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Coronavirus: Employment Support

Part of the debate – in the House of Commons at 10:30 am on 19th March 2020.

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Photo of Greg Clark Greg Clark Chair, Science and Technology Committee (Commons) 10:30 am, 19th March 2020

For much of yesterday, like many Members of the House, including Jack Dromey, with whom I have been working, I was speaking to businesses in our constituencies who are facing a crisis. With revenue collapsing and no knowledge of when normal trading can resume, they see no choice but to lay off workers now. The loan scheme that the Chancellor announced on Tuesday is not enough to prevent that. These businesses have no idea when they will be able to pay back the debts they would incur and it provides no reason to keep staff employed. In fact, the reverse is true because, the smaller the wage bill, the less would have to be borrowed. On Tuesday, the Chancellor promised that there would be employment support, but as each day goes by, businesses are making decisions that will be irreversible and if the Government do not act immediately, large numbers of people will be unemployed and registering them will put huge pressure on the welfare system. Vital skills will be lost and good businesses, which will themselves be the customers and suppliers of other businesses, will cease trading.

There is a straightforward and immediate solution. All employers have an account with Her Majesty’s Revenue and Customs to pay tax for employees through pay-as-you-earn. The monthly wage bill is known to HMRC. Instead of firms paying PAYE to the Government, that flow should now be reversed, with the nation paying the wages of people for the next few weeks if, and only if, they continue to employ their staff. Separate arrangements would need to be made for the self-employed, but at a stroke this would save people’s jobs, save businesses and put an immediate end to the risk of contagion and help to save the economy. This is a crisis the like of which we have not seen for 100 years. It requires a response that is immediate, effective and equal to the scale of the problem. The Chancellor said that he will do whatever it takes, and do so urgently. He now needs to make good on that without delay.