Social Security — House of Commons, 2020-05-05
Topic: Macroeconomics
Alexander Jesse Norman (Conservative, Centre-right): I thank all Members who have contributed to this very constructive debate for their support on this important measure I agree, in some respects, with the hon. Member for Ilford North (Wes Streeting) that there is a degree of unreality about this. Of course, as he will know, this measure legislates for change that is already in operation as from the Budget, and therefore does not reflect, is not designed to reflect, and cannot, in fact, in law reflect all the changes that have happened since then. I think he will also be aware that we have had several Budgets- worth of additional measures since then from the Treasury and from across Government It is worth saying that the air of unreality that the hon. Gentleman describes can also, in some respects, apply to some of the points that have been made in the debate. It vaguely reminds one of the famous "Monty Python" sketch, "What have the Romans ever done for us?" Well, at the moment we have the coronavirus jobs retention scheme, the business interruption loan scheme, the self-employment scheme, statutory sickness pay, £750 million of charity support, grants, tax reliefs, billions of pounds to local authorities, and HMRC’s "time to pay" arrangement. That is an astonishing array of different packages. Of course, there may be people who are not, or not yet, able to benefit from them, or to benefit as much as they would like, but I think that everyone will be able to benefit from them in some regard, because that is how they are designed The hon. Gentleman mentioned the social investment tax relief. As he will be aware, we have consulted on that. Interestingly, I have talked to some of the social investment tax relief organisations involved, and they concede that so far the relief has not been effective, so the question is really whether it would be more effective if it were continued. Of course, the Treasury continues to reflect on that matter, as it does with all taxes I share the view of the hon. Member for Airdrie and Shotts (Neil Gray) that we have had constructive interactions in the past, and I thank him very much for his speech. He asked whether the employment allowance could be extended to cover all employees; I think I am right in saying that 93% of all businesses, including those owned and run by charities, remain eligible for the employment allowance, so it is extremely comprehensive. The restriction to smaller companies reflects the point that £4,000 is a substantial amount for small and micro- businesses but not for much larger businesses with national insurance contributions payments of more than £100,000 a year The hon. Member for Richmond Park (Sarah Olney) asked about the self-employed and dividends. She will be aware that dividends are a payment in return to capital ownership of a company, rather than as a matter of wages. Because of that, there is no available information as to who benefits and by how much and there is no clarity as to whether the dividends are in fact a form of wages or may have come from other activities of the business. It is of course right to focus on the issue if that is what her constituents are pressing her on, and we continue to think about the point The hon. Lady mentioned the £50,000 threshold for the self-employed; I think I am right in saying that on average, according to Her Majesty’s Revenue and Customs, a self-employed business has to have had £200,000 of revenue in order to have £50,000-worth of profit, so in most instances we are not talking about the most vulnerable people in society, who make up the groups that we are very much focused on assisting to the extent that we possibly can The hon. Member for Coatbridge, Chryston and Bellshill (Steven Bonnar) asked about devolution. As he will be aware, the Smith commission made a clear recommendation that national insurance contributions should remain reserved. National insurance is, of course, a social security contribution, so there would be many interactions with entitlement to benefits and other impacts across other businesses and individuals. The UK Government have delivered on their promise to devolve increased income tax powers to Scotland; it remains up to the Scottish Government to decide what to do with their own tax policy, and they have begun measures—be it said not enormously wide-ranging ones—to change tax policy The hon. Member for Oxford West and Abingdon (Layla Moran) made a point about charities. As I have suggested, the employment allowance covers an overwhelmingly large 93% of the businesses to which it is potentially applicable The hon. Member for Westmorland and Lonsdale (Tim Farron) talked about a 12-month funding settlement. As the Chancellor has acknowledged, in terms of the public purse the present situation is not sustainable. It is not a situation that people should want to sustain, not least because it may in due course have counterproductive economic effects. We in the Treasury, and across Government, are reflecting very hard on how we can emerge from this lockdown stronger and more unified as a country than ever. With that said, I commend the regulations to the House Question put and agreed to. Resolved, That the Employment Allowance (Increase of Maximum Amount) Regulations 2020 (S.I., 2020, No. 273), dated 11 March 2020, a copy of which was laid before this House on 10 March, be approved Adjournment