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That this House has considered eligibility for Government support during the covid-19 outbreak.
I am grateful to have the opportunity to move the motion, but I find it genuinely hard to believe that we are having to have this debate again. It is now 16 months since the Government should have filled the gaps on eligibility for their covid support schemes. In that time, I and countless other Members from across the House have raised the issue of the exclusion of 3 million people from Government support. I have personally asked five oral questions, made seven speeches, submitted dozens of written questions and led three debates, yet progress has been minimal.
At the start of the pandemic, I and many others could understand the Government’s argument that it was inevitable that some people would temporarily fall through the gaps during such an unprecedented time. Likewise, I accept and welcome the instances where the Government have taken constructive steps to plug the gaps. I do not dispute that some progress has been made, so I would be grateful if the Minister does not squander his valuable time by simply listing all the things that have been done. Perhaps we could focus on where the gaps still exist.
If it is the role of the Government to protect and improve the lives and livelihoods of citizens, it is incomprehensible that 10% of the working population can be accepted as collateral damage and left to be ground down by poverty and despair by a Government who claim to be business-friendly. Instead of looking backwards at what has already been done, I want to focus on where the gaps still exist and to look ahead to what can be done to tackle the long-term effects of the Government’s decision to let temporary gaps in support become a full-blown crisis of debt, poverty and mental health problems.
The Minister will be well aware that over 800,000 people have been unable to access the coronavirus job retention scheme due to last year’s real-time information cut-off date. He is no doubt champing at the bit to stand up and give the Treasury a pat on the back for the decision to amend the date to November, but those affected are telling us that this does nothing to support those who missed out on furlough because of their roles as pay-as-you-earn freelancers or annually paid limited company directors. Although the inclusion in March’s Budget of the 2019-20 tax returns for calculating eligibility for the self-employment income support scheme is welcome, the Treasury’s assertion that this will open eligibility to 6000,000 more self-employed people is categorically disputed by campaigners.
In order to allow all Back Benchers to contribute to the debate, I am imposing a three-minute time limit that will be enforced. I call David Warburton to speak now.
It is a pleasure to serve under your chairmanship, Mr Mundell, and to speak on this subject today. I congratulate the hon. Member for Midlothian (Owen Thompson) on securing the debate.
Like all of us, I have been contacted by constituents from a kaleidoscope of different situations who have been unable to access Government support in spite of having been hit hard by the pandemic and the lockdown restrictions. From visiting businesses in Somerset and talking to owners and managers and those in their supply chains, it seems the economy is like a pointillist painting with apparently discrete specks of colour, but when one steps back they merge into a cohesive picture. The Government have provided huge support to countless businesses and individuals—to many of those specks of colour. It has been unparalleled in peacetime, and the package of support has ended up costing more than £300 billion, with some 14 million people supported. However, some have not been able to access that.
I met the Chancellor a few days ago and talked to him about those people. I very much understand both his intention to try to help as many as possible and the challenges in bringing more into the safety net through proper assessment. Of course, restrictions on livelihoods are about to be lifted. Those who managed to keep the show on the road ought to be back in business very soon, but there will be challenging months ahead, and we should now look carefully at those who have had to struggle without support for the past 15 months.
The different types of ineligibility are numerous and complex. We have the newly self-employed, anyone earning over £50,000 and those drawing their salaries as a dividend. This is a common one in the music sector where I have been trying to get more support. There are those with mixed income and those on zero-hour contracts such as peripatetic music teachers. This is not academic or theoretical. It is tangible and real. I know my right hon. Friend the Minister is more than sympathetic to it. The impact means businesses going bust and mounting personal debt, and there is a particular impact on younger and older workers, new parents, parents of young children and their families. I will not go into the detail of specific cases or numbers. I am sure we will hear more about that and we can argue or dispute numbers. However, we are talking about millions of people.
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Stewart Hosie (Dundee East) (SNP)
It is a pleasure to serve under your chairmanship, Mr Mundell, and I congratulate my hon. Friend the Member for Midlothian (Owen Thompson) on securing this important debate.
