Self-employed Persons: Financial Support

(Urgent Question): To ask the Chancellor to make a statement on financial support for the self-employed in the light of the covid-19 pandemic.

We know that many self-employed people are in real distress, but we are working urgently to address this problem, and I say to the self-employed: we have not forgotten you—help is coming. But the policy and delivery are complex, and we cannot and should not rush to announce a scheme that gives rise to more questions than it answers. The Chancellor has held meetings this morning with representatives of the self-employed and will continue to meet them this afternoon.

It is important to remember that covid-19 is an urgent challenge to our entire economy, affecting workers of all types. It is essential that we respond swiftly, so that people can keep their jobs and businesses can carry on. That is the basis of our coherent, co-ordinated and comprehensive plan. It is a plan that gives those on the frontline the tools they need to tackle the virus, with all the support the NHS needs, backed up by an initial £5 billion fund for public services. It is a plan that puts a shoulder behind business with a statutory sick pay relief package for small and medium-sized enterprises, business rates holidays for all retail hospitality, leisure and nursery businesses in England, and grant funding for small enterprises, as well as support through Her Majesty’s Revenue and Customs’ time to pay scheme. As of yesterday, businesses with cash-flow concerns are also able to access the coronavirus business interruption loan scheme, offering up to £5 million for SMEs through the British Business Bank. For larger firms—[Interruption.]

Order. It might be easier if Members pass notes down the line, rather than going round and speaking to everybody.

The coronavirus business interruption loan scheme, on which Members across the House have raised questions, is now available, offering up to £5 million for SMEs through the British Business Bank. For larger firms, the Bank of England is providing a new facility to help support liquidity.

I urge all Members of the House to continue speaking—as I know many are doing—to the business leaders in their constituencies and ensure they are aware that they are not alone and that help is coming. In this House, we are all standing behind business and everyone who works in it. To encourage businesses to retain staff, we are deferring VAT, and my right hon. Friend the Chancellor has announced the job retention scheme to facilitate that.

Taken together, this is a huge programme of support, and we will keep thousands of workers in jobs, but we know that there are thousands of self-employed people who have been wondering what the future holds for them. My right hon. Friend the Chancellor has already set out a range of measures in support. Sole traders and freelancers will be able to access the business interruption loan scheme as long as activity is channelled through a business account. We are also removing the minimum income floor for the self-employed workers affected by coronavirus so that they too can access universal credit in full. That is not only the standard allowance, but a wider package of support for those with children, disabilities or, indeed, housing needs. At the same time, the next self-assessment income tax payments will be deferred until January 2021, helping those who have set money aside for those payments with immediate cash flow. That means there is a package on tax, on loans and, more widely, through universal credit, to support those with that safety net.

Let me reassure everyone in this House and the self-employed people they represent that further help is indeed coming, but we have to make sure we get this right and that we target the right support to those who are most in need. The Chancellor will provide a further update on support for the self-employed in the coming days.

I thank the Chief Secretary to the Treasury for that answer. He knows that parties on all sides of the House have been supportive of the way in which the Chancellor and the Treasury have given support to businesses and to employees. But I have to tell him that the 5 million self-employed people across the country, who are in all our constituencies, are in real stress and are deeply worried. While we all understand that there are complications, the Government have to move as fast as possible to meet their concerns, because they are literally, in many cases, simply running out of money.

I want to say to those on the Treasury Bench that it is important we remember who the self-employed are: 80% of the 5 million self-employed are sole traders. They are our neighbours, our friends, our family. The vast majority are not wealthy people. They are cleaners, taxi drivers, plumbers, hairdressers; they are musicians, tutors, journalists; and they are builders, electricians and child minders. These people are literally running out of money now, and we have to support them.

Of course there will be stories about wealthy people who are self-employed, but they are the minority. If we look at the figures from HMRC’s own data, 36% of sole traders—the majority of the self-employed—have taxable incomes of less than £10,000 a year. That compares with just 15% of employees on incomes that low. We are talking about people on low incomes: 60% have profits of less than £10,000 a year. These people were struggling before the coronavirus pandemic, and they are now facing ruin.

I think that an urgent package of help is needed now, and it needs to be at least the equivalent of that offered to employees. While we all know the problems that the Treasury is facing, may I say to the Chief Secretary that if the package is capped as it was for employees, if it is temporary as it was for employees and, especially for the self-employed, if there is some sort of clawback mechanism if people are given money that they did not need, surely we can come together as a House and as a country to make sure these people get the support they need? It is not uncommon for the self-employed, when they do their annual self-assessment tax return, to have to pay money back to the Treasury. Surely, if money is given now so they can deal with cash flow—capped, in a temporary scheme—then that money can be clawed back the next time they do their self-assessment, if it turns out that they did not need it.

