Draft Employment Allowance (Excluded Persons) Regulations 2020

Jonathan Reynolds Excerpts

Monday 2nd March 2020 General Committees

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is always a pleasure to see you in the Chair, Ms Buck, and I thank you for the opportunity to respond to the Minister.

I thank the Minister for his explanation of this measure. I am aware that it has been in the pipeline for some time and I can understand the Government’s desire to focus the allowance on smaller businesses. However, I would like to ask the Minister several questions to aid the Committee’s understanding of its likely impact.

First, the Minister said that he believed that this would raise £1 billion a year. Will he share with us some of the Government’s analysis as to how many businesses, which were previously able to claim this allowance above the £100,000 threshold, will be affected from 6 April 2020? I ask that, with reference to the revenue, because this seems to be a significant undertaking in terms of the administration being asked of the recipients. Will the Minister explain who is affected and how those savings justify the change that is being proposed? As we often discuss in debates on Finance Bills, constant tinkering with allowances can be unhelpful, as it creates confusion among businesses as to what they are entitled to and when.

Secondly, I would like to ask about the reclassification of this payment as state aid under EU rules. Given that we have left the European Union—although we are still in the transition period—why is this reclassification necessary and what relevance does the Minister anticipate this will have in the future under UK law?

Finally, I am aware that an administrative change is associated with this amendment to the allowance, in that companies will no longer have an ongoing rolling entitlement, but will instead fill out a new claim each year. I want to ask the Minister to address the unnecessary bureaucracy and paperwork that might, therefore, be put on to all business owners, on top of the implementation of Making Tax Digital and the likely increase in bureaucracy as a result of Brexit. How will this change be communicated to all those it will affect? How are the Government communicating this to small business owners, so that they understand that they will not be affected, in a timely manner and with adequate support?

I hope the Minister can respond now to those points, but if not, he can respond in writing.