[Relevant documents: Second Report of the Treasury Committee, “Economic impact of coronavirus: Gaps in support”, HC 454; and the Government responses, HC 662 and HC 749; Eighth Report of the Treasury Committee, “Economic impact of coronavirus: the challenges of recovery”, HC 271; e-petition 303345, “Pay self employed workers a wage due to lack of earnings caused by covid-19”; and e-petition 310471, “Provide covid-19 income support for the newly self-employed, without HMRC records”.]
I beg to move,
That this House has considered support for the self-employed and freelance workers during the covid-19 outbreak.
I am grateful to the Backbench Business Committee for granting time for this important debate, which affects so many of our constituents. The job retention and self-employment income support schemes have provided a lifeline for many, and they have undoubtedly provided a degree of security for those who were eligible. But there’s the rub: far too many people have been ruled ineligible.
Today’s debate takes place just as the six-month period that the self-employment scheme was intended to cover draws to a close. I intend to make the case that the scheme should be continued where it is needed and, crucially, that it should be extended and backdated for all those people who have been unfairly left without support over the last six months through absolutely no fault of their own, and who have endured intense hardship as a result.
Many cannot pay their bills. They are losing their homes, they are drowning in debt and they need our support. Today’s debate is a sorely needed opportunity to set out how the self-employment scheme has fallen short. It has fallen short by failing to recognise the reality of what self-employment looks like in Britain today—by failing to understand that self-employment is significant across the breadth and depth of our economy. The self-employed are beauticians and barristers; charity and construction workers; dentists and decorators; many in marketing, events, arts and hospitality, and many more. This is a chance for us to explain loudly and clearly why self-employed people need justice and why they need support as we go forward.
As it stands, as I am sure all hon. Members know—although, frankly, I am less sure that Treasury Ministers know—the Government scheme penalises a wide range of people. They include those who combine self-employment with pay-as-you-earn work, or PAYE freelancers. They include new start-ups and the recently self-employed. They include women who have taken time out for maternity leave and childcare. They include anyone earning over £50,000. They include those earning less than 50% of their income from self-employment. They include limited company directors who take their income in the form of dividends.
There have been endless requests for the Treasury to meet MPs and those affected by the scheme’s failings to discuss those gaps. Frankly, the exchange between the Chancellor and the hon. Member for Batley and Spen (Tracy Brabin) during Treasury oral questions earlier this week underscored how urgently such a meeting is needed. I am not sure whether the Chancellor just does not understand his own scheme or whether he was deliberately being economical with the truth, but when he asserted that the only group of people excluded from the self-employment scheme is those earning more than £50,000, and that their average median salary is apparently £200,000, I did not know whether to laugh or cry. He is completely and utterly wrong. He does not understand his own policy, and we urge him again to meet us so that we can set out the problem.
At this point, I would like to pay tribute to the brilliant campaigns, including ExcludedUK, ForgottenPAYE, ForgottenLtd and many others, and individuals such as Amanda Evans and Ellie Phillips who have helped the self-employed find such a powerful and united voice. I also thank the various hon. Members from right across the House who joined me, campaigners and the money saving expert Martin Lewis at the end of July to symbolically deliver petitions to the Treasury. They were signed by more than 348,000 people and demanded that the gaps in the scheme be urgently closed.
Those campaigns and many individuals have sent copious correspondence to the Chancellor, detailing the various groups of people who are not eligible for income support. His refusal to honestly engage with those suffering as a result of his policies is frankly shameful. The Treasury has met all requests for dialogue with either deafening silence or meaningless stock responses. I am sorry, but that is not good enough.
It is not good enough for my Brighton constituent who was working full time with the BBC as a PAYE freelancer, so he is ineligible for either furlough or self-employment support and, having come relatively recently from Ireland especially to take on the role at the BBC, he is not eligible for universal credit either. He says that how he has been treated during this crisis has financially ruined him. It is not good enough for Deniz Turan, a sole trader who has gone, in her own words, from being a successful businesswoman to being homeless and feeling suicidal every day in the blink of an eye, simply because she was a start-up who took her income in dividend payments. And it is not good enough for Mark, another small limited company director, who says that the strain of getting no income support on his marriage, his household, his mental health, his physical health and his finances is literally unbearable.
The self-employed have been failed by the Chancellor and the Prime Minister, and it is not just me making that argument. As hon. Members will know, an all-party parliamentary group has recently been formed. I pay tribute to the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) for setting up the APPG, which represents those who have not been protected by the various Government packages. It is I think one of the fastest growing APPGs in parliamentary history. It currently has around 260 MPs from all sides of the House, including 79 from the Government Benches, while 15 Conservative MPs added their names to the application for this debate to take place.
One of the forgotten sectors is music teachers who teach our young people. Many of them—including some in my constituency, as well as throughout the United Kingdom of Great Britain and Northern Ireland—do not have any income whatever. They are one of the forgotten groups as well.
I thank the hon. Gentleman for his intervention. I absolutely agree. The people we are talking about are in every sector of our economy and our society, and they are hurting.
Back in June, the Treasury Committee published a unanimous report called “Gaps in support” as part of the inquiry into the economic impact of coronavirus. It found that hundreds of thousands of self-employed people are suffering hardship because of features like the disqualification of anyone who started a business in the last year. The Select Committee made some clear practical recommendations for change. I agree with the Chair of the Committee, the right hon. Member for Central Devon (Mel Stride), that urgently enacting those recommendations and helping those who have fallen through the gaps is the only way for the Government to, as he puts it, fairly and
“completely fulfil its promise to do whatever it takes”.
Sadly, the Government’s response to the “Gaps in support” report was predictable: they made excuses and cited obstacles, when what we need is action. So let me say just a little more about some of those who are falling through the gaps. I mentioned small limited companies whose directors take all or part of their income in dividends. I want to stress that that is common practice; there is nothing suspicious about doing that—it is what people do when they are starting up small businesses, and they plough that money back into those businesses in the early days.
How is Her Majesty’s Revenue and Customs meant to know where the dividend income comes from, because when people fill in their tax return, they do not have to say the source of it? It could be dividend income from massive stock market investments, and why should they get subsidised for that?
A whole range of practical proposals has been set out by the Treasury Committee, ExcludedUK and many others documenting the other paperwork that could be presented, including records from tax returns and so forth, that can make sure that this scheme is not open to fraud. If the political will is there, a way can be found using a range of different documentation to demonstrate that the money that people are applying for is absolutely legitimate. We can look at bank statements, for instance. It is not beyond the wit of people to make sure that people in our constituencies are not literally having to go to food banks, as an hon. Member mentioned the other day, in order to be able to put food on the table.
When I raised this very issue with the Treasury Minister, I highlighted the fact that the records are held in Companies House and all HMRC has to do is marry up the records. The reason he gave was that they did not have enough staff at HMRC. Is that not just a complete disgrace?
The hon. Lady is exactly right. Just a first step will be for the Government to acknowledge that there is a problem. Instead of sticking their fingers in their ears and going, “La, la, la”, they need to accept there is a problem here, and I am sure if we all got around the table we could find a way through this.
The vast majority of those small limited companies do not have commercial premises either, so they do not qualify for business grants. Nor do they see taking on large debts in such an uncertain business landscape as a realistic option. Furlough has been a Catch-22 for company directors: unpredictable cash flow means their salaries are low, so the scheme does not cover living expenses, yet if they furlough they are not allowed to work on saving the businesses that are in question.
The scheme has also routinely excluded carers and parent. As part of its inquiry into the impact of covid-19 on maternity and parental leave, the Petitions Committee heard evidence from the brilliant campaigning group, Pregnant Then Screwed. It was told that, because the self-employed scheme fails to properly accommodate women who incur a loss of earnings when taking time off for maternity leave, the gender pay gap among the self-employed, which is already at 43%, will increase, as will the likelihood of women’s businesses failing due to a lack of financial support.
The hon. Member is absolutely right that people furloughed generally are not allowed to work. But there is an exemption that the Government brought in for company directors who are furloughed—they are allowed to carry on with their company director duties, including saving their business.
If they do not have any money, they cannot save their business, can they? That seems an odd intervention to make.
The Petitions Committee urged the Government to amend the scheme to take into account periods of maternity and paternal leave to ensure fairness and equality, yet, once again, Ministers have deliberately looked the other way. That phrase “whatever it takes” apparently does not stretch to ending discrimination against self-employed women. Nor do they care very much about freelancers, especially those on short-term PAYE contracts, as is now common practice because of HMRC requirements. They are caught between a rock and a hard place: denied access to the job retention scheme and the chance to be furloughed, yet often not earning enough from self-employment to qualify for the self-employed scheme.
In some sectors of our economy, freelance working is especially common. In my own Brighton constituency, for example, a number of people work in the arts. Three in four jobs in the arts across the country are freelance. They are the people who make the plays, the musicals and live experiences that are a part of the fabric of British life. We do not always see what they do, but they are invaluable, yet one in three of the skills base in theatre, for example, have missed out on any Government support since March, with disabled people, people of colour and early career workers disproportionately affected. Young people are also over-represented compared with other sectors of the economy. Therefore, rather than recovery, we see a sector that is facing total collapse.
Failure adequately to support the cultural, creative and events industries has put at risk 16,000 jobs across Brighton and Hove and £1.5 billion in turnover. My inbox, like, I am sure, the inboxes of many other hon. Members, is full of emails from constituents forced to abandon long-standing careers in the arts because there is no income support for them as freelancers.
