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Loan Charge 2019: Sir Amyas Morse Review

Part of the debate – in the House of Commons at 2:40 pm on 19th March 2020.

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Photo of Matt Rodda Matt Rodda Shadow Minister (Transport) (Buses) 2:40 pm, 19th March 2020

It is a pleasure to speak in this important debate. I will be brief and focus my remarks on two or three key areas that have been partially mentioned by some colleagues earlier. I thank Mr Davis for securing this debate and commend the work of the all-party parliamentary group and the cross-party nature of the debate today, which is helpful.

First and foremost, I put on record my fundamental support for a fair tax system. We obviously need to raise taxes to pay for vital public services, but that system clearly has to be fair. I think that the points made by a number of colleagues across the House on the matter are absolutely right, and I am grateful for the emerging consensus on the issue.

Secondly, I highlight the importance of the issue of the loan charge. The fact that this debate is taking place today in a period of sustained national crisis—indeed, it is a crisis for the whole world—is interesting, and it does underline the importance of this issue. I was approached about it a number of times during the general election, like many Members here today, and I have had constituents contact me about it. There is deep unease in the community, certainly in the constituency I represent, which is made up of Reading itself and the neighbouring town of Woodley, about the problem, which affects many people. I noted the figure of 50,000 people across the country. It certainly seems to be higher than that, given the proportion of people in my community who seem to be affected.

I draw Members’ attention to the effects on a typical town of its type, as Reading is, and specific industries where I believe there may be a particular likelihood of the problem arising. In the area I represent, a very large number of people are self-employed and have microbusinesses or work as consultants in one form or another. That is spread across a huge range of sectors, from traditional small businesses through to people with trades or IT skills and public servants. It is a vast range of people.

I want to add to the point made by my hon. Friend Dr Huq about locums in public services affected by the issue. I know of cases where a number of people in public services have to set up as a company and work on that basis, perhaps as a supply teacher or in some other interim role in public services. I should declare an interest, as I have certainly operated in that way in the past as an interim public servant. In the more distant past, I was a full-time civil servant. Locums are a well-known type of employment and a subset of those people—not all of them—are affected by the loan charge.

As well as my area, many other nearby parts of the country have similarly high levels of employment in IT. There is a particular prevalence of self-employment among IT professionals. If we think of the great IT businesses in this country—companies such as Microsoft, Oracle or Vodafone—many of them are headquartered in the Thames valley or west London. Many of those large businesses rely heavily on subcontractors who have often no choice but to set up a limited company that then serves the much larger organisation.

In my area, many people who are affected by the loan charge are in the IT industry. There are whole WhatsApp groups of people in parts of the IT industry that are buzzing with concern about the matter. As has been said, the issue ranges back over many years and there is deep uncertainty and pressure on these workers and their small businesses and, indeed, their families, because of this whole problem. As I said earlier, we are debating this issue at a time of national crisis. Imagine how that concern overlays itself on top of the existing pressures that we talked about earlier today and yesterday. Quite rightly, we in this House have discussed and raised with the Government the importance of supporting small businesses at this time of national crisis.

Imagine how it would feel to be a small business person or an IT subcontractor who was the breadwinner in their family. Their source of income could dry up because of this crisis, which is not of their making and that they have not anticipated. At the same time, they face the long-standing problem of the loan charge looming over them, with the very grave measures that other colleagues have mentioned today. Some of the examples that have been mentioned are truly dreadful. Imagine that pressure. That is what we need to do today—to think about what it feels like for somebody who is a small business person or self-employed. I know the Minister is dutiful and well-read and, as was said earlier, he has written a biography of Adam Smith. I hope that he will look again at the evidence clearly and thoroughly and in the context of the current situation affecting small businesses.