Coronavirus: No help for workers excluded from government support, says chancellor

'It is not as if there is no support available,' Rishi Sunak says as he confirms self-employed people, freelancers and company directors will not be given a leg-up

Ben Chapman
Wednesday 15 July 2020 19:49 BST

Up to 3 million people who have been excluded from coronavirus financial support will get no help beyond what is already available and the government must now “look forward”, the chancellor has said.

Asked whether he would look again at support schemes which have excluded millions of freelancers, the recently self-employed and company directors, Rishi Sunak confirmed that no new measures would be introduced.

He also defended his plans to pay a £1,000 bonus to employers who keep staff on, despite admitting that much of the money would be wasted on jobs that would have been kept in any case.

Mr Sunak told the House of Commons Treasury Committee: ”Now we have to look forward. There wouldn’t now be the opportunity to have new schemes.”

Committee chair Mel Stride said “administrative complexity” appeared to be a weak justification for denying financial help to people.

“If there was an easy thing that we could have done, at scale, speed, protect against fraud and was affordable we would have done it, Mr Sunak said.

“For the group of people you mentioned, it is not as if there is no support available,” he said, pointing to tax deferrals, bounce-back loans for people who have their own companies, and mortgage repayment holidays for homeowners.

“It may well be that they haven’t got exactly what they wanted but there are other avenues that they have been able to access.”

Attempting to draw a line under one of the most controversial aspects of the government’s economic response to Covid-19, Mr Sunak said the Treasury was now “planning for and implementing policies for the recovery ... That’s where our focus should be.”

Ellie Phillips, a freelance TV and radio presenter who has been campaigning on the issue, expressed anger at the chancellor’s comments.

“It is absolutely abhorrent that Rishi Sunak continues to ignore the near-millions of taxpayers who’ve been excluded from support during this crisis. This is a national scandal.”

She added: “MPs are constantly asking the chancellor to fix these enormous gaps. And despite all of this, Rishi Sunak still refuses to help these excluded taxpayers, who have had no income and no support for over four months during this crisis.

“All that the Treasury Select Committee meeting today achieved for those who’ve been excluded, was an acceptance by Rishi Sunak that not everyone has been able to get the support that they need.”

In a wide-ranging select committee session, the chancellor played down fears that the government would need to step in with bailouts for specific firms, said there was little the government could do to support industries like aerospace and agreed with the Office of Budget Responsibility that the public finances are not currently on a sustainable path.

He said he wished to reverse that last problem over the “medium term”, but would not comment on the fiscal policies he might implement to achieve his aim.

Asked about criticism of the £1,000 bonuses for employers who bring back furloughed staff, the chancellor said it would “serve as a significant incentive and reward, particularly to small and medium-sized companies to protect employment”.

On business bailouts he said: “I’m not completely persuaded of the scale of the problem at the moment. The simple reason is that we know corporate debt levels in the UK were in a relatively healthy place coming into this crisis.”

Companies’ indebtedness was well below its levels during previous crises, he said. He added: “The bar for that kind of intervention is very high."

“It should be exceptionally rare, it should only be in situations where a company has some strategic value, it clearly has a long-term viable future and the existing equity holders and creditors have shared in the burden and are not just looking for a free ride on the taxpayer.”

He added: “In any country government is always the lender of last resort. Is there going to be a slightly bigger call on the government’s role in that regard during a period of financial distress? Yes. That said, the bar remains where it should be.”

Taking equity stakes in millions of small and medium-sized companies, as some think tanks have suggested, “might not be sensible”, Mr Sunak said.

The chancellor also attempted to calm speculation that the government was planning to raise capital gains tax. Asked why he had asked for a review of the tax, he said it was “business as usual” to do so.

Mr Sunak said: “It happens every year, so the last year or two the [Office for Tax Simplification] have looked at inheritance tax, before that they looked at VAT, they have looked at stamp duty and then before that income tax and national insurance.”

He added: “They’ve looked at all those other taxes over the past few years and this is just the next one on the block to take a look at.”

The chancellor declined to directly address concerns about £15bn spent on personal protective equipment, some of which has gone to companies with no track record in medical supplies after no tender was carried out.

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