My Lords, with the leave of the House, I will now repeat an Answer given to an Urgent Question by my right honourable friend Steve Barclay earlier in the House of Commons.
“Mr Speaker, we know that many self-employed people are in real distress, but we are working urgently to address this problem and I say to the self-employed: we have not forgotten you. Help is coming, but the policy and delivery are complex, and we cannot and should not rush to announce a scheme that begs more questions than it answers. The Chancellor has held meetings this morning with representatives of the self-employed and will continue to meet them this this afternoon, but it is important to remember that Covid-19 is an urgent challenge to our entire economy, affecting workers of all types. It is essential that we respond swiftly, so that people can keep their jobs and businesses can carry on. This is the basis of our coherent, co-ordinated and comprehensive plan. It is a plan that gives those on the front line the tools they need to tackle the virus, with all the support the NHS needs, backed up by an initial £5 billion fund for public services.
It is a plan that puts a shoulder behind business with a statutory sick pay relief package for SMEs, business rates holidays for all retail, hospitality, leisure and nursery businesses in England, and grant funding for small enterprises, as well as support through HMRC’s time-to-pay scheme. As of yesterday, businesses with cash-flow concerns will also be able to access the coronavirus business interruption loan scheme, offering up to £5 million for SMEs through accredited lenders. For larger firms, the Bank of England is providing a new facility to help support liquidity among larger firms. I urge all Members of the House to speak to business leaders in their constituency and make sure that they are aware that they are not alone, and that help is coming.
In this House, we are standing behind all businesses, and everyone who works in them. To encourage businesses to retain staff, we are deferring VAT and my right honourable friend has announced the coronavirus job retention scheme. Taken together, this is a huge programme of support, and will keep thousands of workers in their jobs.
However, we know that there are thousands of self-employed people who have been wondering what the future holds for them. My right honourable friend the Chancellor has already set out a range of measures in support. Sole traders and freelancers will be able to access the business interruption loan scheme, as long as activity is channelled through a business account. We are also removing the minimum income floor for self-employed workers affected by coronavirus, so that they too can access universal credit in full. At the same time, the next self-assessment income tax payments will be deferred until January 2021, which means that those assiduously putting money aside for the end of this month now have more freedom to prioritise and plan for next year.
Let me reassure everyone in this House and the self-employed people they represent that further help is coming. However, we have to make sure we get this right and target the right support towards those most in need. The Chancellor will provide a further update on support for the self-employed in the coming days.”
My Lords, I thank the Minister for reading that Answer, which was quite scant on detail. In response to this pandemic, Norway immediately committed to paying the self-employed 80% of their three-year average earnings, obviously with an upper limit. Denmark and Belgium have brought in similar schemes. We are happy to work with the Government to look for solutions, but these solutions need to be delivered quickly. Many self-employed people are in desperate situations in these desperate times. What timescale are the Government looking at to bring in these new measures? Can the Minister encourage them to do so as quickly as possible?
I thank the noble Lord, Lord McNicol. I am in total agreement that these things must be advanced as soon as possible. As I said in the Statement, my right honourable friend the Chancellor will provide a further update on support for the self-employed in the coming days.
The noble Lord mentioned other countries. As he will be aware, the situation has unfolded in different countries around the world at different paces. Her Majesty’s Treasury is keeping a close watch on what is happening elsewhere in Europe and in other countries. We will keep all these matters under review.
My Lords, I am sure we can all imagine the households up and down the country of the 5 million self-employed and freelance workers as they watched the Prime Minister’s statement and the penny dropped. You can imagine the scene: a builder talking to his wife, a freelance speech therapist in a school, and saying an expletive beginning with “S” and then, “This means we’ll have no money coming in for the foreseeable future.” That is what we need to consider. These people will have no access to funds.
Can the Government confirm that the support package mentioned by the noble Earl—much of what he said was about business in general, not the self-employed in particular—will be equal in generosity to that already provided to business and employees? Likewise, will the Government agree to the self-employed having the same access to zero-interest loans as other people for the next 12 months? They are not second-class workers. Perhaps more radically, will they consider a form of statutory self-employment pay, as the noble Lord mentioned, based on previous tax returns? That would seem the ideal safety net for those who will need it during the course of this pandemic.