Many working in media and journalism are similarly struggling, as the National Union of Journalists has evidenced, with its members routinely treated as employees for tax purposes, yet not eligible for furlough and not afforded the same protections and rights as staff when it comes to employment law.
Another group of people hard hit is those who choose to combine self-employment with PAYE income. I have a number of constituents in that situation, often as a result of being midway through making the transition to running their own company and being wholly self-employed.
None of this is inevitable. All of it is the result of a conscious choice by the Government to abandon anywhere between 3 million and 6 million self-employed people and freelancers. As the current self-employed scheme winds down, now is the time to change tack and do the right thing by these people. The details of a more inclusive scheme have been set out by the campaign groups and by the Treasury Committee. The ForgottenLtd group published a rescue package. Backed by the Federation of Small Businesses and other business groups, it sent it to the Treasury over a month ago, and it is still waiting for a response.
I appreciate how much other people need and want to speak, so let me quickly, in my last few minutes, outline three things that can be done. First, we can retrospectively expand the self-employed scheme. Bring those people who have been excluded from it into its ambit and make it fair by retrospectively starting it from 1 March to give it parity with the furlough scheme.
Secondly, as well as looking back, we need to look forward, so the Government should immediately extend the duration to the many sectors where the self-employed are a significant part of the workforce and which will not be back to anything like normal for some time to come. Thirdly, the Government should be looking at ways of keeping pace with the changing shape of the economy, balancing public health and economic priorities with the likelihood of more local lockdowns, for example. Part of the answer to that is a basic income scheme. The self-employed and job retention schemes do not work in tandem with the welfare system and therefore do not approach anything like a proper safety net. Many people have not been able to claim universal credit. Some have received no support whatever and the consequences are devastating, so much so that ExcludedUK has been working with the Samaritans on creating a dedicated helpline called Mind the Gap for those experiencing mental health problems. There is a simple and effective way to start to put things right and a universal basic income delivered via a welfare system that lifts everybody up would be a key cornerstone of that.
In conclusion, on Tuesday the Chancellor said he had
“not hesitated to act in creative and effective ways to support jobs and employment,”—[Official Report, 15 September 2020; Vol. 680, c. 160]—
and promised he would continue to do so. The self-employed and freelancers rightly want that creativity to apply to them as well. The Treasury has demonstrated time and again that it does not understand self-employment, so at the very least those of us standing up for the excluded are asking this again today: please will the Minister go back to the Treasury team and ask them to meet us so that at the very least they can understand what is at stake here? The stakes could not be higher: people’s businesses are being destroyed and their lives are being destroyed. That is not right and that is why so many Members want to speak in this debate.
What a powerful start to this debate we have just heard from the hon. Member for Brighton, Pavilion (Caroline Lucas), laying out with passion the case that has, to some extent, not been heard by those on the Treasury Bench throughout this crisis.
I want, in part, to echo a number of the points the hon. Lady made and take hon. Members back to the start of the crisis when all of us as Members of Parliament were met with a series of increasing issues from our constituents. They were worried about not being able to get groceries from their local grocery store. They had loved ones who were overseas. They were worried about their jobs. People could not get loans to keep their businesses supported.
Time and again, those issues were sorted out by the Government to a greater or lesser extent and answers were found. At the end of all that, however, as many hon. Members will know, there was one group that remained excluded from a number of levels of support or where their ability to access that support was not sufficient—the millions of people in this country who are self-employed.
I want to go through some of those issues passionately, if I can, but also with facts. I am sure the Minister will respond with facts, and quite rightly so. She will, I am sure, mention the fact that the Government did find the right arteries, if I can call them that, to get the support to people, particularly those in the job retention scheme and others. That was a tremendous success. The ease with which people were able to access the support when they qualified was also a tremendous success.
The overall record for the Government in terms of economic programmes and international comparisons was also a great success. However, this debate is not about those successes; it is about the omissions from those programmes. A fact it would be helpful for the Minister to provide is to reconcile the difference between the Government’s assertion that 95% of the self-employed are covered and the other assertion that there are 3 million excluded. That would be a helpful reconciliation to have.
It is important for those on the Treasury Bench to understand the issues for the self-employed that have made that speed to get a response so difficult: the fact that their income is lumpy and unpredictable and the fact that they have a variety of employment structures, often taken up over the years at the request of those on the Treasury Bench, make it difficult for schemes to come into place.
Will my hon. Friend allow me to assert the fact that some people who are self-employed have been able to get back to work, but many involved in large industries such as culture, entertainment, film and music have not been able to because those events are not taking place?
My hon. Friend is precisely right. That is one of the three issues the Government really need to focus on as they consider their response to this debate. If we take wedding planners, theatre, live events or conferences, we see that the Government are asking those sectors to remain closed but what is their level of support? Literally hundreds of my constituents in those sectors still cannot earn an income anything like they would have earned in normal times.
I urge the Government also to consider the newly self-employed. We had issues with people who changed jobs from February to March, when the scheme came in. The Government did find some change there, but that was where someone’s change was measured in a matter for weeks. The self-employed can be measured for a matter of months and they still cannot get included because their tax returns are measured on an annual, not monthly, basis. What will the Government do, for example, for a pet care business in Biggleswade in my constituency that suffered precisely because of that?
The criteria for the self-employed were more complex than for those in any other of the schemes that businesses or individuals could apply for. It got to a point, which I will return to in my final comments, where something in what the Government were trying to do for the self-employed was beyond the issue of providing support. I had a musician from Upper Caldecote and a performer from Sandy who were not able to access the scheme because they felt they fell on one side of the criteria and not on the other. If it was good enough for the Government to think of complex criteria for the individual to claim, why could the Government not sort out the problems for people by cross-referencing their dividends so that they could say that they were genuinely self-employed?
It is important that the Government get to grips with the issue of those who feel that they have been excluded, because the self-employed provide so much for our economy. They are the innovators. They are the people who will undercut competitor prices to deliver a better product. They want to over-deliver, because for self-employed people, it is not just about business; it is about themselves. It is how they behave and how they interact with others that is so important. The UK gets so much from the self-employed. We get a quarter of a trillion pounds of contribution to the British economy. We get higher growth. We get a world-beating labour market in terms of its efficiency. We become a front-foot nation. That is why the Government need to act.
I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing this debate and thank the Backbench Business Committee for putting it forward. It is a shame that we have to cram six months of misery into an hour and a half, but we will do our best.
Many of those excluded from Government support over the past six months work in the creative industries—in TV, theatre and the arts, but also in events and exhibitions. Sometimes I feel I have got all 3 million of the excluded in my constituency, which is very arts and ents heavy. With 70 years of the BBC, we have grown a massive media industry, including commercial broadcasters. We have three highly regarded theatres in the Lyric, the Bush and the Riverside. We have major national music venues, such as the Hammersmith Eventim Apollo, the Shepherd’s Bush Empire and the Olympia exhibition centre. Such venues have had a double-whammy, because in many cases they and their industries do not get any help and are not being allowed to open—it is likely, the way things are going, that that will be further delayed—and many of them rely on exactly the excluded groups we are talking about today.
Of course this is not just about those groups. I have been involved recently with everything from the wedding industry to the Bar. Anything that brings barristers and wedding planners together must be quite extraordinary. We go to them at different times of our lives when we may be happy or sad, but there is an interesting point there, which is what all these organisations have in common. Often they are entrepreneurial. Often they are risk-taking. Often people who are at the beginning of their career are investing and have limited incomes. Often, also, they are following professional advice from accountants and the Treasury that has got them into the situation they are in. They are not wilfully ending up in this situation; they are there because they have entered into it in good faith.
I have to declare that I was a self-employed barrister for a number of years, and the figures from the Bar Council say that not only have three quarters of chambers lost 50% of their work, but the majority say they will not be able to last more than six to 12 months. Some people may not cry many tears over that, but the fact is that these people—I hope that many of them are successful and go on to great careers—cannot make do on the income that they have, and they are being done down in that way.
I have so many letters from constituents, and often they are from couples who both work in those industries. I think that most of us know the common problems. They could be people who are just above the £50,000 earnings threshold. They could be people who recently became self-employed having set up their businesses. They could be people who have moved between jobs. They could be people whose incomes come from a range of different sources. Whatever it is, they fall through the gaps in the Government’s scheme, and they cannot get any help at all in many cases.
The Chancellor, of all people, pooh-poohs them and says, “These are wealthy people,” and talks about dividends, but I have a letter from a constituent who gets £10,000 basic and then relies on dividends to top up their income. I could go on for a very long time—I am sure all Members could—in relation to these matters, but I will end on this: whereas we have got our act together with the Excluded UK all-party parliamentary group and through ExcludedUK, the Government are all over the place. We often have to deal with four different Departments to get an answer. We are taking two or three months to get Departments to answer. Please will the Treasury Minister sort that out, make the change retrospective and help people who are genuinely in need?
Businesses up and down our country face pressures they never expected, challenges they never predicted and hardships they never sought. Rightly, the Government stepped up and came to their aid in their hour of need—grants, the furlough scheme, bounce back loans, and much more. The Government have provided to businesses in all four nations one of the most generous and supportive packages of economic measures anywhere in the world.
