Ministers must help workers locked out of virus support
The Government must act to protect the livelihoods of more than a million people who have fallen through the cracks of its coronavirus income support schemes, according to leading experts at the National Institute of Economic and Social Research.
NIESR welcomed the report by the House of Commons Treasury Committee and particularly the recognition given to the plight of new starter business and freelancers who had missed out on the chancellor’s schemes for salaried employees and the self-employed.
NIESR’s Director Professor Jagjit Chadha gave evidence to the committee while Claudine Bowyer-Crane and Adrian Pabst, two leading NIESR researchers, wrote an open letter calling for new starters to be included in a modification of the Coronavirus Job Retention Scheme (CJRS). They said the scheme had left a proportion of the workforce unprotected, specifically those due to start new jobs in late February and early March.
NIESR said it supported the recommendation in the report to revisit the scheme and support the hundreds of thousands of people who have been overlooked. It said the government should consider policy ideas such as further extending the cut-off date for the CJRS, accepting alternative evidence of employment, introducing New Starter Loans, or providing wage subsidies or tax breaks for firms that hire new starters.
Adrian Pabst, Deputy Director, said official data suggested that as many as a million people are new starters each quarter, with a further 800,000 moving jobs. Between 350,000 and 500,000 workers risk missing out on support in the hospitality sector alone, which will continue to be hit hard by social distancing rules, he said.
“The long-term impact of this situation cannot be overestimated,” Professor Pabst said. “Without financial support, hundreds of thousands if not millions of people will be left destitute, and the country will emerge from the pandemic with a huge cohort of ‘newly disadvantage’ families. This situation is entirely avoidable.”
Claudine Bowyer-Crane, Associate Research Director for Employment and Social Policy, said it was clear that extending the cut-off date for the CJRS from 28 February to 19 March has not adequately addressed the lack of coverage for hundreds of thousands of people who continued to face financial hardship.
She said the sticking point was the added requirement on the part of the HMRC that employees needed to have real time information, which meant they needed to have received a payslip in order to qualify for furlough, in order to avoid fraudulent claims.
“The need for protection against fraud is understandable but the approach is inadequate,” said Dr Bowyer-Crane. “Employers have access to alternative forms of evidence which, if accepted by HMRC, would allow them to furlough their staff, for example a signed employment contract. Why this evidence is not admissible has not been explained.”
In his evidence Professor Chadha said: “The problem with cliff edges is going to come up time and time again, for example with new starters, who in some cases have been unable to access the job retention scheme, just because they started on a particular date rather than another date. Some state-dependent policies would be very helpful, innovative and a good thing for the Government to be thinking about.”
Notes for editors:
The full report by the Treasury Committee, Economic impact of coronavirus: Gaps in support, can be read here.
The open letter by Professor Pabst and Dr Bowyer-Crane can be found here.
For further enquiries and to arrange interviews, please contact the NIESR Press Office: press [at] niesr.ac.uk / l.pieri [at] niesr.ac.uk / p.thornton [at] niesr.ac.uk / 07930 544 631 / 07941 443 781