Covid-19: Government Support

Patricia Gibson Excerpts

Wednesday 7th July 2021 Westminster Hall

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I echo the thanks and appreciation to my hon. Friend the Member for Midlothian (Owen Thompson) for securing this debate and for the comprehensive way in which he set out the challenges faced by too many people. More than 3 million people went to work every day to pay their bills and to look after their families, only to find that when coronavirus took hold, the Government built a lifeboat called furlough—but they were not allowed a place on that lifeboat. In what at times appeared to be an act of random cruelty, they were left without support for themselves or their families.

When those people complained about their concerns, or their elected representatives did so on their behalf, the Government simply responded by pointing out all the support that was available for other people, as though the excluded could be comforted by the fact that their exclusion from support would be made more bearable by knowing that others had received support. I sincerely hope that the Minister does not repeat that bizarre cycle when he gets to his feet.

In fact, the self-employment support scheme failed to help most self-employed workers, with many left out in the cold. As the Government gradually withdraw furlough support—too early in my view and that of many others—it is clear, and has been for some time, that the excluded are to remain so. They have been left to manage as best they can.

On 25 March 2020, the Prime Minister promised to put his

“arms around every single worker”.—[Official Report, 25 March 2020; Vol. 674, c. 334.]

But he did not and he has not, despite all entreaties to do so. Now, we face a summer of redundancies, as furlough has started to be eased back before firms have had the time to scale up. Families will fall further into debt and many will fear losing their homes, while we see the scandal of lucrative covid contracts for pals without formal processes, as well as all the other questionable practices that were set out in the House of Commons in a debate earlier this afternoon.

It makes no economic sense to force people on to benefits rather than support them with assistance that might just enable them to keep their businesses and their jobs up and running, helping them to reach a point where they can again start to generate tax revenues. It is bad enough that millions were excluded from Government support, but if the purpose of furlough was to save jobs, as we were told, removing it before businesses have had time to scale up their operations runs counter to that aim. The Minister should reflect on that. I urge him to urge the Chancellor to tread carefully and realistically when people’s livelihoods are at stake.

--- Later in debate ---

[The Financial Secretary to the Treasury (Jesse Norman)]

It is pleasure to serve under your chairmanship, Mr Mundell. I am grateful to the hon. Member for Midlothian (Owen Thompson) for bringing the debate to Westminster Hall and to colleagues across the House for their comments and remarks.

I have been very struck by the difference in tone among the contributions made. There has been a lot of denunciation, but there has also been a rather fair-minded strand of discussion that acknowledged the extraordinary circumstances in which we as a nation have been placed, and the scale and effectiveness of the Government’s interventions. I particularly thank my hon. Friend the Member for Somerton and Frome (David Warburton), the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) and the hon. Member for Stirling (Alyn Smith) for their fair-minded engagement with the issue.

If I may, I will talk a little about where we are and then come to the questions raised by colleagues. Let me be perfectly clear—it is important, as the hon. Member for Midlothian and others mentioned, for us to be tonally clear—that the Government absolutely understand the depth and difficulty of the situation that people have faced throughout the pandemic. That is why we have tried to support as many people and businesses as we possibly can, and to do so as quickly and as effectively as possible. The hon. Gentleman was highly dismissive of that, but actually, I am pleased to say that other hon. Members were not; they recognised that the Government provided a very wide-ranging package of national financial assistance worth over £350 billion, and that international commentators have recognised that. I think of the International Monetary Fund, which described it as

“one of the best examples of coordinated action globally”.

Those packages and bits of concentrated but wide-ranging support include the coronavirus job retention scheme—CJRS—which has supported 11.5 million jobs since its inception, and the self-employment income support scheme—SEISS—which has so far provided grants to almost 3 million people.

[Patricia Gibson]

Will the Minister give way?

[Jesse Norman]

I am not giving way; I am sorry. I have no time whatever and I want to respond to all the comments made in the debate.