That said, my constituency, a coastal community, with an economy at its core dependent on tourism, the arts, music, creative sectors and hospitality, has been disproportionately hit by coronavirus. Hastings and Rye is a beautiful constituency that has seen a revival in recent years of its music scene, artistic events, creative kinship and gastronomic offerings. We only have to compare Hastings old town 15 years ago with today to see the massive winds of change that have blown through our streets.
Those who have helped to revive the parts of this beautiful constituency, however, are now themselves in need of support, for they are the freelancers who are the backbone of many of these sectors and have thus far gone without much Government support. From musicians to artists, writers to journalists, actors and performers, they put the soul and beat into the streets of Hastings, and it is only right that we support them now in their hour of need, because once coronavirus is over and we are out in the streets celebrating once more, we will want our musicians, actors and artists there to entertain, inspire and lift us up after this dark episode in human history.
This is not just about the performer; it is about the fabric of connections that bind the whole industry together. These performers work in partnership with each other and with theatres, commercial organisations, charitable trusts, schools and local groups, so by supporting our freelance or self-employed performers, we help the whole industry to stay afloat and we build community resilience.
This is not just about individual finances; it is about experience and skills being lost and young people not being encouraged to choose the creative industries as a career. Being self-employed in any industry provides the freedom and flexibility to go where the work is, but during the pandemic, work dried up overnight for many people, and freelancers continue to struggle as protective measures against coronavirus continue to affect many industries.
Like my hon. Friend, I represent a coastal community, and many of the people she has mentioned I recognise. May I add my voice to the calls to the Government? They have done a tremendous job during the pandemic to support businesses, but those whom she describes have been badly hit, particularly those who have been prevented from carrying out their work because of Government regulation. Surely, they deserve additional support.
I agree with my hon. Friend. Numerous freelancers did not have a financial buffer and, unlike employees, were not entitled to be furloughed. We must not forget the small business owners who pay themselves mostly in dividends and earn under the threshold. It is often a more flexible way of payment that can keep money in their businesses to keep them going—many have used dividend payments to legally mitigate their tax payments—but there has to be some encouragement for entrepreneurs taking risks and setting up businesses and employing people.
Our SMEs provide the backbone of our great nation. The Government rightly took the bold and necessary decisions to provide an exceptional package of financial support to businesses up and down our land, but now the Government must go further and consider the support given to our freelancers and self-employed as we turbo-charge our economy out of the pandemic. For we as a community will look for our creative freelancers once all this is over to lift our spirits once more and inspire us into happier, healthy and more prosperous days.
I thank those Members who have been championing the self-employed for the past six months. In Northern Ireland, about 15% of people are self-employed, which is higher than average, and of course the scheme has been welcome, vital and suitable for many people, including those back already to something approaching a normal working life. For me, however, as for other Members, the hole in the scheme became very clear from my inbox—from the newly self-employed without last year’s tax return, to the limited director who pays herself with dividends as and when she can; from the PAYE freelancer, the part-time freelance, to those just over the threshold or who took time off for sickness or maternity, having tried to build a career that could balance their home and work life, and now feel abandoned.
In short, the scheme did not reflect the modern economy and modern work practices, nor the ways in which so many had been living. These are individuals who had taken a leap of faith with their skills or had been manoeuvred into their working arrangements by the casualisation of the economy in their sector. We are talking about the tradesman, the contractor, the small and growing business—the red blood cell members of our economy, driven, willing and creative: attributes we will need so much as we rebuild after the pandemic. Some have already gone under because they could not wait for business as normal to return, and very many more are edging closer to a similar fate. In my constituency, since the start of the pandemic, 2,300 more people are claiming universal credit. It would take every minute of the time we have today to talk about how unfit for purpose and unfair is that system that so many more people will be thrown into in coming months.
I want to use my limited time to focus on the creative sector in Northern Ireland, which is 5% of our economy and growing fast. It is not only fundamental to our tourism product but fundamental, of course, to who we are. At home, now and in darker times, the arts was the shared space—the organic place—where people of all backgrounds and different views worked and enjoyed themselves together in a way that a Government in Northern Ireland could not create in their wildest dreams. It was, as Liam Neeson said, our north star and our compass. He said that at the Lyric theatre, which is the heart of my constituency and the heart of the arts and culture.
The hon. Lady is very passionate in what she is saying, and I totally agree with her. One of the drama clubs and theatres that has done exceptionally well is Bangor drama club, which has closed after 90 years. Many of my constituents participated in that for the camaraderie, the coming together, the friendships and the wonderful productions. Does she agree that the Minister here and the Minister in Northern Ireland must ensure that historic venues such as this can be opened once more as the community hubs that they are and can be again?
Of course. The hon. Member will know that community arts also feed into our professional workforce, attracting and creating so many jobs. The economic value is clear: the arts give us £7 for every £1 spent. We have world-leading expertise—genuinely world-leading expertise—in all areas of the arts in Northern Ireland. But because it is a sector that requires collaboration, it is almost necessarily casualised, and very few people are working in static economies.
I think we are all dying to get back to the theatre, back to a book launch, back to a gallery or back to a gig, but if we do not take action, the sector will not be there. In fact, if we do not take action the things that, in many cases, got us through the past six months—the books we read and the TV we enjoyed—will not be produced in the same volume again. That requires taking action: the type of action that the hon. Member for Brighton, Pavilion (Caroline Lucas) outlined so comprehensively, and indeed, as the hon. Member for Strangford (Jim Shannon) said, action within Northern Ireland. I am calling on the Executive to release and to thoroughly target the £33 million that was our proportion of the arts intervention in July within Northern Ireland. If we are not spending as much as the Conservatives on the arts, we have a bit of a problem. Indeed, we need a wider economic strategy that addresses all those who have been excluded and left out within the economy.
The whole economy is struggling, of course, but the arts, in particular, has so little chance of recovery. It simply cannot open in the same way again. If universal credit is all that people are going to be able to access—if they are lucky, after a fight—how are they going to stay afloat? How are they even going to get back on their feet, let alone manage to retrain or retool for a future economy? This is going to have a long-term impact that is not just economic and not just about our cultural value, but will affect equality in the workplace, skills, growth and innovation. It is not too late to act. The scheme can be extended in scope and duration. It can be applied retrospectively. The support that other advanced economies have provided can be given. No one is saying that this can or should last forever, but nor does anyone believe that this crisis is over. Leaving people with nothing and at the financial cliff edge turns off the light at the end of the tunnel.
It is a pleasure to support freelancers and self-employed people in my constituency who have fallen through the cracks of what I recognise has otherwise been an extremely generous financial package provided by the Treasury for so many people. As I have gone about my constituency over the past few months, so many people have thanked me—people in business and employees—for the support that they have received from the Chancellor. However, I want to use this opportunity to highlight three cases in my constituency.
The first is that of Andy Warren, a co-director of the long-established Congleton company Printing Group (UK) Ltd. He refers to the fact that dividend-receiving company owner-managers are effectively discriminated against from receiving support. He says:
“HMRC is happy to accept our word on our income tax returns (that are self-assessed), on our corporation tax returns (that are self-assessed), on the furlough claims we make for our staff, and on our entitlement to a bounce-back loan. We even have to self-declare that we have to repay child benefit. None of these are verified by a third-party, we are taken at our word. So why is it not acceptable regarding our dividends?”
Secondly, I would like to turn to the concerns expressed by another constituent, Dave Boutcher, who is a director of Thorn Distribution Ltd, a warehousing and distribution company with 15 staff. Neither he nor his co-director have received anything by way of benefit from any national scheme or council support package for themselves or their company. They have not even received any furlough money, due to a technicality on the payroll submission date, but being the honourable employers that they are, they have paid out some £100,000 of their own money to their staff, effectively furloughing their staff out of their own funds. I wrote to the Treasury about this on 13 May and received a generic reply letter on 8 September. I am asking the Treasury to look again at their case, which their accountant says is one of the worst they have seen in a system with no flexibility and no appeal.
Finally, I would like to talk about my constituent Lauren Scott, a self-employed musician. We have heard a lot about musicians in the debate, and I would like to tell the House about Lauren’s circumstances. Lauren is a highly professional harpist, and her husband Andy is a composer and teacher. Over the past 10 years of my being a Member of Parliament, no individuals have done more in my constituency to promote the arts, and particularly the engagement of young people in music, than Andy and Lauren Scott. I have heard Lauren perform many times as a harpist, and I have heard one of Andy’s pieces premiered at the Southbank Centre.
The hon. Member is absolutely right—it is about not just these people’s talent, but the next generation that they are nurturing.
“I am a self-employed freelance musician of 25+ years. I have only ever been a professional musician. During that time I have always paid my taxes and never considered myself to be a burden on the state. I am highly regarded within my field and very often my work is booked into my diary up to 1-2 years in advance. All my concert work has been cancelled…Performing was 80% of my work/income and private teaching was 20%. The only work I now have is my teaching.
At the start of lock-down I applied for 18 jobs with local supermarkets for roles ranging from shelf stacking to driving delivery vans. I did not succeed with any of those applications. It appears that 25 years of playing guest principal harp with all the professional orchestras playing at the likes of the BBC Proms, recording live broadcasts and performing at all the major concerts venues across the country was not the right kind of experience Aldi and Tesco were after.