I thank the noble Baroness, Lady Thornhill, for her question. Her Majesty’s Government are looking at all options for how we take this forward. Specifically for freelancers and the self-employed, at the moment we are doing it through the welfare system, which will benefit from changes made on 20 March, such as the £20 increase in the UC standard allowance and the uprating of local housing allowance. We are also temporarily relaxing the minimum income floor for all self-employed UC claimants for the duration of the outbreak. This means that a drop in earnings due to sickness or self-isolation, or as a result of the economic impact of the outbreak, will be reflected in claimants’ awards. Self-employed people unable to work because they are directly affected by Covid-19 or self-isolation will also be eligible for contributory employment and support allowance, as announced in the Budget; that is now payable from the first day of sickness. This package will enable self-employed people to claim welfare close to statutory sick pay.
The noble Baroness mentioned another issue, to which I do not have the answer. I will arrange for her to be written to on that.
My Lords, I will not ask about the self-employed; I will wait for the Chancellor’s Statement in a few days’ time. Will the small businesses able to access zero-interest loans have to put up any form of security for that loan?
My noble friend refers to the business interruption loan scheme, I think. The recent Budget announced a temporary new coronavirus business interruption scheme to help businesses access the finance that they need. On 17 March, the Government went further by increasing the value of the facilities available under the scheme from £1.2 million to £5 million. Alongside the action being taken by UK lenders, this will help to ensure that eligible businesses facing short-term cash-flow difficulties continue to access the finances that they need to respond to the temporary impact of the coronavirus outbreak on their cash flow.
My noble friend asked a specific question about security. I will write to her on that matter.
My Lords, I understand that it can take a while to develop specific targeted measures for the self-employed, but can the Minister say why so little is being done on social media, for example, to publicise to the self-employed the limited range of measures that currently exist?
My Lords, the noble Lord makes a very good point. That is imperative. So far, we have been able to give them wide coverage and ensure that the self-employed are aware of what is available to them at the moment. I am sure that over the next couple of days, when the Chancellor has the opportunity to bring forward further measures, there will be an effort on this basis to ensure that the self-employed, whom we all know and employ at some stage or another, are given the opportunity and looked after.
My Lords, is the Minister aware of the plight of the creative industries? For instance, 72% of those working in the music industry are freelance. Last week, the Creative Industries Federation conducted a survey which showed that almost 50% of freelancers in the creative industries who responded to its poll had already had 100% of their work cancelled. Will the Government urgently consider a scheme in Norway—the noble Lord, Lord McNicol, has already mentioned schemes in Belgium and Denmark—which has guaranteed temporary income protection of 80% of average self-employed earnings from the past three years? That seems exactly the kind of scheme that would fit the bill here.
My Lords, the noble Lord, Lord Clement-Jones, is quite right to raise the situation of freelance workers in the entertainment and music industries. He makes a very good point. We will carefully consider the schemes of all other countries. We want to ensure that we can look after the self-employed and will try to give them every opportunity to take some of their worries away.
My Lords, I commend the Government for removing the universal credit minimum income floor for the self-employed and for the business interruption loan scheme for sole traders and freelancers. However, in the meantime, self-employed and freelance workers are likely to need to turn to their banks, either for a credit card or an arranged overdraft. Credit card interest rates are now significantly higher than they were before the 2008 crash—they have just reached another record high—and arranged overdraft interest rates have just increased significantly to around 40%. Given the dramatic drop in Bank of England interest rates, would my noble friend agree that it might be time for the banks, especially given the huge sums they received from the public during the last crisis, to consider dramatically reducing interest rates on credit cards and overdrafts? Will he take that back to the department and discuss it?
My Lords, I will of course take that back. My noble friend will also be aware that we have been talking to the high street banks—there is now the mortgage holiday situation—and there will be an announcement from my right honourable friend the Secretary of State for Housing, Communities and Local Government on renters and evictions.
My Lords, the scheme for the employed announced last Friday was backdated to 1 March. Could the noble Earl take back to the Treasury the importance of ensuring equivalent backdating for the self-employed?
My Lords, this question was also raised in the House of Commons when the issue was debated. I know my right honourable friend was listening to the question closely, as am I.