Covid-19 Support Schemes: Ineligible People

Peter Grant Excerpts

Wednesday 9th December 2020 Westminster Hall

[Peter Grant (Glenrothes) (SNP)]

I am pleased to be able to sum up in this debate for the Scottish National party. I commend the hon. Member for Twickenham (Munira Wilson) on securing the debate, and everyone who has contributed. As others have said, we could have filled this Chamber four or five times over with hon. Members who would have liked to take part, but realised there would not be space. I cannot be the only person who has noticed that today, again, nobody has defended the Government’s failure to support these 3 million people.

I also commend the campaign groups that are helping to make sure that this scandal will not go away—not this year, not next year, not any year—until it is addressed. I am sorry there is not time to mention by name all my constituents who have contacted me and asked for their plight to be publicised, let alone the people from outside my constituency who have been in touch over the past few days specifically because I was going to speak in this debate.

The first and most important point that must be made—it is one that the Government sometimes try to fudge—is that this is a deliberate policy decision. It is not that the Government could not have helped these people by now, had they wanted to; it is that, frankly, they do not seem to care enough to try. It has to be the UK Government who address the problem. None of the devolved Administrations has borrowing powers that would come anything close to the amount the UK Government are borrowing to fund their covid support package. By 2025, UK Government debt will be somewhere in the region of £2 trillion to £2.5 trillion. The devolved Administrations are not allowed to borrow money to this extent; if they were, I am sure that at least one, and possibly all three, would.

To the many harrowing stories we have heard today and in other debates, I can add that of my constituent Gemma, who moved from being employed to being self-employed early in 2019. For 2018-19, her PAYE income was higher than her self-employment income, and she did not qualify for support. She has now submitted her tax return for 2019-20, the period ending shortly before lockdown was imposed. Deliberate policy from the Government is that they ignore her accurate tax return for 2019-20 as evidence of what she was earning—what she would have earned this year. However, HMRC is happy to use the same tax return as evidence that she now owes them £9,000.

There was good reason why 2018-19 tax returns were used as a basis for the first scheme when it was announced last year, but now that the Government again have a scheme open for self-employed support applications, there is no excuse whatsoever to continue to exclude people simply because their 2018-19 tax return significantly understated their self-employment earnings.

There are some cases, such as that of Joanna in my constituency, where alleged employed earnings were significantly overstated. Joanna still runs a small business. Her family ran another business that failed because a serious accident befell a close family member who was involved in the business. To cope with that, they cashed in their pensions at exactly the wrong time in 2018-19. This meant that their pensions were counted towards her earned income. Had it been a few months earlier or later, it would not have counted, and Joanna would qualify for covid self-employment support. Now, they get nothing. Just like Gemma, Joanna’s tax return for 2019-20 will give a much more accurate picture of her earnings but it will be ignored by the Government. Again, of course, HMRC will quite happily use it as a basis for the tax she is due to pay them.

It would be easy just to say that this is happening because the Government do not care, but even if it was true that they genuinely could not care less about the plight of these 3 million people and their families, surely they care about the damage to the economy if these people disappear from wealth creating in the future. Let us not forget that this time last year all those people were working in their businesses, creating wealth and providing valued services to the local communities and beyond. Some were giving jobs to other people in the community. All were paying taxes into Government coffers. That is what they were doing this time last year. This time next year, or maybe even earlier, every one of them wants to be doing exactly the same—to be part of a post-covid shared economic recovery. To do that, they need support this time, this year.

I say to the Minister, even if the Government’s approach to these people is as callous as it sometimes appears, surely it is in our shared interest to help all those who want to be in business after covid to get into business or to stay in business. It is not about charity; it is simply about parity.

--- Later in debate ---

[The Economic Secretary to the Treasury (John Glen)]

It is a pleasure to serve under your chairmanship, Ms Rees. I congratulate the hon. Member for Twickenham (Munira Wilson) on securing the debate, and I thank the 14 Back-Bench Members for their contributions—I listened very carefully to each—which spoke powerfully to the many cases of hardship that I recognise exist throughout the country.

I acknowledge the article written by the hon. Member for Twickenham for The House magazine today, and the briefing by ExcludedUK, which was made available yesterday for the debate. I have looked at that carefully and shall take back the three-stage approach, and we will continue to see if we can move forward. I recognise that there is a sensitivity about Ministers standing up and listing all the measures that have been put in place so far, so I will go through some of that only briefly, but I will then move on to the context and rationale behind some of our decisions, and address some of the points that have been raised.

Clearly, the pandemic has profoundly affected the lives of countless people. As a Government, we have a moral obligation to protect jobs, livelihoods and our country’s economic capacity, a point that has been made and acknowledged by many Members during the debate. We have spent £280 billion on what has been one of the most comprehensive responses, including the job retention scheme, which protected 9.6 million jobs; the self-employment income support scheme, which provided grants to 2.7 million people; affordable loans for businesses, which we have adapted over time; extra help through the welfare system; bespoke interventions for different industries, such as the £1.57 billion for the creative industries; as well as other support, such as income tax time-to-pay arrangements, payments to those asked to self-isolate and grants for businesses required to close.

