The House of Commons Treasury Committee (Treasury Committee) has published its interim report, ‘Economic impact of coronavirus: Gaps in support’, as part of its inquiry into the economic impact of Coronavirus. The report makes recommendations to the Government to help over one million people identified by the Treasury Committee as having fallen through critical gaps in Government COVID-19 support due to the pace at which this support has been rolled out and its huge scale.

The report also appeals to the Government to implement these recommendations to fulfil one of the key overarching principles reflected in its COVID-19 Recovery Strategy of fairness to all people and all groups and its promise to do whatever it takes to protect people and business from the impact of the coronavirus pandemic.

A number of COVID-19 support measures have been introduced by the Government, including two principal schemes:

  • Coronavirus Job Retention Scheme (CJRS): aimed at salaried individuals and designed to pay them 80% of their salaries, up to a cap of £2,500 per month.
  • Self-Employment Income Support Scheme (SEISS): aimed at self-employed individuals and designed to pay them 80% of their average monthly trading profits over the last three years, subject to an annual trading profits threshold of £50,000.

While the COVID-19 support measures have been welcomed by many, the Treasury Committee has identified in their report five main groups of people who have not been able to benefit from them. The Committee is generally concerned that these people have lost their livelihoods and continue to endure financial hardship with no access to COVID-19 support even as the period of such support is extended for those who are currently eligible.

The five main groups of people, together with the specific Treasury Committee concerns and recommendations to the Government are summarised below.

Economic impact of Coronavirus: Gaps in support

Main groups affected                                                       Treasury Committee concerns                                     Recommendations to the Government        
New starters in employment                                                                                                                                                                                                                                                                                                                                                                 
  • Hundreds and thousands of individuals suffering financial hardship either through
    • their unfortunate timing in starting a new job after the cut-off date for support under the CJRS, or
    • their employer's choice of timing in submitting new starter paperwork to HMRC.                                                                                                      
  • Extend eligibility criteria to all new starters (e.g. by extending the cut-off date to 31 March 2020 or by accepting alternative forms of evidence such as a signed contract of employment).

Self-employed with annual trading profits above £50,000 threshold

  • Hundreds and thousands of people potentially suffering financial hardship due to the arbitrary £50,000 cut-off that has no equivalent in the CJRS.
  • Possibility of a situation where in one household, a self-employed single-parent earning just above the threshold receives nothing while a couple either self-employed and earning profits just below the threshold could access SEISS, or if both salaried employees could access CJRS.
  • Remove the £50,000 threshold and allow those with profits just over this cap access to some financial support, up to the total monthly support cap of £2,500, in line with CJRS.
Limited company directors receiving a large part of their income as dividends        
  • Hundreds and thousands of limited company directors missing out on support because they pay themselves in dividends.                   
  • Find a practical way to support these individuals, such as a proposal whereby HMRC would request additional information about the proportion of dividends that have come from company profits and from other sources and require self-certification by the applicant. HMRC would reserve the right to investigate claims.
Freelancers and short-term contractors 
  • These distinct groups of individuals fail to benefit from the Government's principal COVID-19 support schemes when they have lost their livelihoods through lockdown.
  • Recognise the impact of COVID-19 on PAYE freelance workers and establish a system of support which ensures that this group of people can access financial support during the crisis.
Newly self-employed 
  • Many people have started a new business, or built their business up in the last year, but are unable to qualify for support because they cannot fulfil the eligibility criteria required by the SEISS.
  • Undertake an urgent review to see how support can be extended to those newly self-employed who are unable to benefit from the SEISS.

 

External link

Economic impact of coronavirus: Gaps in support, House of Commons Treasury Committee                                    

 

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