I will not be able to ‘get back to work’ when the current SEISS ends in October. By now my diary should be full of bookings for 2021, but promoters are not booking and I have nothing booked in for next year…
Please could you ask for there to be consideration to extend the SEISS for self-employed musicians and the Arts Sector. Having high quality live events happening in major venues… is precisely what is going to attract people to visit those city centres.”
Gary Thomson is a taxi driver in Edinburgh—one of many in the city. He has been driving for years, and until last year he worked for a private company and paid his taxes and national insurance every month. A year ago, Gary realised his lifetime ambition of setting up and started working for himself. He invested his savings and went into the unknown. It was working up until the virus struck, when demand for taxis pretty much disappeared overnight.
When Gary tried to apply for support, he was told he had not been self-employed for long enough and was excluded, even though he had been paying his taxes continuously over the qualifying period. That is unfair.
Sarah Lachhab is a tour guide in Edinburgh—one of thousands of workers in that industry in the hospitality sector. She has been running her own business for more than three years, but up until the beginning of 2019 she did not make enough from it to pay the rent, so she had some other bar jobs in the hospitality sector. When Sarah applied for support, she was told that because most of her earnings had not come from self-employment over the past three years, she too would be excluded from the self-employment income support scheme. Of course, because by then she was doing okay as a self-employed worker, she had given up the other payroll jobs. That meant she was excluded from the coronavirus job retention scheme as well. She fell between the two stools, and that is unfair.
Georgina Allison is an architect in Edinburgh. She has been self-employed for a while, but three years ago she took time off to look after a newborn child. Because her earnings were very little in that year, it brought the average of the three years for which the calculation was made much lower than it would have been otherwise. I have asked HMRC to disregard maternity periods and childcare in making the calculation, but it has refused to do so. That is not only unfair; it is blatant discrimination against female self-employed workers in this country.
All of those things need to be fixed, and it is possible to fix them. For six long months, dozens of MPs—or perhaps hundreds of MPs—on behalf of tens of thousands of constituents, have been arguing with HMRC and the Treasury to try to get something done for the people they represent. I think we have all been stunned at the degree of intransigence we have met.
We are constantly invited to applaud the schemes that have been set up. There is talk about how many people they have helped and how much money has been spent on them. I acknowledge that—I will sign anything you want to say how great it is—but that is not an excuse or a rationale for refusing to fix problems that are manifestly there in the system. In fact, the very scale of the schemes and the amount that has been spent on them make it bewildering that for a very small proportion more, the Treasury would not plug all the gaps that are clearly there. When we come to remember these schemes, I fear that they will be remembered not for their largesse and generosity, but for the parsimony and unfairness that has led to many millions of people being treated unfairly in this country.
It is not good enough for the Treasury to refuse to answer questions, to refuse to take meetings, to sit there and pretend that it does not understand what is happening. There is no reason for that, so I appeal to the Minister and her colleagues: please open your minds, open your ears and meet with us so that we can discuss the things that need to happen to put these schemes right.
For the sake of transparency, I refer hon. Members to my declaration in the Register of Members’ Financial Interests. At the point when I was elected to this House, I was still self-employed and, with a bit of cross-over to complete a couple of projects, I remained so before I completely ceased trading much earlier this year.
As someone who was self-employed for 15 years, I come to this debate understanding what self-employed people go through and the risks they take, often putting their own homes on the line in order to build a business. Most importantly, I speak in this debate because there are some 12,000 people registered as self-employed in my constituency of Buckingham.
The self-employed and those who take the risk to start their own business will always have my absolute respect and admiration. They are the wealth creators, not just for themselves but for the supply chains and services they use to go about their trade or profession. They are the vital disrupters who propel competition and innovate. Those who take this worthy entrepreneurial path do so, as I have mentioned, at serious personal risk: their own homes are on the line. It is because of that very risk that when crisis or disaster strikes, such as we have seen with coronavirus, they are left the most vulnerable if their trade cannot continue through no fault of their own.
I want to put on record my absolute thanks and gratitude to the Government for making available a support package that has supported 4,300 self-employed people in my constituency, receiving grants worth a total of £14.5 million. It must be acknowledged that this Government’s covid support scheme for the self-employed has been among the most generous in the world. However, like so many other hon. and right hon. Members, I have heard far too many stories of those who have fallen through the gaps.
Each and every freelancer, contractor, self-employed businessman or woman who has come to my surgeries or written to me has a different story to tell, and that is important because it speaks to the diversity and vibrancy of entrepreneurialism and how it works and thrives. Not everybody fits into the sort of box that I fear HMRC officials would deeply love them to neatly sit in. Our challenge is how we make up for those losses if we are to come together as a country and bounce back.
I have argued in the past and written to the Chancellor of the Exchequer and my other hon. and right hon. Friends in the Treasury calling for a support package. However, if such a retrospective package cannot be delivered, I urge my hon. Friend the Exchequer Secretary and the whole Treasury team, as they look to the upcoming Budget, to look at ways in which we can stimulate the self-employed sector and ensure that we are recognising them in the tax system, including the risks they take and the costs they incur. For example, the value of every invoice is not necessarily profit—there is cost in there that needs to be taken into account—and dividends are a legal and legitimate way in which people have paid themselves, on the advice of their accountants, for many decades.
Let us find a way to support all our self-employed, freelancers and owner directors of limited companies, and give them the stimulus to grow our economy.
The hon. Member for Buckingham (Greg Smith) made an excellent speech, and I hope the Minister listens to him in a way that I have not managed to make the Treasury listen to me so far.
I have had constituents from all walks of life reach out to me over the last few months—carpenters, architects, taxi drivers, musicians, accountants—and all with one thing in common, which is that they have been very badly let down by this Government. People who have been self-employed for less than a year, limited company directors, freelancers, the self-employed earning over £50,000 have all had their income slashed and are expected to get by on universal credit.
We cannot stress enough that this was totally unexpected. If someone is self-employed or a freelancer, they expect the ups and downs that accompany that state as they take risks, but nobody expected covid to happen. This was a one-off event, and in such circumstances people look to the Government to step in and provide a safety net.
Like the hon. Member for Edinburgh East (Tommy Sheppard), I have heard from self-employed new mothers who have been financially penalised for raising a child because maternity leave is included in the self-employment calculations as a period when they have not made a profit. I have heard from a director of a limited company whose income supports her, her partner and their four-year-old daughter, but her partner was on maternity leave as lockdown struck with a baby due in four weeks, and they were not getting any support at all.
Another constituent sent me this, which is worth reading in full because it sums up the impact that people are experiencing:
“I went self-employed 9 months ago and haven’t so far submitted a tax return. My work is drying up and I just don’t know how long I will be able to keep my head above water, I’m so worried that I’ve been having panic attacks. My brother is in an even worse situation. He’s a director of a small limited company and pays himself via dividends, with his average earnings a fraction over the £50k cliff-edge threshold. He’s a heating engineer who can only do breakdowns. His partner can’t work as she’s a hairdresser and they have a young family. My brother's income has been slashed to virtually nothing and they have next to no income to pay their bills. They are in such a lot of trouble. If I knew if I could keep working I could help him out. My parents are trying to help but they can’t if this goes on for very long.”
That was in early April.
Five months down the line and despite repeated pleas to the Treasury, there is still no support for people like them. The Chancellor bragged that his March Budget was pro small business, but small limited companies have received neither business nor personal support. Some 20 directors of small limited companies reached out to me and I have tried to lobby on their behalf but, as everyone who has spoken today has said, the Government simply would not listen.
Since lockdown, I have sent 16 letters to the Chancellor about flaws and gaps in the Government’s personal financial support schemes. If we take into account the business in my constituency on whose behalf I emailed to see if they could get loans or business grants, I sent 35 emails to the Treasury. The vast majority of those received a cut-and-paste response from a civil servant in the Treasury’s correspondence unit—not even a Minister—that was essentially a printout of the Government’s frequently asked questions.
As colleagues on both sides of the Chamber have mentioned, people in the creative sector have possibly been dealt the worst hand of all. Many of them, especially musicians, still cannot legally go back to work. I hope the Minister listens to us all today on both sides of the House, does the sensible thing and extends the furlough scheme, as we heard in the previous debate, for those who cannot return to work. However, the Chancellor also needs to listen to what MPs are saying today, finally acknowledge the plight of the excluded and do the right thing by them too.
I thank the Backbench Business Committee for securing this debate on an important topic. It is a topic that has featured frequently in my inbox and consistently at surgeries. I am sad that I follow my hon. Friend the Member for Buckingham (Greg Smith), because he has taken so many of the issues that I wanted to talk about in my speech. He, though, was very eloquent and said them in a far better way than I could do.
Early on in my career, I was engaged under a freelance contract, and before coming to this place I worked in a sector that used freelancers and self-employed talent, so I have a deep understanding of the issues that affect those who are self-employed. If someone works for themselves, their raison d’être to get up and go in the morning is to go out and find business—to work. When they cannot work because the Government have told them to stay at home and has locked them down, it is counter to everything they do. I represent Warrington South, an area in the north-west of England that has a particularly high level of self-employed people. More than 20% of the constituency work for themselves. It is an issue that has come to the forefront there.
As other hon. Members have done, I pay tribute to the Government for the support they have given to the 2.7 million people in this country who are self-employed, costing £7.7 billion. Self-employed people have been able to claim grants worth 80% of their average monthly trading profits, up to £2,500. It is without doubt one of the most generous schemes in the world.