I raise the issue of the covid recovery loan scheme, described on the Government’s own website as supporting “access to finance for UK businesses as they grow and recover from the disruption of the covid-19 pandemic”. It also describes how businesses can receive up to £10 million and is clear the Government are guaranteeing 80% of the finance to the lender. Not all lenders appear to be engaged in this scheme, and those who are have varying degrees of enthusiasm—but I set that aside for the moment.
The rules say that eligible businesses must be trading in the UK, would be viable were it not for the pandemic, have been adversely affected by covid, but are not in collective insolvency proceedings—and there is the rub. There was, quite rightly, a large degree of forbearance during the crisis from the public and private sectors but many creditors are now calling in debts that result from covid before debtor companies have returned to pre-crisis cashflow and profitability levels.
I know of many otherwise viable businesses, who in normal times could perfectly well service their debts, now finding themselves financially distressed as a result. They may fall foul of the recovery loan scheme criteria or lenders’ risk management practices if they are subject to a Scottish decree or an English county court judgment. In short, they are being punished for being adversely affected by covid—one of the criteria to get the money in the first place—and are unable to apply for funds because of how that impact is being felt. Decisions by the lenders and banks are more irrational precisely because the Government are guaranteeing 80% of the loan.
I hope the Government will put pressure on the lenders to take part in the scheme and persuade them to analyse the underlying viability of a business, rather than issuing a hard no simply because of a CCJ or a decree. It would be irrational if a business meets the criteria of being adversely affected by covid, but is denied access to the help it needs at precisely the time it needs it the most because the financial distress caused has resulted in a court order.
I will briefly raise another problem. I have been told by a business finance brokerage that of the 60 businesses he has supported to make full applications for the recovery loan scheme, only a single, solitary one has received the money, and that is deeply troubling.
I am grateful to serve under your chairship for the second time in one day, Mr Mundell. I congratulate the hon. Member for Midlothian (Owen Thompson) on securing this debate.
In March last year, the Chancellor declared that the Government would do whatever it takes to support the country through the covid-19 crisis. While the furlough scheme, which the trade unions were central in establishing, and other financial support have provided a lifeline for millions, sadly far too many individuals and small businesses have still been excluded. I have countless constituents, most commonly the self-employed or owners of small businesses, contact my office saying they have gone a year without receiving any financial support, despite not operating at anywhere near their normal capacities. Time and again, the Government have ignored those excluded from financial support. To be clear, any policy that seeks to ensure financial security while tackling the pandemic must include, above all else, listening to the voices and experiences of people such as my constituents, and addressing their concerns.
When the Minister sums up, will he consider the following two proposals? First, will the Government expand the eligibility requirements for the fifth grant of the self-employment income support scheme. Millions of self-employed people have faced considerable hardship, which has left many of them in serious debt and poverty, struggling to make ends meet with little or no income. There are more than 1 million people who receive less than 50% of their income from self-employment or who have profits in excess of £50,000. They must receive a reprieve after facing uncertainty and financial insecurity for more than a year.
Secondly, the Minister cannot use the lifting of restrictions to wash his hands of offering financial support through this crisis. Some businesses will still be severely hampered despite the planned lifting of almost all restrictions. I am largely thinking of those in the aviation and travel sector, including an independent travel agent in my constituency. Sectors such as these may need long-term, targeted and tailored financial support to survive.
It is a pleasure to speak with you in the Chair, Mr Mundell.
Since the first covid cases in the UK were identified in York 18 months ago, we have been inundated by businesses that are challenged. Although Government relief has been welcome, those ineligible for it have struggled. As covid cases soar again, we worry. This last year, those denied help have seen their life’s work slip through their hands. Many self-employed directors are an example, as are those in the tourism, theatre, events and travel sectors, and those in the supply chains. Even when safe solutions were offered, the Government simply said that they were unwilling to build the capacity to implement them.
Often, it has been the inconsistencies in Government guidance and support that have caused confusion and hardship. For instance, caravan parks with shared showers were open but holiday flats with shared hallways were closed, and those running them were not eligible for support.
