Income Tax (Charge)

Wendy Chamberlain Excerpts

Thursday 4th March 2021 Commons Chamber

[Wendy Chamberlain (North East Fife) (LD)]

Over the past year, more people than ever before will have come into contact with our social security system. In March 2020, around 3 million people were on universal credit; in January, it was 6 million. They will have discovered that what is billed as society’s safety net is, in fact, full of fairly large holes. That has been the experience of my constituents in North East Fife, and it will be the same for hundreds of thousands of people throughout the UK.

A year ago, Liberal Democrats welcomed the Chancellor’s move to help to fix the net via the £20-a-week uplift in universal credit—that money was needed even before the pandemic began—but as time went on, it became clear that further support was not going to come. We called for an uplift to legacy benefits, which are disproportionately received by people with disabilities, but after initially being told that the universal credit uplift was a first step because its computer system was easier to change than the systems operating legacy benefits, it turned out that no uplift would be forthcoming.

We asked for extra support for unpaid carers—a group of people who are under-appreciated, overworked and absolutely need our further support—yet rather than the £20 a week that they need at the very least, the increase the Chancellor is giving in the Budget is a derisory 5p a day.

The decision to create another cliff edge by ending the universal credit uplift in six months means taking away £1,000 a year from those who need it the most. Freezing the personal allowance is a stealth tax that simply means that the poorest will pay an increasing proportion of their income in tax as many begin to make the transition from universal credit to employment as the economy recovers.

Last week, my team and I undertook a virtual visit to the jobcentre in Cupar. It was great to meet the fantastic team there, who have coped brilliantly with the required changes to working practices and are clearly making a difference to many who access their support. Despite that North East Fife team’s efforts, I have real concerns about how the Government plan to get people back into work.

Take-up of the kickstart scheme has so far been sluggish. To some extent, that is understandable, given the current restrictions, but when the scheme was launched I asked the Government to reconsider the requirement for businesses to be able to participate directly only if they had 30-plus vacancies, and although I am pleased that they eventually changed that decision, the initial decision prevented businesses in my constituency from moving forward more quickly with the scheme. The pandemic has hit the job prospects of those aged 18 to 24 most heavily; kickstart needs to succeed.

Tourism and hospitality are two key sectors in North East Fife, and I have previously raised in this place many examples of small businesses that are struggling because of covid-19 and lack of support. I welcome the continued 5% VAT rate for hospitality, which many Members from all parties called for, along with the furlough extension, but the reality is that the Budget offers very little for the cafés, shops and sports clubs at the heart of the local economy. Hairdressers such as Alex Thaddeus in Cupar also need a VAT reduction, which the hair and beauty industry has called for. The data tells us that women are also paying a disproportionate economic price during the pandemic.

The furlough extension is useful, but when I have spoken to businesses such as the Ship Inn and the Dory in the East Neuk, they tell me that it now comes with costs—it is not the same scheme that it was a year ago. That means that the small business owners who are currently unable to open face painful choices—accruing more debt, laying off staff or, indeed, closing altogether.

Many Members have raised the self-employed. I can think of many constituents who have found themselves excluded. Beneath the Chancellor’s rhetoric, there is no real change to the self-employment support; it is just that more people qualify now because they have 2019-20 tax returns.

Some of the Scottish Government’s support schemes are problematic. There are Barnett consequentials sitting on the desk of the Cabinet Secretary for Finance right now, and in Scotland we have been in harder lockdown for most of the past year. Just this morning, I spoke to my team regarding bed-and-breakfasts such as Lillian May in Newport-on-Tay, which is still waiting—and has been since December—for Fife Council to get further guidance from the Scottish Government on the administration of funding for bed and breakfasts.