rights and to work with trade unions. It is just plain wrong. Companies that have avoided paying their taxes have received taxpayer bail-outs, with no requirement to change their behaviour, to stop tax avoidance, to stop profit shifting and to stop their use of tax havens. So did the Chancellor fail to act in the interests of taxpayers?

We have called for a full back-to-work Budget, one that is focused on preventing mass unemployment and on creating the jobs of the future, but instead we have an economic update from the Chancellor tomorrow, and we will have to wait to see what comes of that. Some 3.4 million people have already been moved on to universal credit since March and, with lockdown easing, it seems that we have an exit without a strategy.

Let me turn to HMRC itself and where the principle of job retention, it would seem, does not apply. HMRC’s staff numbers have fallen from 105,000 in 2006 to 65,000 in 2019. During those years, the UK cut more revenue collectors than any other European tax authority. Only Greece cut more staff as a proportion of population. The current office closure programme puts a further 2,000 HMRC jobs at risk on top of the more than 900 jobs already cut. One hundred and seventy local tax offices are closing around the UK, leaving 13 regional hubs and four London offices. That will leave no tax office for the south-west closer than Bristol, no tax office in East Anglia at all, and none in Scotland north of Edinburgh and Glasgow, severing the connection with the communities they serve. We oppose the office closures programme. Counter to the Government’s levelling-up narrative, it will see offices closed and jobs lost in towns across the country, from Wrexham to Warrington, Stockton, Dudley, Shipley and Solihull.

Low pay, poor staff retention, high staff turnover and redundancies are all wasting thousands of years of institutional knowledge and expertise at HMRC. It is the incredible work of staff administering the coronavirus schemes that has done so much for people across the country, but it has also meant that key duties elsewhere have had to be suspended. Perhaps our biggest challenge in the coming years will be to restore our public finances and reinstate our tax base, and for that we need HMRC firing on all cylinders.

We know that tax audits bring in at least four times what they cost—£4 to £6 for every £1 spent—and those subject to audits also declare more of their profits in future years. Quite simply, we need tax collectors in order to collect tax. I say sincerely to the Minister that, in the light of the challenges ahead, he should halt the redundancies, stop the office closures and commit to a properly funded and resourced HMRC.

We need the Government to break away from their blanket approach to this crisis. They must look again at sector-specific support beyond October. It can make no sense for viable jobs and sectors simply to be left to collapse, and I implore the Minister to work with trade unions and the TUC to that end. As my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) said, the Government have fostered, and indeed pursued, the growth of a gig economy across this country, and the lack of support for those people has been astounding. We have a crisis of hunger in our communities, with food bank use multiplying and people unable to pay their bills, their rent or their mortgages. The Government must do more for those left unemployed by the coronavirus pandemic.

We are also living through the most incredible demonstration of the value of our public services. There has never been greater urgency to ensure that our tax system is fit for purpose, so that those with the broadest shoulders pay their fair share. Never again can a crisis be heaped on the least well-off and the least able to afford it.

During the last decade of austerity, the richest 1,000 people in the UK increased their wealth by 183%. Aggregate private wealth is now over six times our GDP. We therefore welcome the serious academic research under way on how a UK wealth tax would work. That research is being carried out at the London School of Economics and the Centre for Competitive Advantage in the Global Economy at the University of Warwick, alongside the Institute for Fiscal Studies, the Institute for Government, the OECD and the Resolution Foundation.

In order to sustain funding for universal public services, deliver the coronavirus support schemes and create the sustainable green jobs of the future, we need fair and progressive taxation that confronts growing wealth inequality, to build a just and sustainable economy that puts people, jobs and the planet first.