I remember clearly, in late March, when we first went into lockdown, that the furlough scheme had just been announced and I took a call in my office from a gentleman called Stephen, a self-employed carpet fitter. He was incredibly concerned about his self-employed status and what it would mean for him. I remember being able to phone him back a few days later and give him the news that the Chancellor was launching a scheme to help people like him, and I remember the words he used: “Thank you, Chancellor.”
Sadly, I took a call on the same day from a couple who worked in the entertainment sector, Jo and John Martin. Jo books talent for cruise ships and John is a performer. They, too, were incredibly worried and the call I made back to them, thinking it would be positive, ended up not getting quite the same response, because the way they had constructed their self-employed operation meant that they were not eligible for anything. Today, they still do not understand. They have paid every single tax that was due, on time, all the time, but have had nothing. That is the bit that confuses and frustrates many people.
I want us to look forward; I want to see a focus in the forthcoming Budget in November on ensuring that we do everything we possibly can to encourage businesses to start up and operate. We are providing significant cash incentives to businesses to take on people and paying them £1,000 to train them up. I hope we can look carefully at what we are doing for people who want to go out on their own and set up their own businesses. I want us to make sure we have mentor schemes in place. When someone launches their own business, stepping out on their own, without the ability to wrap a monthly salary around themselves, it is a difficult time. As a Government, we need to ensure that we are ready to support those people and give them every level of assistance to get the business up and running. We need people who work on freelance and self-employed contracts to be firing on all cylinders, ready to go, and I look forward to economic support targeted in a creative way in the autumn statement.
I can see that several people are hoping to speak. We are running out of time, so I am afraid that I am going to take the time limit down to three minutes. I am sorry that that gives a little shock to the hon. Member for Stirling, but I know he can deal with it very well.
You are very kind, Madam Deputy Speaker. I assure you that I have had more shocking things to deal with this week than that.
I warmly pay tribute to the hon. Member for Brighton, Pavilion (Caroline Lucas) for securing this debate and praise to the rafters the ExcludedUK and #ForgottenLtd campaigns, which have done so much to bring this issue to the forefront. I also praise colleagues for the constructive, bipartisan way in which we have held this debate, and in that spirit I reach out to those on the Treasury Bench and to Treasury Ministers. I do feel for them, as this has been an unprecedented crisis, needing unprecedented solutions, on an unprecedented timescale. So we are not here just to criticise; we do have solutions to the problems.
The Scottish Parliament cannot borrow at the moment. I would like it to, but at the moment the UK Government does this on our behalf, so it is our job to make sure that the money is well spent and that the support is extended and better targeted. Business is still in crisis. We need to acknowledge the seasonality of many businesses, particularly in Stirling and in Scotland, and we need to look after the self-employed better. But what hurts—I would like some response on this—is that the Chancellor said that no one will be left behind. I promise and assure those on the Treasury Bench and colleagues that in Stirling, Scotland and the UK lots of people have been. They feel aggrieved and hurt, and that needs to be acknowledged. I have supported the schemes as far as they have gone, but we are talking about people who are not Wetherspoons, British Airways or Costa Coffee. We are talking about pram shops, electricians, taxi drivers, mortgage brokers music shops, gym equipment makers—the real entrepreneurs, who are the lifeblood of the Scottish economy.
We have a number of concrete requests to make—I have tried to boil this down. First, the Government should acknowledge that there are gaps in support and that some people have been left out and left behind. I ask the Government to meet us—to meet colleagues from across the House, and meet ExcludedUK and #ForgottenLtd. I ask them to continue the self-employed scheme beyond October and retrospectively expand it to cover seasonal workers, freelancers and the recently self-employed, and to look into the specific gender pay aspects of the support schemes, which have let down so many women in particular.
We are not out of the woods yet—far from it.. I have just heard of one case of covid being confirmed at the University of Stirling, and we must ensure that we keep people safe throughout the times to come. If the Treasury will not act on the reasonable suggestions made by Members from across the House today, we will. Let me give a final statistic: 71% of Scots want the Scottish Government and Scottish Parliament to have full financial powers to protect our businesses and to deal with the crisis. If the UK Government prove that they will not act, they build the case for the transfer of powers to Scotland, because we have a fully functioning, law-abiding Parliament and Government who will.
I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing this debate on a very important issue. If the Conservative party is anything, it is the party of entrepreneurs, strivers and people who get out of bed in the morning to create wealth, which is one of the reasons I am a Conservative. I have also been freelance—self-employed—the past couple of years, and I know how precarious it is and how one may not know how much money is coming from one month to the other. When the coronavirus crisis struck, my heart went cold when I heard accounts from some of my constituents about the sudden 100% loss of income overnight.
As we have heard, a huge amount of support has been provided, through a range of different schemes. That has totalled some £280 billion, with quite a lot of it focused on self-employed people. The Treasury Committee, on which I serve, produced a report on those who are excluded—it was quoted earlier—for which we talked to a range of different groups. Many people have been in very difficult circumstances, and I do not wish to minimise that, but I will say—because we have heard so many Members speak from one side of the argument—that a lot of them did get some form of support. They might not have got the self-employment income support, but often they got other forms of support, such as VAT deferral or other tax deferral, or they did not have to pay business rates, or they received grants. There is also the backstop of universal credit. I totally accept that universal credit is not much money and that it is very difficult to live on, but everyone should have access to it.
The one big difference between the self-employed and those on the furlough scheme, which we debated earlier, is that the self-employed could continue to work. I know from conversations that I have had with constituents that many of them who are self-employed continued to work, particularly those in the online and digital sector, although I absolutely accept that if they do not have any work, clearly they cannot continue to work.
The other thing about all of this is that the more we think about the detail, the more complicated it gets. We heard the discussion about dividends, for example. Actually, there are so many different circumstances in which people get dividends from different forms of work, with company directors getting dividends from investment funds and so on. It means that we cannot have an automated system. The whole point about the SEIS scheme and the furlough scheme was that it could be done rapidly and at scale because it used data that already existed and was accessible by Government. We could not do that in this case without the equivalent of some sort of self-assessment scheme, with really detailed investigations into each individual’s circumstances, which would have taken six months or so to set up. The Government’s objective, quite rightly, was to get support to as many people as possible as quickly as possible, and they did that well.
Another aspect of paying oneself by dividends, which obviously people do for cash-flow reasons, it that they do not pay national insurance contributions, so they are paying less. It is very complicated, and the more we look into it, the more difficult it is. I join my right hon. and hon. Friends in urging the Government to ensure that we have a Budget for freelancers and entrepreneurs, and to make sure that they are looked after.
I thank the hon. Member for Brighton, Pavilion (Caroline Lucas) for securing the debate, and the Backbench Business Committee for agreeing to it.
I wish quickly to pick up on a comment that the hon. Member for South Cambridgeshire (Anthony Browne) has just made. He suggested that, “As the Government have been saying all along, it is just too difficult.” The fact is that the Government have not even met the Excluded UK all-party parliamentary group or Forgotten Ltd, even though we could help them resolve this. It is difficult, but we can help. The hon. Gentleman said that we must not forget that the self-employed can work. Let us not forget that awful week when the whole of the creative sector, restaurants, theatres and cinemas were ordered to close, sports were cancelled, schools were shut and millions were told to work from home if they could, but millions could not.
Although we are very grateful for the Chancellor’s furlough scheme, there were some quite frustrating days while we were waiting to hear whether the self-employed would get any support. It might have been a mistake on my part, but I put out a single tweet on 13 March asking for people who were self-employed or who worked freelance to contact me with their stories. My inbox almost exploded, with nearly 4,000 contributions, because people’s lives had been thrown into total chaos and anxiety. I heard about work that had been booked in for more than a year being wiped out. I heard from couples, often in the same sector, who lost a whole year’s-worth of work, with childcare costs and mortgages to pay. It had a seismic impact on people’s lives and futures. There is still no mention of support for freelancers. Finally we got the self-employed income support scheme, which I am enormously grateful for. But we cannot get away from the fact that there are still 3 million people excluded from that support.
One of the most recent emails I received was from a lady who is a freelance musician. Because of the crisis, she is now going to a food bank, and she is very grateful for that food bank. Unfortunately, she is not going to be the only one. The Trussell Trust has announced a spike in food bank usage and said that worse is to come, with a possible 61% increase in need compared with last winter, and with half the food parcels given out to first-time users. We are facing a tsunami of deprivation this winter.
I would like to add my support for Pregnant Then Screwed, and my good friend Olga Fitzroy, for all the campaigning they have been doing for maternity and paternity rights. In my remaining 23 seconds, I cannot fail to mention the creative industries, in which I was a self-employed freelancer for more than three decades. We are used to feast and famine, but this is unacceptable, particularly when the Government do not seem to be listening. Please may I urge the Government to extend the furlough scheme for those sectors that are the last to return and to meet with us and ExcludedUK?
Back in March, at the beginning of lockdown, when announcing some financial support, the Chancellor said that he understood people’s concerns about losing their jobs and paying their rent or mortgage and their food bills, and he added:
“You will not face this alone”.
Since that time it has been clear that a significant section of our community has been abandoned—left to face their financial difficulties without any help from the Government and very much alone. The people I am talking about are the excluded 3 million, made up of freelancers, the self-employed, new starters and many others who, through the misfortune of the way that they were employed, were excluded by the Government from any financial assistance at all.
