Government defends pandemic support but promises to look again at measures for the excluded self-employed

11 Dec 2020

On Wednesday, Liberal Democrat MP Munira Wilson led a Westminster Hall debate on support for three million self-employed workers ruled ineligible for the government’s Coronavirus support schemes.

During the debate, MPs from across the House cited examples of constituents struggling in the absence of support from the government while being unable to work, with backbench Conservative MPs joining opposition MPs to call on the government to ‘look again’ at its support measures. Ministers gave a robust defence of the actions taken to date, but acknowledged the difficulties within the system and promised to take on board the proposals that were debated.

You can read the full transcript of the debate by clicking here or, alternatively, watch a recording of the debate here (from 16:31:15)

In opening remarks, Wilson described ‘feelings of betrayal, hopelessness (and) abandonment’ felt by ‘the many thousands of people who have been in touch’ with her, having fallen through the government’s safety net.

She said that the Treasury had ‘repeatedly refused’ to address the issue, despite research indicating that one in ten of the workforce – or three million people – were ineligible to receive support via the government’s various Coronavirus support schemes or the Universal Credit system.

Wilson also addressed the many ‘misrepresentations’ she said existed around both the government’s response and those who have failed to access support. She described suggestions from the government that it was ‘too difficult and complex’ to include excluded groups and that ‘schemes were targeted where help was most needed’ as ‘simply not true’.

She took umbrage at the suggestion that those who had fallen through the cracks were ‘highly paid and dodging tax in some way’. Wilson cited the case of a constituent who operates a travel business and pays himself in dividends ‘because of the huge fluctuation in annual income’ due to events such as coronavirus.

She continued: “If he had drawn a regular salary through the year, he would have been unable to fulfil his statutory and contractual obligations to his clients, in terms of prompt refunds when their holidays were cancelled due to the pandemic.”

As a result of the government’s inaction, Wilson said that there were now ‘heartbreaking stories of desperate need, including the use of food banks and people not being able to switch the heating on this winter’.

To address these issues, Wilson suggested that the government consider a number proposals suggested by a range of interest groups and the Treasury Select Committee. These include:

  • Using HMRC data to support claims for those with PAYE income history
  • Widening the accepted evidence for demonstrating proof of employment
  • Extending cut-off dates for directors of limited companies
  • Removing the rule for self-employment grants that states more than 50 per cent of a person’s income must be derived from self-employment
  • Removing bereavement payouts and carers’ allowance from the calculation of PAYE income
  • Extending the criteria for discretionary business grants

In concluding remarks, Wilson urged the government ‘to listen to how these hard-working, tax-paying people are feeling and to look at the long-term impact’ of exclusion.

During the open debate, Esther McVey (Conservative) said that revenues from business rates exemptions paid back by supermarkets should be used to support those who hadn’t received support during the pandemic. Her calls was endorsed by Imran Ahmed Khan (Conservative) who said the funds should be ‘repurposed and directed towards those who have yet to receive adequate support’.

Andrew Selous (Conservative) said that the government had been generous in its support to people during the pandemic and that it should be possible to use the many ‘clever people’ in the Treasury to work out a way to provide support for groups including ‘people who work with a construction industry scheme card, directors who pay themselves through dividends and the newly self-employed’. His comments were echoed by his Conservative colleague Andrea Leadsom, who said support at this stage would help people ‘to rebuild their businesses and to create new jobs’ in 2021.

Labour MP Tracy Brabin said that Labour metro Mayors in Manchester, Sheffield and Liverpool had been working to ‘plug the gaps left by Government’ and expressed frustration that the government’s mantra of ‘”whatever it takes” has turned into “whatever we will give you”’. Stephen Morgan (Labour) said the excluded had become the ‘collateral damage’ in the response to the pandemic, while Emma Lewell-Buck (Labour) said the safety net provided by Universal Credit was ‘not the answer’.

Addressing the proposals for reform outlined by Wilson in her opening speech, Jeff Smith (Labour) said that these showed that ‘There are potential solutions if the Government will just look at them.’

Richard Fuller (Conservative) conceded that many of the excluded were ‘probably not high on the list of those who are in greatest need’, but that there were ‘some specific areas’ in need of focus. He concentrated his contribution on company directors, who he said had ‘the grit and determination that will be so crucial to our recovery’. He said; ‘it should be within the wit of man or woman—certainly within the wit of the Treasury’ to find a solution to support people who ‘can demonstrate a negative impact on their business and can confirm they have not received any benefit from Government under any existing schemes.’

Nick Fletcher (Conservative) said it was ‘harsh’ that directors of limited companies ‘To be penalised because one is a director and takes remuneration through a dividend’. As a limited company director, Fletcher called on the government to ensure businesses that have been successful during the pandemic return rates relief, give businesses the option of opting out from future government support and, ‘most importantly, listen to the concerns and recognise the plight of the self-employed’.

SNP MP Peter Grant said that it had been ‘a deliberate policy decision’ by the government to exclude many of the self-employed from its pandemic support schemes and urged them to take steps to help protect small businesses and support economic recovery. He spoke of a recently self-employed constituent. They had been excluded from receiving support because their 2018-19 tax returns showed that they had failed to meet the criteria for eligibility. Grant said the government had chosen to ignore the fact that their 2019-20 was a more accurate reflection of their income from self-employment, but that HMRC were ‘happy to use the same tax return as evidence that she now owes them £9,000).

Shadow Chief Secretary to the Treasury Bridget Phillipson, responding for the opposition, said that it would have been ‘difficult to get everything right when the Government set up these income support schemes back in March’ but that ‘months into this pandemic’, the government risked ‘storing up problems down the line’. A failure to act, she said, would lead to ‘a much slower and less inclusive recovery’.

Responding for the government, John Glen, the Economic Secretary to the Treasury, gave a robust defence of the measures put in place by the government since March to support jobs and livelihoods during the pandemic.

Glen said that the government had ‘set clear rules’ to support those most in need and protect taxpayers. He acknowledged the frustrations of those who have missed out, but added ‘wherever we had drawn it (the cut off line for support), we would have had the same challenge.’

In an acknowledgement that the schemes as originally designed had failed to support everyone in need, the Economic Secretary to the Treasury said the government would ‘continue to think about how we can improve’ these schemes to better provide support.

He said the government had already extended the cut-off point for furlough eligibility, adapted the self-employment scheme to help new parents taking time out of work and extend support to self-employed armed forces reservists.

In concluding remarks, Glen reiterated the government’s willingness to look at how it could better provide support and that the government would ‘ continue to do our very best until we have beaten coronavirus.’ This commitment was welcomed by Munira Wilson in her own concluding remarks, who urged Conservative MPs to listen to the concerns of many of their own backbenchers and to work towards a solution that provides support for those who have been excluded from receiving pandemic support.

By Chris Young.