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Covid-19: Support for Businesses

Volume 674: debated on Tuesday 24 March 2020

The Government remain committed to doing what they can to support businesses, our people and public services. In the last week, I have announced unprecedented measures to support business, including over £300 billion of Government-backed loans, £20 billion of tax cuts and grants, a VAT deferral worth 1.5% of GDP and a landmark job retention scheme guaranteeing 80% of the wages of furloughed workers. We believe that these measures represent the most comprehensive and generous suite of interventions of any major developed country in the world.

On behalf of my constituents, I welcome those announcements. The Chancellor, though, will know that 15% of the UK workforce is self-employed, equating to about 5 million people up and down the country. According to the Federation of Small Businesses, there are 5,600 in The Wrekin. When will the Government come forward with plans for the self-employed and freelancers, given the immediacy of their need?

I thank my hon. Friend for the question. I will be making further announcements about progress on these measures. It is something that we have been looking at in intense detail over the past week in the Treasury. What I can say to him is that we are in dialogue with all the key stakeholder groups, including calls that I am having today with several of those bodies. There are genuine practical and principled reasons why it is incredibly complicated to design a scheme that is analogous to the one that we have for employed workers, but he can rest assured that we absolutely understand the situation that many self-employed people face at the moment as a result of what is happening and we are determined to find a way to support them. We need to be confident that that can be done in a way that is deliverable and fair to the vast majority of the British workforce.

On behalf of my residents in North Cornwall, I thank the Treasury for the support that it has put in place for employees and employers over the last few days, with this unprecedented series of events. Like my hon. Friend the Member for The Wrekin (Mark Pritchard), I want to ask about self-employment. I have a huge number of self-employed people in North Cornwall. I know that the Treasury is under a huge amount of pressure at this time, but I urge expediency on that so that we can get a package of measures in place for them, too.

As I said, we are looking at this in immense detail and at pace. As has been acknowledged by many stakeholders in the industry, there are genuine questions about practicality, fairness and delivery of any such support scheme, which is why it requires careful thought.

We have an urgent question on the self-employed after this, but to add to the comments that have been made so far, there is a sense of urgency about this now. There is no Member of this House who has not been contacted by a constituent who is in quite a distressed state about that. One of the most effective ways of supporting businesses is to make sure that the whole workforce is supported. There is another group—2 million workers are on zero-hours and there are part-time workers. They are still not eligible for statutory sick pay and they appear to be excluded as well from the job retention scheme, which is focused on the definition of “employees” while, in law, these are referred to and defined as “workers”. I have written to the Chancellor about this, so will he make a statement urgently that sets out how these workers will be protected in the same way as other workers were in the announcement on Friday?

It is not the case that those who are on zero hours are not eligible for the existing scheme. Depending on their status, they would absolutely be eligible for the job retention scheme. It could be based on an average of previous earnings over a period in order to get smoothing, but there is no reason why they should not be eligible. In fact, any worker who was on a PAYE scheme is eligible for the job retention scheme.

That is really helpful. I have welcomed the statements from the Chancellor to date, and I welcome that as well. I am grateful for the work that he is doing. There was confusion, and many of us had representations on that. I would like him to clarify one other point: he might have done so earlier and I missed it. Some people are being asked to work reduced hours in the interests of the company rather than being furloughed overall, and it appears that those people may also be excluded from the scheme. There is a lack of clarity on that: again, could the Chancellor confirm whether those workers will be included in the scheme? If not, can he bring forward a fairly urgent reform to the scheme to enable that to happen?

One other category we have had questions on is those people who have work available but cannot do it because of the shutdown of their childcare arrangements and as a result have childcare responsibilities. Are they are eligible for the furlough support scheme as well?

In common with schemes all around the world, the schemes are for furloughed workers. The check is that the company decides to put an employee into a furlough scheme rather than retain them as employed. That is exactly the same as every other scheme. It is not possible to design a scheme that deals with flexible hours, with the result that the state would essentially be subsidising the wages of almost the entire workforce. It is something that we looked at in detail and, given the time we have available, we went with a scheme that could be delivered and is in common with almost every scheme around the world that does exactly the same thing.

It is vital that we work across party lines at this time, and the SNP very much welcomes the Chancellor’s economic package for firms and workers announced last Friday. Given that millions of small businesses, freelancers and the self-employed are understandably concerned about their incomes, we welcome the fact that the Chancellor is considering a response to that and understand that it is important to get it right, but when does he expect to be able to come back to the House and announce the details?

As I said, we are looking at these things. I will not commit to a specific day until we know we can work through the details. One of the issues is that of course there are people whose incomes have been enormously impacted by what is going on currently, but there are also millions of people who are self-employed whose incomes may not have been impacted and, indeed, might be increasing. The ability of the Government to distinguish between those people, based on tax returns that are over a year and a half out of date, poses some very significant challenges in terms of fairness and affordability.

I thank the Chancellor for that answer, and our offer to work with him to protect incomes remains open. As part of his deliberations on this and in order to simplify the process of getting the money to where it needs to go, will he consider using the tax and welfare system to roll out a universal basic income in these times?

We are not in favour of a universal basic income, although we have strengthened the safety net for the most vulnerable in our society, with more than £7 billion invested into improving our welfare system for this year, including improvements to universal credit, employment support allowance and, indeed, the local housing allowance. Those payments are all available more quickly, more easily and more generously than they were before, and I know that will make an enormous difference to many vulnerable people.

I am grateful for the opportunity to raise an issue that seems unique to my constituency. The Isles of Scilly sit 28 miles off Land’s End, and all people and supplies travel via large and small private companies. Those businesses rely on the tourist trade in the summer, but that has completely collapsed, and every single one of those businesses is liable to collapse if the Government cannot move quickly. Can the Chancellor look at this issue urgently, because 2,500 people are relying on urgent action from the Treasury to make sure that their transport infrastructure system is sustained and retained?

I am happy to talk to my hon. Friend further about his particular constituency issue, which I know poses particular challenges. We have committed to providing local authorities—and indeed all Departments —with any funding required to support public services, including local transport infrastructure in their communities.

On behalf of my constituents who will benefit from the measures that the Chancellor announced last week, may I sincerely thank him for the action that he has taken and for the responsibility that he is carrying? We are all rooting for him to succeed in the task ahead. The challenge, as others have described, is that for those who do not benefit, in particular the 5 million self-employed, the anxiety has increased, because they have seen a ship sailing carrying others but not them. I think they will be reassured that the Chancellor has given a clear commitment to do something, but many are facing a cash-flow crisis right now, so can he say a bit more to reassure them about how quickly he can implement the measures that he is considering?

1 am very grateful to the hon. Member for his warm words; I appreciate them. We are looking at pace at what support can be provided. The fact is that the universe of 5 million that we are dealing with contains such a wide variety of different people that we are unable to target support. That is the challenge in designing something that gets to the people who we want to help, while at the same time being affordable and not having to benefit absolutely everybody. That is proving to be problematic, but we are hard at work on it.

In terms of delivery, it is almost certainly going to be the case that we would have to build another brand-new system to deliver any support. I am sure that hon. Members on both sides of the House would agree that, in terms of prioritising system design, the scheme that we have set up for 90% of the workforce who are employed should be delivered first and quickly, and that is what we have committed to do, ideally by the end of April. We are looking at how we can do these things in sequence or in parallel, but I take the hon. Member’s point: people are anxious. That is why we deferred the self-assessment tax return that is due shortly to provide some cash-flow benefit. We have also deferred VAT to a significant degree, which will help with cash-flow benefit, and many self-employed people will benefit from the business interruption loans, which are also interest-free.