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Over a million people slip through net of coronavirus support schemes

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15/06/2020
More than one million people have fallen through the gaps of government coronavirus support schemes, an influential group of MPs say.

The roll-out of financial support as coronavirus gripped the nation came at pace, and has led to more than a million people being locked out of support.

The influential Treasury select committee said the government needs to fulfil its promise of “doing whatever it takes” to protect people and businesses from the impact of the health pandemic.

It said despite the introduction of the Coronavirus Job Retention Scheme (CJRS) and the Self-employment Income Support Scheme (SEISS), a number of groups of society are excluded.

It has therefore made a series of recommendations for how the government can help these people:

  • Those newly in employment: Hundreds of thousands of people are suffering financial hardship due to unfortunate timing in starting a new job or their employer’s choice of timing in submitting paperwork to HMRC. The MPs said 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 who have started a business in the last year don’t qualify for support from the SEISS as they can’t fulfil the eligibility criteria. The government should undertake an urgent review to see how it can extend support to this group of people, the MPs said.
  • Those self-employed with annual trading profits above £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, the committee suggested.
  • Directors of limited companies who take a large part of their income in dividends: The MPs said 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 committee urges 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”, they said. They suggested 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 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.”

A Treasury spokesperson, said: “The swift and targeted action we’ve taken has protected millions of jobs and livelihoods and our interventions have been rightly welcomed by the select committee.

“Our wide-ranging support package is one of the most comprehensive in the world – with generous income support schemes, billions paid in loans and grants, tax deferrals and more than £6.5bn injected into the welfare safety net.

“All our support is targeted to make sure we use public funds responsibly, helping those who need it most as quickly as possible, while minimising fraud risk.”

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