We have striven, as a Government, to provide support for as many individuals and businesses as we can, as rapidly as possible. That has meant taking some difficult decisions, however. I will set out the rationale for some of those decisions, particularly in relation to the self-employed, before moving on to how we have adapted our support schemes so far.

To give some context, when we designed those schemes, we had to keep some guiding principles in mind. First, the help must be targeted at those most in need. To achieve that, we obviously had to set clear rules. That is why we have said that those eligible to claim from the self-employment income support scheme must have made profits of no more than £50,000 from self-employed activity. I recognise that for those on the upper side of the £50,000 cut-off, that must feel unfair, but we did have to draw a line somewhere, and wherever we had drawn it, we would have had the same challenge.

According to HMRC data, those in that category had an average income of between £100,000 and £200,000. We have also said that support from that scheme must go to people whose main income is from their self-employed trade. That is why we also said that to claim, workers should make at least half of their income from self-employed activity. HMRC analysis shows that typically for those who make less than 50% of their income from self-employed sources, their profits are on average between £1,800 and £3,500 per year. That strongly suggests that self-employment is not their primary income source.

I now come to the second principle that we have used, which is the need to balance the Government’s duty to support individuals with our responsibility to protect taxpayers. Colleagues will be aware of the wide concern about fraud that continues to be, rightly, something that is raised in Select Committees and by those commentating on what we have done. To verify claims through the self-employment income support scheme, we needed to use data from an individual’s tax returns, and that means using returns from the year 2018-19. That has meant that people who became self-employed in 2019-20 have been unable to access the scheme, because HMRC does not yet hold complete tax return data to check their details.

We are listening closely to individuals who pay themselves through dividends, but that presents another challenge, which is that there is no practicable way of distinguishing between dividends derived from an individual’s own company and those from other sources.

I know that the past months have been very difficult for many people in the groups that I have mentioned, but I want to stress that we have not taken a dogmatic opposition position to any particular group and we continue—

[Peter Grant]

Will the Minister give way?

[John Glen]

I will be very happy to take just one intervention.

[Peter Grant]

I am grateful to the Minister for letting me intervene. It is patent nonsense to suggest that we cannot tell the difference between shareholders who are directors of a small company and shareholders who are anonymous investors in a big company that they know nothing about. Companies House holds all those records. Why, nine months later, have HMRC and the Treasury made no attempt to do a data-matching exercise between what HMRC holds and what Companies House holds?

[John Glen]

I thank the hon. Gentleman for his intervention. Of course, one of the challenges that we had to come to terms with was the need to deliver a scheme as quickly as possible, and to as many people as possible, within the context of a finite number of individuals who could verify that data. Short of introducing a scheme whereby people would need to manually go through and verify those different data sources—

[Peter Grant]

indicated dissent.

[John Glen]

The hon. Gentleman shakes his head, but that, practically, was the challenge that we, working with officials, had to overcome. We had to make a judgment as to how to reconcile those two realities.

I want to reiterate that we are not adopting dogmatic opposition to any particular group, or contribution or idea that could move this forward. We need to protect the taxpayer, but that has not overridden our determination to provide support and we will continue to think about how we can improve the way the schemes that I have mentioned are targeted.

We have adapted already. We extended the cut-off point by which workers needed to be on their company’s payroll to be eligible to be furloughed, allowing more workers to receive those payments, and that potentially includes freelancers paid through PAYE. Some workers may be able to benefit from the recent changes that allow employers to re-furlough workers who left their jobs between 23 September and 30 October. And since July, employers have been able to bring back previously furloughed workers while still claiming from the Government for any hours not worked. We have adapted the self-employment income support scheme to help new parents who have taken time out of work, along with self-employed armed forces reservists, who were previously not covered.

I would like to add that people who are ineligible for one scheme may still be able to get support from one of the many other sources that I mentioned earlier, and that was not an exhaustive list.

I recognise that many people in the groups that we have talked about today fully intend to continue in their current jobs. However, we are investing to help those who decide to seek new opportunities. My right hon. Friend the Chancellor of the Exchequer recently announced a £2.9 billion restart programme, which will provide intensive and tailored support to help people to find work.

I listened to the range of contributions from constituents across the country. It is very, very challenging for us to provide support for every single group that is struggling at this time, but I reiterate our willingness to continue to work with groups, including IPSE, the relevant APPG, the FSB and others, that bring forward proposals. My right hon. Friend the Financial Secretary to the Treasury is engaged in many of those conversations. As we move through into the new year, we will continue to look at the new schemes.

Our overriding goal has been to provide as much support as we can to people and businesses, and as rapidly as possible. We acknowledge that we have not been able to help everyone in the way that we would ideally want to, but that has not been a wilful disregard for their situation; it is based on the challenges of verifying. It is not attributing any blame to them either. We have succeeded in supporting millions of people and businesses through this intensely difficult time, and we will continue to do our very best until we have beaten coronavirus.