The right hon. Gentleman is right to emphasise the importance of timing and speed in this regard. He spoke about how that can be targeted and the fact that there are many very deserving causes within the population, but it is probably useful to draw the House’s attention to the fact that one in 10 of those who are self-employed is over state pension age. Over two in 10, according to the 2017-18 figures, were earning less than £2,000, which suggests that it was not their main source of income. Between one and a half and two out of 10 are already on universal credit. Some remainders will be quite well paid, such as law partners and so on, and some will be in employment and returning self-employment tax forms for part of their income in addition to their employment. The point is that the population itself is complex and we need to ensure that the measures are targeted correctly.

The right hon. Gentleman raised the mechanism. One of the themes that has informed the Treasury’s approach is this: what is operationally deliverable? That is one of the things we are working through. For example, HMRC does not hold people’s bank accounts, which is why the support package for those in employment was through the PAYE—pay-as-you-earn—system. As my right hon. Friend the Chancellor set out at Treasury questions, tax data is one and a half years old. Those are the issues we are working through. The right hon. Gentleman is absolutely right that urgency is important—that is why the Chancellor is engaged on this—but we are seeking to target a complex population.

Recognising the complexity of solving this problem, can my right hon. Friend give some indication of how quickly we can expect to have at least an interim solution in place for those who are desperate for help and desperate for clarity at this point?

For some within this population—not all—there will be some solution already through the £5 million loan that is available as of yesterday. That will not cover the entirety of this population, but, in accordance with the business needs of some who are self-employed, there is support. For some of the population—again, by no means all—there will be some relief through some of the measures the Chancellor set out on property and business rate relief, but part of the complexity of the target population is that different measures work for different groups. That is part of what my right hon. Friend the Chancellor is working through, but I recognise the point my hon. Friend the Member for Altrincham and Sale West (Sir Graham Brady) and others have raised. We do recognise the importance of timing on this issue.

Can I say to the right hon. Gentleman and other Members that no one is looking for a row over this? We are looking for a solution. The reason some Members became irritated earlier was the emphasis, in one of the Chancellor’s responses, on the rich self-employed. They are not the people who are contacting us. The ones who are contacting me at the moment are the plumbers and the hairdressers. Yes, some freelance artists and others are in desperate straits, but I do not think there is a Member who has not received representations. We are just looking for something we can go back with today to give them some assurance. We know how complicated it is, but we have to find a solution quickly. I urge the Government to at least set a deadline, so we can go back to our members and say, “By the end of this week, there will be a proposal brought forward.”

The other assurance that people want was raised by the right hon. Member for Kingston and Surbiton (Sir Edward Davey). If we can go back and say, “You will get the equivalent of the 80% or whatever that was offered to other workers,” it would lift people’s spirits that something was on the way.

Many self-employed workers, just like other workers, are having to sign themselves off sick. They do not have access to statutory sick pay—still. I have to say that asking people to survive on £94.25 a week is just an impossible ask. When the Secretary of State for Health was asked on television last week whether he could live on it, he said no. I agree with him. We need the level of sick pay raised for everybody if we are expecting them to choose not to work, and not have to choose between health and hardship.

Finally, in Treasury questions my right hon. Friend the Member for North Durham (Mr Jones) raised a point about different categories of workers. I know that it is complicated, but we do have to consider agency workers. I have had many emails and telephone calls from people working in the construction sector who do not know whether they should be at work today, or whether they would be safe if they were. Let us use this opportunity to look at the exploitation by payroll companies and umbrella companies of people who in many instances are forcibly designated as self-employed.

Order. I am aiming for this to last until about 1.20 pm.

May I first welcome the constructive tone that the right hon. Gentleman has struck? His offer to come to the Treasury might contravene some of the recent social distancing requirements, but I appreciate the spirit in which it was made. He is right that we need to move at pace and to work together. That is why my right hon. Friend the Chancellor was involved in further meetings this morning, as he will be later today, as we work through how to take this forward.

The Chancellor was drawing attention to the complexity of the target population. I think that a number of Members would have concerns, not least as we look to the future, if we were subsidising some very wealthy self-employed people. I take the point that they are not the ones getting in touch with the right hon. Gentleman, but it is important that our approach is mindful of the target population.

The right hon. Gentleman raised the issue of reassurance, which is a legitimate concern, and one shared across the House. I draw the attention of his constituents, and those of colleagues across the House, to the Chancellor’s comments this morning. We are working at pace on this and we recognise the issue being raised. I hope that provides reassurance, certainly in terms of an announcement, although the operation of any solution may take further time, as the Chancellor set out.

