Social Security

Kim Johnson Excerpts

Tuesday 5th May 2020 Commons Chamber

[Kim Johnson (Liverpool, Riverside) (Lab) [V]]

Thank you, Madam Deputy Speaker. I welcome the opportunity to contribute to the debate on the increase in employment allowance. Labour recognises that many businesses are facing severe difficulties at the moment and the proposed changes go some way to providing assistance to many struggling small and medium-sized enterprises.

The economic decisions we take now will determine the length of the recession we face going forward. The Government have provided a number of economic packages to support SMEs, many of which have just weeks of cash in reserve. The additional assistance will increase the maximum amount of employment allowance from £3,000 to £4,000 for the tax year 2020-21, which is expected to reduce about 65,000 businesses’ national insurance contributions bill to nil.

My constituency of Liverpool, Riverside covers the city centre, with thousands of SMEs working across a number of sectors, including 4,500 digital and creative industries that employ 22,000 people and contribute £1.8 billion gross value added to the local economy. We are one of the fastest growing hubs in the country for digital companies, devising solutions for all sectors, including the health sector. The vast majority are micro-businesses, and many of them have been supported by our regional Federation of Small Businesses, which has consistently championed raising the employment allowance. It was a central ask in its “Back to Business” manifesto for the 2019 general election, supporting small businesses to cope with the increases in the national living wage. It will also assist half a million SMEs, raise wages and keep more people in work.

I have received a high volume of emails from businesses that are unable to access the support that has been made available. The funding is there to be used to ensure that we have a strong and robust economy to bounce back once restrictions are eased. It also needs to be lasting, as we head into the next phase of the pandemic, with micro-businesses in particular looking to recover. I believe that some businesses are falling through the cracks, and the increase in the employment allowance will be of limited assistance to the many SMEs struggling to keep afloat during the covid-19 pandemic. While I welcome this statutory instrument to increase the employment allowance, I call on the Government to go further—to provide SMEs with the support they need to weather this crisis, and to investigate concerns about HMRC’s ability to tackle tax avoidance effectively following tax office closures.