The Treasury Committee has published the third report of its inquiry into the Economic Impact of Coronavirus – ‘Gaps in Support and Economic Analysis’. Its recommendations include:
- Government must set out criteria for how and when it will lift lockdown restrictions with economic and epidemiological modelling to support it
- HM Treasury should be more transparent with economic analysis that informs Government decisions
- HM Treasury should use 19-20 tax returns to help the newly self-employed
- Eligibility for Government support should be extended to those missing out, including limited company directors and freelancers
- In the Government’s “plan for taking the country out of lockdown”, due to be published w/c 22 February, it should set out the criteria for how and when it will lift restrictions to provide confidence to the general public and business. Alongside this, HM Treasury should undertake and provide the combined economic and epidemiological modelling, known as epi-macro modelling, to better understand the implications of Government-imposed social restrictions and to evaluate the costs and benefits of such social restrictions.
- The lack of analysis provided by HM Treasury on social restrictions is disappointing. It should be more transparent about the economic analysis that it undertakes to inform Government decisions. The House should not be asked to take a view on proposals that have far-reaching consequences for the general population without the support of appropriate and comprehensive economic analysis.
- Comparisons with other countries’ GDP may be affected by different measurement methodologies. HM Treasury and the Office for Budget Responsibility (OBR) should provide commentary at the time of the Budget on this issue.
Gaps in Support
- There is scant justification for the Government to not have addressed the ‘hard edges’ of the Self-Employment Income Support Scheme (SEISS), which have meant that some people have lost out. It’s disappointing that the Government has shown no inclination to expand or provide alternatives to the SEISS. It should look at other models of support for people who need it but do not currently qualify, including those developed by the devolved administrations.
- HM Treasury should use new data from the tax returns for 2019-20 to help the newly self-employed who missed out from previous rounds of support for the fourth tranche of the SEISS grant. HMRC should prioritise analysing these tax returns to help this group as quickly as possible.
- HM Treasury should investigate ways to support limited company directors, in part to ensure that it is not sending out the message that it does not support entrepreneurs and employers who have suffered significantly from a lack of support. It should assess the fraud risk of the Directors Income Support Scheme (DISS) scheme and how such risks could be mitigated.
- To help some freelancers who have missed out on support, the Government should reconsider the 50 per cent limit in the eligibility criteria for the fourth tranche of the SEISS grant so those who derive less than half of their income through self-employment can receive some level of support.
Commenting on the economic analysis section of the report, Rt Hon. Mel Stride MP, Chair of the Treasury Committee, said:
“After almost a year of restrictions, people and businesses need confidence that the Government has a clear route of out the crisis.
“To provide this confidence, the Government must set out the criteria for how and when it will lift lockdown restrictions.
“This should be supported by combined economic and epidemiological modelling undertaken by the Treasury, showing how it would best optimise health and economic outcomes.”
Commenting on the gaps in support section of the report, Mr Stride said:
“Nearly a year on from when the Government first introduced coronavirus support schemes, those who have been excluded must not be forgotten.
“New data from the 19-20 tax returns should be used to help the newly self-employed for the fourth tranche of the SEISS grant.
“We have also made recommendations for how the Treasury should help those limited company directors and freelancers that have fallen through the gaps in support.”