As restrictions lift, we are already seeing infection levels spike in York, meaning staff isolating and businesses closing. It is set to get worse, given the Government’s illiterate plans. The economy is being hit and loyal customers are retreating into their homes, once more feeling unsafe. Reality and Government rhetoric are far apart in communities such as mine. The Government have seriously misjudged things and once again businesses and charities are calling for help, both for now and the longer term. Ineligible for support, they cannot depend on this season either. They urgently need a bridge to carry them through, so that they can then grow again.
I will turn to charities. On 8 April, the Government provided support lasting just 12 weeks. Charities have been ineligible for much Government funding. Many have had nothing at all and have had to cut back, yet all the while demand for their services has increased. Understanding of this sector, which forms a crucial part of our social infrastructure, has been severely lacking from the Treasury, which fails to recognise the role that charities have played throughout the pandemic and will play throughout the recovery. Generic schemes simply do not work for them. Will the Minister at least meet the sector’s leaders and listen to their calls for the support they need right now?
It is a pleasure to share in this debate under your chairmanship, Mr Mundell. We go back a long way. I congratulate the hon. Member for Midlothian (Owen Thompson) on securing this important debate.
I wish to talk about a subject that I have mentioned before: insurance for live events. Even those who have been eligible for support will struggle in the recovery phase if they are unable actually to stage live music events. Many events cited by the Government as examples of cultural recovery fund support have been unable to go ahead this year due to a lack of insurance, including huge events such as the Glastonbury festival.
Why are they cancelling? Because they cannot get commercial covid insurance cover, or not at a competitive rate. Since January, I and others in all parties have been calling for the Government to put in place a Government-backed covid cancellation insurance solution. I have said it before, but such a scheme is not unprecedented. It has been done before with insurance for terrorism losses and—I point out yet again—the Government made a profit on that, which is worth remembering. I have said that repeatedly to Ministers and I hope that they will heed my call.
If we do not get events back up and running again, I fear that, in addition to losing good events in this country, we will erode something that is very important to Britain. Our culture and music are part of our soft power and, as we know, people come from all over the world to attend such events. Again, that is exactly why it would be helpful if insurance could be put in place.
Before I conclude, as Members know, I have the honour of being the joint chair of the gaps in support all-party parliamentary group. I want to put on the record my sincere thanks to my joint chairs and all the many Members who pulled together to form the APPG. I think it is the biggest in the history of the House of Commons. That shows just how important the issue that the hon. Member for Midlothian has brought to our attention today is.
I echo the thanks and appreciation to my hon. Friend the Member for Midlothian (Owen Thompson) for securing this debate and for the comprehensive way in which he set out the challenges faced by too many people. More than 3 million people went to work every day to pay their bills and to look after their families, only to find that when coronavirus took hold, the Government built a lifeboat called furlough—but they were not allowed a place on that lifeboat. In what at times appeared to be an act of random cruelty, they were left without support for themselves or their families.
When those people complained about their concerns, or their elected representatives did so on their behalf, the Government simply responded by pointing out all the support that was available for other people, as though the excluded could be comforted by the fact that their exclusion from support would be made more bearable by knowing that others had received support. I sincerely hope that the Minister does not repeat that bizarre cycle when he gets to his feet.
In fact, the self-employment support scheme failed to help most self-employed workers, with many left out in the cold. As the Government gradually withdraw furlough support—too early in my view and that of many others—it is clear, and has been for some time, that the excluded are to remain so. They have been left to manage as best they can.
On 25 March 2020, the Prime Minister promised to put his
“arms around every single worker”.—[Official Report, 25 March 2020; Vol. 674, c. 334.]
But he did not and he has not, despite all entreaties to do so. Now, we face a summer of redundancies, as furlough has started to be eased back before firms have had the time to scale up. Families will fall further into debt and many will fear losing their homes, while we see the scandal of lucrative covid contracts for pals without formal processes, as well as all the other questionable practices that were set out in the House of Commons in a debate earlier this afternoon.
