The UK government has done all it can to help as many people as possible, suggesting that further financial support for those excluded from previous packages might not be forthcoming.
In this blog and video, I’m taking a quick look at a report from the Public Accounts Committee of MPs, who are being rather critical about outdated HMRC tax systems which have meant many have fallen through the cracks.
Government financial support in the wake of the Covid-19 pandemic has been extensive and unprecedented. I think that’s a fair assessment. Ask anyone at the start of last year if the government would be paying the wages of nearly a third of the UK workforce, at the peak of the furlough scheme last May, and they would give you a very funny look.
However, despite this widespread support, many groups of people have fallen through the cracks of these support schemes, finding themselves with no financial safety net, despite the inability to work due to lockdown restrictions.
And now, a committee of MPs has criticised the government for the out-of-date tax systems that have allowed groups to fall through these cracks. According to members of the Public Accounts Committee, some freelancers and self-employed people were excluded from government support, despite the restrictions placed on their ability to trade.
The out-of-date systems have also enabled some others to abuse the system, making fraudulent or false claims for support. We heard last week that HMRC has received more than 21,000 reports of suspected furlough fraud.
HMRC told the BBC last week: “The Coronavirus Job Retention Scheme is part of the collective national effort to protect jobs. This is taxpayers’ money and fraudulent claims limit our ability to support people and deprive public services of essential funding.”
According to the government, its ‘top priority’ is to support those struggling financially due to the pandemic. However, as I’ll come on to talk about in a moment, they are also claiming that have done all they can to help as many people as possible, which isn’t a particularly positive message, I don’t believe, for those groups who have found themselves excluded from government financial support.
HM Revenue & Customs has provided more than £80bn in support to businesses and individuals since last March, via the various government coronavirus support schemes.
Many self-employed people have also been supported with the payments of self employment income support scheme grants. Round three of that support scheme is open for applications now, until 29th January.
Despite this extensive government support, MPs on the Public Accounts Committee noted the “quirks in the tax system” allowing some groups, including freelancers and some self-employed people who recently became employees, to fall through the cracks. Self-employed people who work on a series of short-term employment contracts, with gaps in between, have also found themselves ineligible for grants or furlough.
Meg Hillier MP, chairman of the Public Accounts Committee, said:
As public spending balloons to unprecedented levels in response to the pandemic, out-of-date tax systems are one of the barriers to getting help to a significant number of struggling taxpayers who should be entitled to support.
She explained that some large companies have received government financial support, enabling them to continue paying dividends to their shareholders and salaries to executives. And, in some cases, HM Revenue & Customs was failing to identify or deal with companies or individuals wrongly claiming government support.
Hillier wants HMRC to tell freelancers and other excluded groups why they have fallen through the cracks, as well as proposing steps to fix the problem. She suggested a six-week deadline with these measures.
The report from the Public Accounts Committee also pointed to a lack of certainty around government coronavirus support schemes, making it challenging for businesses to plan for the future.
One example was the Job Retention Bonus, intended to be paid in respect of each employee brought back off furlough and retained in a business. This £1,000 bonus was due to be paid at the end of January, but HMRC is unable to confirm whether the incentive has been scrapped or delayed.
The report said, “Such lack of clarity may lead to unnecessary hardships for some businesses, who in good faith were relying on the payments from the scheme to meet some of their needs.”
In response, a spokesperson for the government said it has done all it can to help as many people as possible. The spokesperson said:
HMRC delivered Covid-19 support schemes at unprecedented speed, protecting the livelihoods of millions of people.
We do not underestimate the challenges faced by individuals and businesses during the pandemic, and our top priority is getting financial support to those struggling… while protecting the taxpayer against fraud.
Those not eligible for support through these schemes can still benefit from the strengthened welfare safety net, accessing help like Universal Credit.
Does this government response spell an end to any prospect for those excluded from existing support schemes getting access? We’ve got the Budget coming up on Wednesday the 3rd of March, still over a month away, and it looks like we need to wait until then to hear from Chancellor Rishi Sunak about any further support measures.
At the same time, it now seems likely that the current national lockdown in England will continue until at least early April, with a gradual and phased regional reduction in restrictions to follow. Reports in the press yesterday suggest that schools will stay closed until Easter, possibly for longer in some parts of the country, and then tough Tier 4 restrictions could stay in place until at least May.
What do you make of this report from the Public Accounts Committee, and the subsequent government response? I would especially like to hear from you if you’ve been excluded from the various government support schemes.