Social Security

Layla Moran Excerpts

Tuesday 5th May 2020 Commons Chamber

[Layla Moran (Oxford West and Abingdon) (LD) [V]]

The increase in the employment allowance is of course a welcome step from the Government, but the new restrictions on eligibility for the allowance introduced in April are a real cause for concern for small businesses and charities in Oxford West and Abingdon, which are already struggling to cope during this economic crisis. We need to assess this allowance increase in that context and, in any case, the Government need to go further if this relief is going to have any real impact. And there is an elephant in the room that needs to be addressed: the ongoing plight of the self-employed.

The limitations introduced on the employment allowance last month, most notably the restriction of eligibility to those with secondary class 1 national insurance contribution liabilities of under £100,000, unfairly disadvantages charities. In many ways, this negates the positive increase in the allowance amount altogether. Many larger charities, fearful of having to close due to a lack of financial support—such as the Children’s Air Ambulance in my constituency—may now be unable to claim this relief. Four thousand pounds may seem small fry, compared with the scale of the problems many are facing, but believe me, as they say, every little helps right now. That is why the Liberal Democrats are also calling for a dedicated grant for charities during this crisis.

There are charities in the care sector as well that I am concerned about. I spoke to many care homes in my constituency last Friday and they have urgent funding issues that need to be resolved, because they often have a disproportionately high employment spend compared with similarly sized SMEs, and they are at a disadvantage under these new rules. Now that the relief provided by the employment allowance needs to be counted by charities towards the state aid received, it is clear that more needs to be done. Will the Minister tell the House what is being done to fund charities properly at this time and what further relief might be available through the employment allowance?

To turn back to SMEs, for small businesses right now this increase in the employment allowance is of course welcome, but it is insignificant compared with the severe difficulties many find themselves in at the moment. I was on a Zoom call with a number of them right at the beginning of this crisis. They have been one week away from closure for many weeks and now is not the time to restrict which employers can access the employment allowance. It strikes me that the opportunity to temporarily relax those restrictions has been missed in this and any other statutory instrument to fix that.

With many businesses unable to operate right now, or operating from people’s homes, the Government need to make sure that they are covered by that allowance too.

I would like to take this opportunity to talk again about the self-employed. They are ineligible for the employment allowance because they pay class 2 and class 4 national insurance contributions. Time and again, the Government have thought about contractors and freelancers second, leaving them in the lurch or falling through cracks. I urge the Minister to investigate whether the employment allowance could be extended—even temporarily—to the self-employed, to provide some financial relief during this crisis.

We need to look at the statutory instrument in the whole context, not just within the limitations placed on the employment allowance. For charities, small businesses and freelancers alike, there is so much more that could be done to make the employment allowance and other relief measures go further. I thank the Government for what they have done, but I beg them to continue to go further.