Coronavirus: Job-Support Schemes

Steve Baker Excerpts

Tuesday 7th July 2020 Commons Chamber

[Mr Steve Baker (Wycombe) (Con)]

I begin by referring Members to my declared shareholding in Glint Pay. I thank HMRC for what it has done to put these schemes in place. It is the most extraordinary achievement that it has managed to put in place the coronavirus job retention scheme and the self-employment income support scheme. Normally, such things would take months and years and often be marred by IT failures and delays, and yet HMRC staff have successfully delivered this. I would far rather that they had successfully delivered than failed and left everyone without support. It is the most tremendous achievement, and the staff involved deserve our praise for what they have done, but I think we can see why it normally takes months and possibly years to deliver such schemes, because that time is required to deal with what have become hard edges.

Before I go any further, I would like to put into context the scale of the spending that we are talking about. If we look at page 355 of the estimates, there is £52 billion listed for covid-19. When I look up and down the detailed entries for the Department for Work and Pensions, I can see only one sum that is higher than the covid provisions for HMRC. Rounding to the nearest billion, the figures listed are £33 billion for universal credit inside the welfare cap, £13 billion for personal independence payments, £17 billion for housing benefit inside the welfare cap, just £5 billion for universal credit outside the welfare cap and £102 billion for the state pension outside the welfare cap. To see £52 billion appear in the estimates for HMRC is quite extraordinary, and I will return to that figure in my concluding remarks.

[Mel Stride]

My hon. Friend is making an extremely important point. These are just the main estimates, not the supplementary estimates, and the schemes have been extended and modified since those figures were put together. Does he agree that it would be useful to hear from the Minister what additional funds might be sought through the supplementary estimates?

[Mr Baker]

Yes. I hope that the Minister will give us a detailed explanation of how these figures break down, because the figure to which I just referred is different from the one on the Order Paper. I refer Members to page 357 for the resource to cash reconciliation, which I am sure my right hon. Friend will be fully able to break down in detail if he wishes to.

I want to come on to some of the things that the Chair of the Public Accounts Committee said. In my constituency, there are plenty of people who, in one way or another, work in the arts and are in quite desperate straits. To reinforce her point about tronc, it has been a real disappointment to me that we have not dealt with the issue of people in the hospitality sector receiving perhaps half their income through tips, for which HMRC has PAYE information. I will never forget one particular email from a new father who was shocked to discover that he would be not on 80% of his normal pay but 40%. That is a dramatic difference, and it is because HMRC and the Government have not taken into account tronc payments, which they should. The freelancers issue is important and profound. On dividends and directors, we should recognise that sometimes we are talking about make-up artists, for example, who are paid through dividends.

[Meg Hillier]

Yes.

[Mr Baker]

I am grateful to the hon. Lady for agreeing. There are real issues of justice and equity at stake here. I remember reading my right hon. Friend the Financial Secretary’s 2008 book “Compassionate Economics” and it is a wonderful book that I recommend to anyone. I know that he is a compassionate man and that these issues will weigh upon him, so it is no way a criticism that I raise such things, but I observe that the edges here are awfully hard.

In the estimates document, HMRC refers to its policy partnership with the Treasury, so I encourage HMRC and Ministers to work together to see across the spectrum of issues—I do not have the time to go through them all—in the Treasury Committee’s report to see whether more can be done, even at this late stage, to help those who have been without help altogether. I place particular emphasis on furlough in relation to airlines and workers at airports. Such groups are very much represented in my constituency—west of Heathrow as we are—and people need help there.

My final point, and the reason for declaring my interest, is that the obvious and most dangerous harm from coronavirus is, of course, that it has killed tens of thousands of people, but well down the hierarchy of problems is that it has taught us all to be socialists. All of us have learned to live at one another’s expense, often ultimately at the generosity of the Bank of England and the creation of easy money. I say to Ministers that, yes, it was necessary to do this, but please do get us out of this mess.

--- Later in debate ---

[Ms Eagle]

I absolutely agree. This crisis has forced us to look at how our labour market works, and we need to come back to that very strongly indeed.



Tomorrow, I want to hear that the Chancellor is doing something to help the freelancers who power much of our cultural industry but who have thus far been excluded from the help available. I want to see him announce a strategic sectoral approach to job retention to ensure that the economy thrives. The OECD estimates that the UK could suffer the worst covid-19 related damage among the advanced economies, with a decline of 11% in national income and UK unemployment rising to 9% this year. Despite the labour market having been sheltered from a complete meltdown by the furlough scheme, there are ominous signs of a huge strain like a dam waiting to burst. The recent announcement of many thousands of job losses in retail, aviation and leisure could be just the tip of the iceberg if the Chancellor does not take decisive action.

The Government must now switch quickly to a more strategic and tailored response that will enable stabilisation and economic recovery. Certain sectors will continue to be affected because of social distancing rules, and they must be helped. Local authorities and schools, for whom the Chancellor promised he would do “whatever it takes” to fight the virus, should have their costs fully reimbursed. To date, they have received back only a third of what they have spent.

The Chancellor exhorting people to spend, spend, spend, as he did at the weekend, risks entrenching the old debt-fuelled consumer economy in place and squandering the chance to lay the foundations of greener, fairer, more sustainable future prosperity. The Prime Minister blaming everyone but himself, exhorting us to “build, build, build” and trumpeting a Roosevelt-like new deal while promising to spend 0.2% of UK GDP, whereas President Roosevelt spent 40% of US GDP, would be a farcical response to our predicament if we were not in such a perilous situation.

[Mr Baker]

I remind the hon. Lady that she stood at the Dispatch Box 10 years ago accusing us of being Hooverite in our liberalism. Although that was historically questionable, it is where she was 10 years ago. Surely she must feel that the references to Roosevelt are an improvement.

[Ms Eagle]

Clearly somebody in the Conservative party has moved on, but when we look at the difference between 0.2% of national GDP and 40% of national GDP, we can see that a few lessons are yet to be learned.

Coming back to a point made by my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), the labour market is key. Many vulnerable people in the labour market have been left with nothing as a result of the effects of coronavirus. Many in the labour market have also been put at great risk of contracting the virus, and perhaps have to think about a choice between earning and being ill, which is why we need to look more closely at how our labour market is regulated—and crucially, at the 46% cut to the Health and Safety Executive, which enforces labour market rules. The Prime Minister exhorting us to “build, build, build” is all very well, but it would be a farcical response to our predicament if the country were not in such a perilous position; the comparison is ridiculous. The Chancellor and the Prime Minister need to drop the hype and begin to deliver. Our future economic prosperity depends on it.