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Likewise, the discretionary grant funds devised by the UK Government and the devolved Governments have been effective in plugging some of the gaps in places, but the eligibility criteria vary from council to council, keeping some groups excluded based on postcode alone—some because they do not have a premises, and some because they have too many employees. The list goes on. This is something that the Treasury could fix, either by issuing clear guidance on whom councils should consider to be eligible, or by distributing its own grant scheme rather than devolving the blame.
To save the Minister a bit of time later, I point out that I am well aware of the Government’s culture recovery fund, but the scheme does not do much at all to support many of my constituents who work in the supply chain—businesses in the events sector that have remained formally open but have been badly affected by the cancellation of live events. Only 3% of the fund went to supply chain businesses in the first round. That figure did rise to 12.5% in the second round, but only because of the campaigning efforts of groups such as We Make Events. Will the Minister explain how he intends to support the supply chain businesses excluded from this fund, rather than repeat the lines that we already know?
Finally on this point, as much as the Government point to universal credit as the last resort when all else fails, the reality is quite different. ExcludedUK estimates that about 60% of the excluded have been unable to access universal credit, often because they have partners working or savings set aside for business expenditures, such as tax bills, which is natural for any self-employed person.
I hope the Minister will be grateful that we have covered what the Government have already done and that we can focus today instead on the gaps that still exist. Some gaps have certainly been filled—I have no qualms about that, and I would certainly not try to detract from it. However, the onus is now on the Government to fill the rest, and not rest on their laurels.
Plenty of solutions have been presented only to end up being dismissed for spurious reasons; they have sat on a Minister’s desk while people who could have been helped languished in stress and deprivation. For instance, proposals for a directors income support scheme were dismissed by the Treasury because of concerns about fraud and an inability to gather data on dividends, despite the scheme using the Government’s own anti-fraud gold standard and avoiding dealing with dividends at all. Where there is political will, there is always a way, and the Government have displayed nothing but a lack of political will in this.
Throughout this sorry saga, the Treasury has shown that it believes that many Members, such as myself, sound like broken records and that the excluded are nuisances trying to swindle public funds. Perhaps there is a bit of projection going on. Time and again, the tone has been nothing but dismissive. The Treasury has used blatant straw-manning to paint limited company directors as fat cats and imply that the majority are actually just directors’ children and spouses.
With the Prime Minister pressing on with the ditching of all restrictions with trademark recklessness, I imagine that Ministers are rubbing their hands with glee at the chance to redirect attention to reopening and simply to dismiss or brush off the excluded as yesterday’s news. However, if the Government think that the end of restrictions will make the issue go away, they are very wrong; for many of the excluded, the hardest times are still to come. The fact that many jobs and businesses have survived until now does not mean that they are in the clear. Those who have been excluded from support have relied on the loan schemes, so by tapering off support now the Government are exposing them to an unimaginable crisis of toxic debt.
In a Westminster Hall debate in November last year, I raised warnings from TheCityUK recapitalisation group that UK businesses will have £100 billion of toxic debt by 2021, with £35 billion of that related to Government schemes. The report warned that up to 3 million jobs across the UK and 780,000 small and medium-sized enterprises are at risk. Now we are standing at the edge of that very precipice, with many having only just managed to scrape by in meeting the first repayment deadlines for coronavirus business interruption loans or bounce back loans. How does the Treasury expect entrepreneurs to reap the benefits of an open economy when the profits of so many are simply going to go straight to repaying ever-mounting debts? How many businesses that were saved through the pandemic will fold, collapsing in debt when the health crisis is finally over? Are the Government really content with giving some companies a competitive advantage by saddling others in the same sector with debt?
As we reopen, things are more uncertain than ever for the excluded, especially with the reopening process likely to be bumpy. As long as covid is still out there, cancellations and changes of plan can create deep uncertainty. Only last week, in my own constituency, Midlothian, a Tough Mudder event that had been planned over the space of seven months was cancelled at 6.30 pm on the night before it was due to start. While the health situation remains uncertain, there must at least be certainty in support, as well as quality decision making, which was sadly lacking in the Tough Mudder case.