I have had numerous cases of constituents that illustrate the injustice of this denial of support by the Government. Take the example of my constituent Debbie Hassan. Debbie is a single mother of three and a self-employed picture editor for newspapers and other publications who works shifts. Her income went from £150 a day to zero as a result of lockdown. As she was ineligible for furlough or the self-employed income support scheme, the only support she could access was universal credit, at £94 a week. Or take the case of Anna, who, after being made redundant some years ago, set up her own media consultancy company from her loft. In an email to me, Anna said: “I have been five months without any income or meaningful support. As a sole director, PAYE, of my own company, there was no help. I was forced to furlough on less than half my mortgage and council tax, let alone all other bills, such as utilities and food. I am single, so there was no back-up for me.”
Let us take the case of another constituent, S, who said: “I am self-employed. I work mainly as a British Sign Language deaf-blind communicator guide. I usually find I am turning away work. When lockdown happened, most of my clients started to shield, so my income stopped immediately. I met the 50:50 rule for the self-employed income support scheme for my work, but I get some of my dividends from my husband’s limited company, which made me ineligible.” Her husband’s limited company was in set construction and its work also stopped immediately when lockdown was announced.
I have many other examples, including freelancer musicians who have received nothing while their contemporaries in orchestras and thus on contracts were furloughed on 80% of their pay. The Chancellor said he will do “whatever it takes” to get us through the coronavirus pandemic. He has totally ignored the 3 million excluded, who have fallen through the gaps and been left to sink or swim. All that is being asked for is that the disparity in support for the excluded is remedied and that they be given the financial support that they deserve and need to survive. If the Chancellor truly wants a quick economic recovery after this crisis is over, he needs to start listening and do whatever it takes to support the excluded, and to do it now.
Following the powerful debate on the coronavirus job retention scheme that has just taken place, this debate is on an equally unfair injustice. I am glad to speak in today’s debate on behalf of the hundreds of freelancers and self- employed workers in my constituency who have contacted me because they fall outside the various covid support schemes. They include high and low earners, working across many sectors, including those that have been devastated, such as the arts and culture, and aviation. They include those working in TV and media. They are minicab drivers and supply teachers. They work in events, IT and other transport sectors. They include those who have set up a company and employ others, contractors, those who work part time and those in the gig economy.
These people generate economic growth. Except for the very low earners, they pay taxes. They train others. They enrich our cultural life. Yet despite the explosion of self-employed and freelance workers in the UK to around 3 million, too many Government policies, tax arrangements and HMRC processes still see the world through the lens of PAYE and permanent workers. The covid recovery scheme is no different from all the others. I think that is why too many freelancers and self-employed taxpayers have fallen through the gap, and fallen for the cultural block of the Treasury and HMRC.
Despite many of us writing letters and submitting petitions, the Treasury is not listening. A number of solutions have been proposed by those affected and we have heard examples of them today. For those in limited companies—those in the TV and creative sector in my constituency have been particularly hard hit—it has been suggested that the Government could use dividend certificates as a form of proof. For those on maternity leave, SEISS calculations could calculate the time spent on maternity and shared parental leave and exclude that. For those who are self-employed, HMRC could use evidence such as the UTR—unique taxpayer reference—to calculate a rough income. For those who earn less than 50% of their income from self-employed work, a taper beyond £50,000 would be appropriate.
Like others, I have not had anything more than a generic response from the Government on this. I acknowledge that many self-employed people have been helped, and the Minister will no doubt reel off the list of how many millions of pounds of taxpayers’ money has been spent, and on how many thousands of people, but what the House and our constituents want to hear is what those in other nations across the world are providing: honesty, acknowledgement that they are listening and, where appropriate, adaptation. Finally, I want to address the issue of universal credit. With rents over £2,000 in my constituency, too many people are excluded from any benefits.
I join others in congratulating my hon. Friend the Member for Brighton, Pavilion (Caroline Lucas) on securing the debate this afternoon and on drawing attention not only to the pivotal role of self-employed people across the UK but to the need for further Government support for them in this time of crisis. This is particularly the case in Wales, where self-employed rates in rural areas such as Ceredigion are far above the UK and Welsh averages. In the previous debate, my right hon. Friend the Member for Dwyfor Meirionnydd (Liz Saville Roberts) rightly noted the need for sector-specific extensions to the furlough scheme, and I would argue that a similar targeted approach is urgently required to support self-employed and freelance workers, especially those working in the creative, tourism and hospitality sectors, and also in the events sector, which in Ceredigion has been particularly hit this summer, with the cancellation of dozens of local agricultural shows, carnivals, weddings and eisteddfodau.
In the brief amount of time I have available to me this afternoon, I want to echo others in urging the Government to look again at helping the individuals and businesses who have been unable to access any support thus far. I welcome the UK Government’s self-employed income support scheme, but, as has already been noted, almost 3 million self-employed workers were excluded from it, many of whom live in Ceredigion and work in a range of sectors and different circumstances. Composers and architects, newly employed workers and small business owners have all been excluded from support after falling foul of the scheme’s criteria, perhaps by submitting PAYE details a few weeks after the cut-off date or because they have earned too much in previous years.
Another hurdle that needs to be addressed, which has punished far too many, is the requirement to prove that at least 50% of an individual’s income comes from self-employment. That criterion especially disadvantages freelancers in the arts and creative sector, who draw their income from a range of sources. Just as devastating was the exclusion from both the coronavirus job retention scheme and the self-employed income support scheme of newly self-employed workers and those limited company directors who are paid through PAYE on an annual basis.
I am talking here about individuals and businesses who have seen their income completely disappear in recent months and who have little prospect of any work for months to come, and I therefore urge the Government to take action to address these issues, to extend the support to prevent a jobs crisis over the winter, and to look again at the rules so as to help those who have thus far been excluded through no fault of their own to get some support.
Time is of the essence, so I am going to cut to the chase and give a couple of examples from constituents who have been in touch with me because they are ineligible for support because of the timing of when they became self-employed. One email I received was from Steve, a self-employed wedding videographer from Cambuslang, and it sums up the position many newly unemployed constituents have faced with the scheme. He told me:
“I took great comfort in Rishi Sunak’s words that ‘no one will face this alone’. However, because I only became self-employed in December, and despite the huge effect the crisis has had on my business—effectively putting me back to square one—I was unable to receive any SEIS because I hadn’t been self-employed for long enough.”
Lesley runs a photography business and lives in Rutherglen. She found herself ineligible for support under the scheme because, as a small limited company director, she took her income in the form of dividends. She told me:
“As my husband and I are both full-time directors, we are missing out on over £27,000 of support that we would’ve received had we been considered self-employed and treated equally. That money would’ve been retained in our company to pay for overheads and staff, rather than taken by us personally. It’s criminal that honest taxpayers are paying into a system which is excluding them in a time of crisis. It has gone beyond the issue of dividends, these companies need the same support as the self-employed.”
Lesley’s words not only demonstrate the devastating impact that ineligibility for SEIS will have on businesses; they highlight the mistake of bringing the scheme to an end prematurely. Self-employed people working in industries that are still in recovery from the pandemic, such as theatre, live events and productions, want the scheme to be extended for as long as is needed to protect their livelihoods.
This Government must start listening and act quickly to extend both the availability of grants under SEIS and the eligibility criteria for receiving those grants. Like other Members in the Chamber, I am a member of the APPG focused on the gaps in support. I call on the Minister to listen and to arrange a meeting so that we can discuss ways out of this and give options to the people who have been left behind.
I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas), as other Members have, on securing this debate, and I thank the Backbench Business Committee for enabling it.
The hon. Member was absolutely spot on: the self-employment income support scheme must be extended in time, it must be extended in scope, and it must be made retrospective. We have heard throughout the debate how upwards of 3 million people across the UK, including several hundred thousand people in Scotland, have found themselves excluded from the support that the Government have offered, and I add my own commendation to ForgottenUK, ExcludedUK and the Excluded UK APPG for the work they have done in highlighting those instances.
The excluded range far and wide in their scope. They include the self-employed seasonal workers who fall outside the scheme. They include freelancers, and directors of small businesses remunerated by dividends. They include, in many cases, the newly self-employed—and of course let us not forget those who, because of the hard cut-off date of 19 March, missed out entirely on any support through the job retention scheme.
The hon. Member for North East Bedfordshire (Richard Fuller) made a point about the exclusion of the newly self-employed. It is possible to support those in that situation. The Scottish Government did precisely that, using their own resources to fill the gaps. That additional response included £100 million to help the newly self-employed and £10 million to help support those in the events sector who were not able to access any other kinds of support.
Time prevents me from going much further on that, but the Scottish Government certainly flexed their budgets as best they could to spend beyond the allocations that came through the Treasury and Barnett. As my hon. Friend the Member for Stirling (Alyn Smith) said eloquently, the Scottish Government lack the financial powers to extend support much beyond that, but it is not good enough to say, as the Minister did in response to the previous debate, “You’ve got tax powers; off you go and use them,” when the Chancellor prefers, quite rightly, to expand borrowing rather than increase income taxes to achieve that outcome.
