Finance Bill (Ways and Means)

Ed Davey Excerpts

Ways and Means resolution & Ways and Means resolution: House of Commons
Tuesday 19th May 2020 Commons Chamber

[Sir Edward Davey (Kingston and Surbiton) (LD) [V]]

I am beginning to fear that this Government do not understand the self-employed. I fear that, yes, because of the IR35 proposals in front of us, but also because of the loan charge and the way that a large group of the self-employed have been kept out of the support programmes during the coronavirus crisis—I am talking about the people who are newly self-employed and the people whose self-employment operates through a limited company, all of whom have had no help. I am afraid that the evidence is mounting up. That is why there should be a review, not just of IR35, but of how self-employment is viewed—the way we tax it and the benefits that people get—so that we can get a proper balance, rather than the piecemeal approach that we have.

I am really struck by the Government’s approach, which is, as the right hon. Member for Haltemprice and Howden (Mr Davis) said, creating zero-rights employment —employees without employment rights. That is not acceptable and it is why there needs to be a review before this goes any further. I had expected a review because the former Chancellor of the Exchequer said so during the last general election campaign. On Paul Lewis’s “Money Box” programme on BBC Radio 4, he made it clear, and he tweeted afterwards that there would be a review of IR35, but there has not been a review. The Liberal Democrats argued for one in the election, as did others, but there has been no such review. That is a breach of a promise to people, which has made them very angry.

The Minister today is promising a review once the legislation is on the statute book. That is not a review—that is trying to make good once the stable door has closed. Any review must take place ahead of any legislation, if it is to be done in good faith. I am afraid that the way that the Government are treating the self-employed, breaking their promise at the election and now proposing to have a review after the legislation is in place is a breach of good faith to the 5 million self-employed people in our country. That is just not acceptable.

On the details of IR35 in front of us, the Treasury Minister talked about the fact that the measures were trialled in the public sector before the private sector. He seems to think that this can therefore be taken straight across, but that is not real life. The public sector, its HR and payroll look at risks such as tax liabilities in a very different way from the private sector, and I would have thought that he would know that. Therefore, I do not think we can draw the conclusions that he is trying to draw. I am afraid that the evidence, even ahead of this legislation as people were preparing it, expecting it to come in this April, shows that the private sector takes a very different approach. That is why lots of people have ended up going abroad and why the Treasury will lose money as a result of this proposal.

That is my final point. The Treasury Minister trots out the idea that there is a lot of tax avoidance and that this measure closes those loopholes. He should think again, because there are benefits that people are forgoing. I think that this will end up costing the taxpayer and the country, and it will mean that there is less money for our public services if the measure goes through. It is the wrong measure at the wrong time. The Government should withdraw it, review and proceed in a wholesale—not this piecemeal—way.