The excluded are not a niche group. They are the backbone of our economy: business owners and risk takers. To take one example, the events industry demonstrates its incredible potential to build a world-beating sector that boosts both our economy and our spirits. It relies on the efforts of a diverse and highly skilled supply chain of around 1 million people. Those people’s skills should be used to boost the recovery, yet so many have taken such an economic beating that they literally cannot carry on in their current roles and sectors, with 1 million people leaving self-employment in the last year alone.
For all the Government’s talk of a strong economic recovery, we have been left with a looming toxic debt crisis and the decimation of key industries and sectors. The supposedly strong shoulders of the Treasury are quite happy to shrug off millions of livelihoods, and I have not even mentioned the human cost: poverty, hunger, and a serious mental health crisis. The Trussell Trust reports that gaps in social security have driven people to food banks and that universal credit has been totally insufficient in preventing the excluded from falling into food poverty. Many are already been forced to sell their homes to repay CBILS and bounce back debt. Tragically, some have already taken their own lives. It speaks volumes that groups such as #ForgottenLtd have established formal links with suicide prevention charities such as the Samaritans. I really hope the Minister will join me in expressing a deep appreciation for the work that those charities do in supporting the excluded.
In conclusion, never before has a Government been so complacent about a debt crisis, a mental health crisis and a grave injustice all rolled into one. Let us talk about solutions: backdated parity of support; eligibility for support as we come out of the pandemic; support for repaying CBILs and bounce back debt; delayed repayments; or perhaps even a student loan-style repayment scheme that kicks in only past a certain threshold. Those are just ideas, but they are ideas that the Government need to look at now.
Will the Minister recognise the graveness of the crisis we are about to enter and commit to exploring solutions as a matter of urgency? Doing so will require striking a new tone with campaigning Members and groups such as ExcludedUK and We Make Events, so will the Minister agree to co-ordinate a meeting between the various excluded groups?
It is worth noting that the people who have been excluded watch these debates, and the last thing they want to hear today is another generic list of the people who have been supported. Not only is that a waste of our time, it is an insult to them, rubbing their faces in the injustice of the situation. It is taunting to the level of trolling. I implore him to throw away the script and speak today as though he were speaking face to face with one of the excluded themselves. He should listen to their hardships and their stories and recognise the hurt that is out there, listen to those affected and commit to working constructively to resolve one of the greatest injustices of this generation.
I hope, as we climb out of the abyss of the pandemic, we have the perspective to take a breath, look closer at overcoming the technical assessment difficulties, which I fully appreciate, and fish more people out of the pond with a net that is slightly more tightly meshed. Without wanting to mix my metaphors, that would protect those specks of entrepreneurial colour that together make up our national economic picture.
I will draw my remarks to a close. The pandemic disrupted many businesses, but the support offered by the Treasury failed to meet the needs of those small and medium-sized enterprises, including in my constituency, that no doubt will have, or have already had, no choice but to close, through no fault of their own.
Perhaps the most frustrating thing of all has been how impervious the Treasury team have been when they have been written to. We hold the future of local companies in our hands, but we have been given a stock response, often unrelated to the issues that we have been trying to resolve. Businesses have been ignored; support has been denied. Recovery funds for businesses and charities are needed. While the Government are trying to race on, covid infections are racing up. Businesses and charities that have worked so hard to cling on feel that the rope is being cut. We have called for help; we have offered solutions. All we need is for the Government to engage, to rebuild socially and economically. That need has never been greater than it is now.
It makes no economic sense to force people on to benefits rather than support them with assistance that might just enable them to keep their businesses and their jobs up and running, helping them to reach a point where they can again start to generate tax revenues. It is bad enough that millions were excluded from Government support, but if the purpose of furlough was to save jobs, as we were told, removing it before businesses have had time to scale up their operations runs counter to that aim. The Minister should reflect on that. I urge him to urge the Chancellor to tread carefully and realistically when people’s livelihoods are at stake.