The real harm here is the damage of exclusion—not just the immediate hardship, devastating as that is for those affected, but the effect it will have in hampering the economic recovery. I represent a constituency in the north-east of Scotland that has one of the highest start-up rates for businesses in the UK, let alone Scotland. It is no exaggeration to say that those small businesses—those enterprises; those risk takers—are absolutely the backbone of our economy. They include the start-ups, the spin-outs, the home enterprises, the lifestyle businesses, those who are working from home supporting the oil and gas and engineering sectors, the creative businesses, those who organise events, those involved in tourism, the musicians—in short, the creators, the innovators, the entrepreneurs: folk who roll up their sleeves, get their faces dirty and in many cases, as the hon. Member for Buckingham (Greg Smith) said, put their homes on the line to do what they do. Those are the people who will drive the recovery. Hammering their finances and their ability to do all that they do best will not just impoverish them; in the long run, it will impoverish us all.
The hon. Member for South Cambridgeshire (Anthony Browne) said that providing support for the self-employed was complicated and that the Treasury had responded with alacrity. That much is true, but let me repeat the plea for the universal basic income. Surely it would have been better just to give everyone something than to try to cut red tape sideways or do as the Chancellor is often wont to do and obsess about the wrong details, leaving so many people excluded from support.
Many hon. Members have given eloquent personal testaments from their constituents to describe the gaps. We have heard about how pernicious the gender gaps in particular are. I acknowledge that the job retention scheme and the self-employed support scheme were fine as far as they went. I have welcomed and supported them; we have been bipartisan about that. The trouble is, although they are fine as far as they go, we know that they do not go nearly far enough. My plea to those on the Treasury Bench is: acknowledge the gaps and the hurt they have caused the people who have been excluded; please agree to meet those who have been affected; and commit to doing, to quote the Chancellor, “whatever it takes” to help put that right now and for the future.
I begin by congratulating a stellar cast of cross-party MPs, led by the hon. Member for Brighton, Pavilion (Caroline Lucas), on securing this important, well-attended and over-subscribed debate, which the Backbench Business Committee granted in its wisdom.
As we have heard so powerfully, the Chancellor plans to cut off support for every self-employed worker in the country from October, no matter whether they are back at work or back under local lockdown. It is almost as if he thinks that the economic crisis that we are living through is somehow unrelated to the Government’s catastrophic failure on test, track and trace.
As we have heard throughout the debate, the people we are discussing—the self-employed and freelancers across the country—are the backbone of Britain’s economy. They are entrepreneurs, innovators, creators, risk takers and entertainers. They are not looking for a permanent handout, just the support they need to weather the crisis, get back on their feet and help build Britain’s recovery. Let us be honest: they have been an afterthought since the crisis began. Few of us will forget the despair they felt when the Chancellor promised to do “whatever it takes”, yet they found themselves out in the cold when the job retention scheme was first announced.
Without an outcry from the Opposition, we would never have had a self-employment income support scheme and more than 2.7 million people would have missed out on any support at all. Sadly, we do not have to imagine what that would have meant for those people because, if the anguish people felt when they were left out of the job retention scheme package was not bad enough, it was dwarfed by the total despair that 3 million people felt when the Chancellor announced the self-employment income support scheme and excluded them.
Although many groups are affected, I want to highlight those people on repeated short-term contracts. They do not fit into any category, but they have tax records. Surely, with a bit of imagination, people with a long-standing tax record could be helped.
My hon. Friend is absolutely right. There are practical ways through this. We do not pretend that it is not difficult, but the problems are not insurmountable if the Government would only show flexibility and willingness to listen. Millions of people’s hopes were crushed and their lives thrown into chaos and anxiety when they saw the ship was sailing and had left them behind.
I do not need to list the exclusions, but can we drop this idea once and for all that these are all super-wealthy people living it up on savings or shares? One of my constituents affected is a face painter and balloon artist. She has a simple job, which is to bring joy to children, and it is a job she loves doing, but it is a job she could not do when, like every other business, she went into lockdown and her business closed. Now, as she is trying to get her business back up and running, she finds the rule of six has once again crushed the party business. She is not super rich, she cannot do her job through no fault of her own and she has not had a penny of support since April.
We have heard other powerful examples, including from my hon. Friends the Member for Bristol East (Kerry McCarthy) and for Enfield, Southgate (Bambos Charalambous). There are so many examples we could give, but we have so little time and those people have even less time. “You will not face this alone”, the Chancellor said. Unfortunately, that was true in only one respect: they found each other. Through ExcludedUK, ForgottenLtd and other campaign groups, they have found a support network and managed to win a hearing in the huge cross-party support they have built in this House. So why is the Chancellor not listening? Why is he being so stubborn and inflexible? Why, even now, do Ministers refuse the basic request, which is just to meet and talk with people who are willing to come forward with ideas and practical solutions? The consequences of the Government’s failure to act are clear. Before the crisis began, around 15% of the workforce were self-employed. That figure has fallen sharply during this crisis. We heard powerful personal testimony on this from the hon. Members for Buckingham (Greg Smith) and for Warrington South (Andy Carter)—people who know what it means to take the plunge, take the risk and start a business.
We have heard powerful contributions on the arts and creative industries, not least from my hon. Friend the Member for Batley and Spen (Tracy Brabin), who knows how to build an audience. We have heard other brilliant speeches, too, from my hon. Friends the Members for Hammersmith (Andy Slaughter) and for Belfast South (Claire Hanna), from Conservative Members, such as the hon. Members for North East Bedfordshire (Richard Fuller), for Hastings and Rye (Sally-Ann Hart) and for Congleton (Fiona Bruce), and from right across the Back Benches, from SNP and Plaid Cymru Members.
People might think that theatre is frivolous and all about singing and dancing and having a good time, but there is an important economic issue here. There is a reason central London is empty: the theatres are closed. The live music sector contributed £4.5 billion to the UK economy in 2019. We also see in the figures that some of the sharpest falls have been in construction, professional, scientific and technical services, and administration and support services. The Resolution Foundation has highlighted the sharp fall in these people’s earnings.
Labour has repeatedly called on the Government to listen to the concerns of the excluded. The shadow Chancellor has written to the Chancellor four times in recent months to highlight problems and suggest solutions, and we are always willing to meet, if only the Government were not so stubborn and unwilling to listen. The Federation of Small Businesses—experts in this area—has repeatedly called for a rescue plan for those left out of Government support. It is right to argue that those whose businesses are often suffering through no fault of their own should not be left out of support. As my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) underlined, the Government do not understand Britain’s self-employed. As a result, they have not valued them and because of that they have not provided them with the support they desperately need.
Before I was elected to this House, I spent just a year as a freelancer. It was one of the most terrifying professional experiences of my life—not knowing if I would get the next job, or if the invoice would be paid on time; worrying about things such as my cash flow, bills, my incomes, my outgoings. It is a stressful experience. I can speak for the self-employed and the excluded in my constituency—we have heard so many others speak for their constituents too—but none of us can truly understand what these people have been through this year, seeing other people receive support and themselves left behind.
Does the hon. Member agree that many freelancers, particularly in the creative industries, where it is really precarious and people live contract to contract, make ends meet with casual work, but that has totally dried up in the hospitality sector, in ushering and in box office work, for example? So they have absolutely nothing, and they are desperate and running out of savings.
That is absolutely true. One of the things I find most worrying about the trends we have seen is that—as if the inequality that has gripped this country was not bad enough entering the crisis—there have been two very different experiences of the pandemic. If people are in a job with stable employment and have had money coming in every month, they may well be one of the households who has contributed to a record rise in savings. They may well feel that their outgoings have gone down and that they can start planning for home improvements or a decent family holiday. However, if people have lost their job, or were self-employed or freelance and their business activity went completely down to zero, this has been an absolutely terrible experience. I do not think that any of us, unless we have been in that position, can really understand what those people are going through.
In conclusion, I say to the Minister, whose task in responding to the debate I do not envy—with the notable and honourable exception of the hon. Member for South Cambridgeshire (Anthony Browne), I think she has found herself pretty alone in this debate—that the cross-party calls for the Government to listen, even to meet, are overwhelming. The privilege of being able to govern comes with the responsibility of taking action, of seeing people through difficult times. We know that the Government have a difficult job. We would not have wished this pandemic on anyone, but so many of us on both sides of the House simply do not understand the Chancellor’s intransigence, stubbornness and unwillingness to listen on this issue. So please, I beg the Minister, on behalf of millions of people across this country who have felt unheard or excluded: it is time to act.
I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing the debate and acknowledge the many and varied contributions of right hon. and hon. Members across the House. The Government understand the crucial role that the self-employed, including members of partnerships and freelancers, play in this country’s economy. They are part of the lifeblood of British enterprise and they, too, have suffered during the months of the pandemic. We have not forgotten them, but we recognise that we have not been able to help everyone in the country exactly as they would have liked. However, what the Government have done has been unprecedented.
Since the launch of the self-employment income support scheme earlier this year, designed and implemented at speed, claims totalling £7.6 billion have been paid out to support more than 2.5 million people. That represented a first grant and we did not stop there. As of 17 August, individuals have been able to claim for a second and final self-employment scheme grant. This further grant is open to anyone who meets the eligibility criteria and whose business was adversely affected by covid-19 on or after 14 July 2020. Importantly, applicants do not need to have claimed the first grant and they can receive the support while continuing to work.