It is understood that the schemes continue to be the most generous of their kind in the world, and it is recognised by all fair-minded people that as restrictions start to ease, economic activity and demand will pick up. The Government need to tailor support accordingly, and that is why—I refer to the hon. Member for Edmonton (Kate Osamor)—we have announced that the fifth and final SEISS grant will have the value of the grant determined by a turnover test. That is because of the need to target support towards those most affected by the pandemic. I do not think that is a principle that people should wish to contest, given the overall financial impact of the crisis on taxpayers. For that reason, in relation to CJRS, we have also introduced an employer contribution.

Let me focus for a moment on the effects of that set of interventions. In its May forecast, the Bank of England projects the economy to return to its pre-crisis level by the end of the year—significantly earlier than previous forecasts. At the start of the crisis, forecasts suggested that unemployment would reach 12% or more. The numbers are now close to half that, which could mean almost 2 million fewer people losing their job than originally feared. We hope it must be so.

The five SEISS grants combined will have provided individual claimants with support of up to £36,570. That makes clear the scale of the support. I recognise, of course, that some people have not been eligible or not been able to receive support from those schemes. That is why so many other aspects of the interventions, including the support for local authorities, have been put in place.

If I may, let me pick up on some of the points made by colleagues. It was suggested by the hon. Member for Midlothian that the Government were somehow dismissing solutions that have been put in front of us by reputable independent groups for, as he put it, “spurious reasons”. Nothing could be further from the truth. As the hon. Member for Caithness, Sutherland and Easter Ross recognised in another context, we have leant into all those debates.

We carefully scrutinised the TIGS and DISS—target income grant scheme and directors’ income support scheme—proposals. In different meetings, I have met groups including the Federation of Small Businesses, ForgottenLtd, ACCA—Association of Chartered Certified Accountants—the gaps in support group, the Refused Furlough Group, the maternity petition campaign, Forgotten PAYE and a host of others. We will continue to entertain, and we very much welcome, thoughtful interventions designed to help us, recognising the constraints under which we operate.

The trouble, as I think colleagues understand, is that we are caught by the need to put in place schemes that respect fraud and error concerns. Let me remind colleagues, including the hon. Member for Glenrothes (Peter Grant) who raised this, that the very people who would denounce the Government for failing to extend support would themselves be the very ones to denounce the Government if it turned out that the fraud and error incurred by overly expensive support were to lead to a loss of revenue to the taxpayer. People cannot have it both ways. We are trying to bend over backwards to support those groups, and in many respects we are doing so.

Let me pick up a few other words. The hon. Member for Midlothian talked about “straw-manning”, but nothing could be further from the truth. There is no suggestion on my part that any limited company director is a fat cat—absolutely not. We recognise that in many cases those are extremely effective individuals. What we are trying to do is find an effective way to meet all the constraints I have described when supporting the wide range of people who have been affected.

The hon. Gentleman talked about debt management. Let me remind him that we have put in place a pioneering VAT deferral new payment scheme and that HMRC has made it clear that it is trying extremely carefully to manage the impact of different tax schemes and tax reliefs, and the withdrawal of those reliefs, on different groups.

The hon. Gentleman talked about whether the Government will show appreciation for the charities that support people through the crisis. Of course we will. We have expanded support for voluntary and charitable groups with HMRC. We very warmly support and recognise—and, as I said in another context, I work closely with—the Low Incomes Tax Reform Group, specifically trying to support people on low incomes. Of course we are working as hard as we can, and we have been for 15 or more months, to make things work.

Let me pick up a couple of important points made by other colleagues. The hon. Member for Stirling kindly referred to the work that the Government have done. He acknowledged, rightly, that the devolved Administrations and local authorities do have resources in part—they are heavily resourced by UK Government. In many cases, they have the capacity to amplify and extend their resources through local taxation of their own. That flexibility is one that they may wish to use in support of local people. I would support and welcome that as an exercise in devolved responsibility. With that, let me sit down.