Considerable work is being done, but the population is complex. We are looking at the burdens of different delivery mechanisms, whether on the Department for Work and Pensions or local authorities, which have their own staffing pressures because of the number who are ill. That is why we are exercising flexibility in lots of other areas in order to reprioritise resources, but it is important that the scheme is deliverable and mindful of the other challenges we are dealing with.

May I make a point from a public accounts point of view by urging the Chief Secretary to the Treasury to consider a system that is humane, rapid and, above all, simple? The Treasury and the Department for Work and Pensions have traditionally been obsessed with complexity, targeting and clawback, but what we need is a simple system. About 40 years ago I suggested having a universal basic income to Mrs Thatcher, and I got an earful for my pains. But we need something like that, which could be rolled out very simply and claimed by taxi drivers, cleaners and those sorts of people, because rich people would not bother with it. So just get on with it, make it simple and do it now.

My right hon. Friend wants us to get on with it. I refer him to the meetings and the considerable work being done to allow us to get on with it. As a former Chair of the Public Accounts Committee, he well knows that many policy ideas start with the simple but then the devil is in the detail of delivery. I recall many an interview that he has given to draw attention to simple schemes that were then less simple in their delivery. It is worth bearing in mind that a small number of self-employed people—a very small proportion—might be doing quite well in the current climate, while many others are suffering, but that is not what we are focusing on now. The question that we are seeking to address is how we target our measures at those who are most deserving, which is what the attention of the House is focused on, and we need to ensure that the scheme that is brought forward does likewise.

Years ago, I read in the newspapers that there was a red Ed in the House of Commons; I did not realise that it was the right hon. Member for Gainsborough (Sir Edward Leigh).

I, too, will try to strike a conciliatory tone in talking to the Chief Secretary to the Treasury. Obviously, there is very real concern. Like other hon. Members, I have been bombarded with emails from people who are self-employed. When this crisis is over, we should really sort out who is self-employed and who should be directly employed, but that is a debate for another time. Countries such as Norway, Denmark and Belgium have come up with schemes for the self-employed; is he looking at those international examples? Surely what works in those countries can work in the UK. There are 330,000 self-employed workers in Scotland, working in areas such as the creative industries, agriculture, forestry, fishing and construction, and as taxi drivers. Are the Government looking at increasing weekly sick pay from £94.25 to the equivalent of a week’s pay at the real living wage? Are they considering removing the lower earnings limit for qualification for sick pay to ensure that everyone can access it? Are they looking at ending the five-week wait for universal credit, so that the first payment is a grant—a real payment—and not a loan?

On the issue of advance payments and universal credit, the Chancellor has increased the standard allowance. That is not the total quantum that people will get; I referred earlier to those with children, housing needs or a disability, who would get more. We have also made changes to access, so that people can get payment quickly, from day one, without face-to-face meetings. Concerns about subsequent repayments have often been raised in the House, but clearly the £20 a week increase in universal credit that has been announced eases some of the repayment issues; it means that there is more in the allowance with which to address the issue of repayments. There has been a significant increase in universal credit, in part to address those issues. There is some operational complexity around a shift to a grant system because of the way that the universal credit IT system has been set up. We have sought to address the concern to which the hon. Gentleman refers through the increase, and of course an advance can still be offered.

Changes have been made to facilitate statutory sick pay being paid from day one, and changes have been made in respect of employers with 250 or fewer employees; the Chancellor set out measures to support those businesses with those costs.

The hon. Gentleman made a point relating to what I said about simplicity in a previous answer. Let me clarify the point that I was making. The vast majority of people who are self-employed are suffering; we recognise that. We are looking at how we can design a scheme that addresses the operational challenge that Members have spoken about.

Let me give an example. Part of the merit of the scheme that the Chancellor set out on furloughing members of staff, which is, I think, for many people a new concept, is that it gave clarity about delivery of the scheme. In answer to the previous question and the issue that the hon. Gentleman raises, we are looking at what is operationally deliverable quickly; what recognises other challenges in the Department for Work and Pensions and elsewhere; and what will not result in support going to a small proportion of people who should not be getting this targeted action, and instead allow us to focus it on the much larger cadre of people who deserve that help.

In designing his scheme, will the Chief Secretary to the Treasury recognise that many self-employed people in the tourism sector have very seasonal businesses, so using February, for example, as a reference month would not be appropriate? Will he see what can be done to help recreational charter fishermen, who, because they pay harbour dues rather than business rates, have not been able to access the grant aid that their friends across the road from the harbour have been able to?

My right hon. Friend draws attention to the challenge that emerged from some earlier questions: the simpler the scheme, the less it accommodates often legitimate and deserving issues that Members raise on behalf of their constituents. I am very happy to have further discussions with him, but he will recognise the tension between simplicity and addressing all the concerns that colleagues raise.