Government must act over gaps in support during lockdown

By June 15, 2020NEWS

The Treasury Committee publishes a unanimously-agreed interim report as part of its inquiry into the Economic Impact of Coronavirus called Gaps in Support.

The government must act to help million-plus people who have lost livelihoods while being locked down and locked out of support

  • Over a million people have fallen through the gaps of Government’s coronavirus support schemes
  • Treasury Committee makes recommendations to help those in need of support
  • Government should enact recommendations to fulfil its promise of “doing whatever it takes” to protect people and businesses from impact of coronavirus

Report Summary

The Chancellor has frequently stated that he will do whatever it takes to protect people and businesses from the effects of coronavirus. Support measures, including the Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS), have been introduced by the Government to protect the livelihoods of salaried and self-employed individuals.

The Treasury’s interventions have been welcomed by many, but rolling out financial support at pace and scale has inevitably resulted in some hard edges in policy design and some critical gaps in provision.

More than two months into lockdown, many people continue to endure financial hardship whilst being unable to benefit from the Government’s two principal support schemes. The inquiry has identified the following key concerns and made a series of recommendations for how the Government can assist these people:

  • Those newly in employment: Hundreds of thousands of people are suffering financial hardship through no fault of their own, often due to unfortunate timing in starting a new job or their employer’s choice of timing in submitting paperwork to HMRC. The Government must find a way to extend eligibility criteria to all new starters, perhaps by extending the cut-off date to 31 March, or by accepting alternative forms of evidence of employment.
  • Those newly self-employed: Many people who have started a business in the last year don’t qualify for support from the SEISS as they cannot fulfil the eligibility criteria. The Government should undertake an urgent review to see how it can extend support to this group of people.
  • Those self-employed with annual trading profits in excess of £50,000: Hundreds of thousands of people are potentially suffering hardship because of the arbitrary £50,000 cut-off in the SEISS. The Government should remove the £50,000 cap and allow those with profits just over this cap access to some financial support, up to £2,500 a month.
  • Directors of limited companies who take a large part of their income in dividends: The Government has failed to take action to help the hundreds of thousands of limited company directors missing out on support because they pay themselves in dividends. The Government must find a way to support these individuals. We urge implementation of a solution whereby HMRC requests additional information about the proportion of dividends that have come from company profits and from other sources, and requires self-certification by the applicant.
  • Freelancers or those on short term contracts: In industries such as television and theatre, where short-term PAYE contracts are the norm, many workers are not entitled to support under the CJRS or SEISS. This cannot be right. The Government should give this group access to financial support that equates to 80 per cent of their average monthly income, up to a total of £2,500 per month.

Chair’s comments

Commenting on the report, Rt Hon. Mel Stride MP, Chair of the Treasury Committee, said:

“The Chancellor has said that he will do whatever it takes to support people and businesses from the economic impact of the pandemic.

“Overall, he has acted at impressive scale and pace. However, the Committee has identified well over a million people who – through no fault of their own – have lost livelihoods while being locked down and locked out of the main support programmes.

“If it is to be fair and completely fulfil its promise of doing whatever it takes, the Government should urgently enact our recommendations to help those who have fallen through the gaps.”

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.