Covid-19: one million ‘locked out of support’

MPs are urging the government to take immediate action to help over a million people who have lost their livelihoods as a result of the lockdown, and who have fallen through the gaps of the current coronavirus support schemes

The Treasury select committee has published an interim report as part of its ongoing inquiry into the economic impact of coronavirus.

This states that while the Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS), introduced to protect the livelihoods of salaried and self-employed individuals, have been welcomed by many, rolling out financial support at pace and scale ‘has inevitably resulted in some hard edges in policy design and some critical gaps in provision’.

The inquiry identified five specific groups which the committee says have missed out and has made a series of recommendations for how the government can assist these people.

The first group are those newly in employment, with the committee claiming 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.

It wants the government to 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.

Secondly, many of the newly self employed who have started a business in the last year don’t qualify for support from the SEISS as they cannot fulfil the eligibility criteria. MPs say the government should undertake an urgent review to see how it can extend support to this group of people.

The third group are those self-employed with annual trading profits in excess of £50,000, which the Treasury select committee describes as an ‘arbitrary’ cut-off in the SEISS.  It wants the government to remove the £50,000 cap and allow those with profits just over this limit to access to some financial support, up to £2,500 a month.

The fourth group who have missed out are directors of limited companies who take a large part of their income in dividends.

The report stated: ‘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.’

Finally, the committee wants to see action to help freelancers or those on short term contracts. It points out that 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, and states ‘’this cannot be right’.

Instead, MPs suggest the government should give this group access to financial support that equates to 80% of their average monthly income, up to a total of £2,500 per month.

Mel Stride, 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.’

Gaps in Support report

By Pat Sweet

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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