The eligibility criteria have been raised by many Members. The criteria for the scheme are fair and rightly aimed at delivering support to those who need it most. Self-employed individuals, including members of partnerships, are eligible if they submitted their tax return for the tax year 2018-19, continue to trade and have been adversely affected by covid-19. To qualify, their self-employed trading profits must be no more than £50,000 and at least equal to their non-trading income. Many Members have said that this is not enough, so I would like to pick up on those points.
My hon. Friend the Member for North East Bedfordshire (Richard Fuller) said that there is a discrepancy between the 3 million who are not served and the 95% that the Treasury is talking about. We are talking about people for whom at least half their income comes from being self-employed. Ninety-five per cent. of those people are covered—that is about 3.4 million people who were mainly self-employed in 2018-19 who should be eligible for this scheme. The statistics show that the scheme has helped individuals across the UK in all sorts of different sectors. The extension of the scheme also means that eligible individuals whose businesses are adversely affected, from or after 14 July, can claim a second and final grant until 19 October. That is a taxable grant worth 70% of their average monthly trading profits paid out in a single instalment. Like the first grant, the second grant will be based on three months’ worth of trading profits and capped at a maximum of £6,570. We are listening. Many different requests are coming through and we are trying to get a package that works, but that is balanced towards businesses, the consumers and the taxpayer.
Very many Members, including the hon. Member for Hammersmith (Andy Slaughter), my hon. Friend the Member for Hastings and Rye (Sally-Ann Hart), the hon. Member for Belfast South (Claire Hanna) and others, have raised the case for those working in the arts. We do recognise that. The Government know the challenge facing creative organisations and practitioners as a result of the pandemic and the disruptive impact of the necessary measures on cultural and creative activity. We have announced a £1.57 billion cultural recovery fund to protect the cultural sectors through the covid-19 pandemic, and that money will also go to help those self-employed individuals who may not have been able to access schemes. None the less, as the economy opens, we believe that the situation will improve.
The self-employed, including freelancers, benefit not only from Government support specifically designed for their needs, but from schemes that we have created that will cover them, but that are not specifically targeted at them. They benefit, like so many others, from schemes such as bounce back loans, tax deferrals, rental support, increased levels of universal credit, mortgage holidays and other business support grants. The Government have spent £160 billion in support on interventions—as much as we have spent on the NHS and schools. That is alongside many other Government measures that will help support people and kickstart the economic recovery. The plan for jobs, for instance, will make up to £30 billion available to assist in creating, supporting and protecting jobs. I am pleased that hon. Members from across the House have acknowledged that the UK has one of the most generous self-employed support schemes in the world. However, today’s debate is about the concerns and not about the successes.
Several Members, including the hon. Member for Brighton, Pavilion (Caroline Lucas), are particularly interested in the eligibility of individuals who receive income from dividends issued by their own limited company. Although the Government understand that some business owners choose to pay themselves in the form of dividends, it has not been possible to include them in this scheme. The Government have worked closely with stakeholders and carefully considered the case for providing a new system for those who pay themselves through dividends, but it would be so much more complex than other existing income support schemes. My hon. Friend the Member for South Cambridgeshire (Anthony Browne) was very perceptive in raising the operational difficulties that it would entail. That is because, under current reporting mechanisms, it is just not possible for HMRC to distinguish between dividends derived from an individual’s own company and dividends derived from other sources. Unlike existing support schemes that use information that HMRC already holds, such a scheme would require individuals to make a claim and submit information that HMRC may not efficiently or consistently verify. Such verification would be essential to ensure that payments were made to eligible companies for eligible activity.
Many Members have talked about comparing notes with Companies House. I do not think that people really understand just how difficult that would be. It is not simply a matter of looking at Companies House. It would require so many manual compliance checks: those people who need money would have to send information to HMRC, which would then need to be cross-checked. That would be extremely arduous and due regard would have to be given to the opportunity cost for that resource—where compliance activity would have to be reduced elsewhere. In other words, the many checks that Members are asking for would make it even harder for us to help those people who are most at need. It is important that the House—
I am afraid that I do not have enough time. I am sorry I am not taking interventions.
It is important that the House understands that we have not taken a deliberate stance against support for company owner managers who pay themselves through dividends. This is about understanding and identifying what is operationally feasible, managing technical complexities and fraud risks and ensuring that other forms of Government support are delivered in a timely way.
Owing to the Government’s reasonable concern to protect against fraud and error, it has also not been possible to include in the scheme those who are newly self-employed, which I know many Members have raised. That is because the most reliable and up-to-date record of self-employed income is from the 2018-19 tax records. Individuals can submit tax returns for 2019-20, but again there would be significant risks to the public if the Government relied on those returns for the scheme. That would create an opportunity for fraudulent activity through the returns—where no trading activity has taken place, where trading profits have been inflated to increase the size of the grant, and where trading profits have been reduced to below the £50,000 threshold in order to become eligible. The Government cannot expose the taxpayer to those risks, and the extension of the scheme would not mean that those concerns have been reduced.
The hon. Member for Edinburgh East (Tommy Sheppard), among others, raised the issue of parental leave. The treatment of self-employed parents is part of the scheme. As the Minister for Equalities, it is a subject close to my heart, made even closer by the fact that I recently returned from maternity leave. That is why I want to address the issue directly. Claiming maternity allowance or taking parental leave does not mean that trading has ceased and will not therefore affect a person’s eligibility for the self-employment scheme, as long as the individual intends to return to trading after parental leave.
In addition, we have listened to feedback from stakeholders and made changes to the scheme to benefit self-employed parents. Those parents who were previously ineligible for the scheme because they had not submitted a tax return for 2018-19, or because their trading profits in 2018-19 were less than other trading income because they were taking time off work to care for their newborn or adopted child, can now claim through the self-employment income support scheme. Those parents who have become eligible can now make a claim for the first grant, the second grant or both depending on when their business may have been adversely affected by covid-19. Again, we have made those changes. Many Members of Parliament have written to us with requests about that.
We are aware of concerns raised on how the grant is calculated, particularly for those who have taken parental leave. As the Chancellor indicated, delivering a scheme for the self-employed is a very difficult operational challenge, particularly in the time available. We are trying to get the money to people as quickly as possible. There is no way for HMRC to know from income tax self-assessment returns why an individual’s profits may have dropped in earlier years. However, to help those with volatile income in 2018-19, eligibility can be determined by profits in 2018-19 or by an average between 2016-17 and 2018-19. This scheme has been designed to deliver support as quickly as possible to millions of self-employed individuals by using information that HMRC already has. It is an enormous delivery challenge and we need to ensure that the changes do not risk delivery of the scheme.
The hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) and others expressed concerns about the impact a second wave might have on the future income of their constituents and talked about extensions. The scheme will remain open for applications for the second and final grant until 19 October 2020. Unfortunately, it is the case that some businesses will be affected by covid-19 far longer than others, and the Government will seek to support those businesses appropriately. As I mentioned earlier, many other schemes can provide support to specific businesses.
Let me end by saying that we are living in unprecedented times. The Government needed to deliver support at incredible speed, prioritising those schemes that could help as many as possible, as quickly as possible. Once the scheme launched, we have remained flexible. We have worked with stakeholders to consider carefully the case for making changes. We listened and, where possible, acted to bring individuals into eligibility.
The Chancellor has acknowledged that the Government have not been able to support everyone in the exact way that they would want, and we have been clear from the beginning that delivering the scheme for the self-employed is very difficult in the time available. They are a very diverse and wide mix of people, with a diverse mix of turnover and profits and monthly and annual variations even in normal times. In many cases, they have substantial alternative forms of income, too. Despite the challenges, the scheme has delivered what it set out to do successfully, providing at speed much-needed income support.
I will endeavour to make sure that ExcludedUK and ForgottenPAYE, which so many Members praised, receive a ministerial response to their letters, and I am happy to write to those Members who have other areas that they feel have not been addressed today. I thank so many Members for contributing to this debate, and I hope colleagues will support the Government as we now turn our thoughts, energies and resources to looking forward and planning for the recovery.
I thank all Members who have contributed to this debate and many others who I know wanted to do so, but could not because there was not time. All of us—even the hon. Member for South Cambridgeshire (Anthony Browne)—want to see some changes to the scheme. There is no shame in saying that errors have been made and in trying to rectify them. That is all we are asking the Minister to do, yet I notice that she is still refusing to meet us. That is simply not acceptable.
The Minister says that the Government understand the crucial role that the self-employed play in our economy. No, they do not, otherwise she would not be suggesting that the self-employed just take more loans or they just have universal credit. She said that the Government have not forgotten them. The impression that has been left with people all around the country is that the Government have forgotten them. She says that the Government have not helped them as they would have liked. The Government have not helped this particular group of people at all.
I beg the Minister again. It is not enough to say that she will get a response—a much-delayed response—in writing to these excluded groups. They want a meeting. Why is that so much to ask? What happened to all the rhetoric about levelling up and the warm words about the Government putting their arms around everybody? Why are these people being excluded? Why are our innovators, our entrepreneurs and our risk takers being punished? This is not a party political issue. I am happy to commend the Government for the support they have put in place for the people who have been able to access it, but I want the Minister to acknowledge that some people have not been able to access it and to act now. I ask her again to meet with us.
Question put and agreed to.
That this House has considered support for the self-employed and freelance workers during the covid-19 outbreak.