Recommendations & Conclusions
9 items
12
Recommendation
Eighth Report: Economic impact of coron…
Rejected
We are concerned that there may be a significant lack of capacity and willingness for the private sector to step in to provide solutions for corporate indebtedness especially amongst small and medium-sized enterprises (SMEs). Viable SMEs struggling with debt will prolong the recession and so the Government must develop solutions …
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We are concerned that there may be a significant lack of capacity and willingness for the private sector to step in to provide solutions for corporate indebtedness especially amongst small and medium-sized enterprises (SMEs). Viable SMEs struggling with debt will prolong the recession and so the Government must develop solutions for ensuring the recapitalising of their balance sheets. The Government must outline a plan for this within the next three months. It should think creatively (as it has around other support measures) and consider a wide range of potential interventions, such as contingent tax liability or student loan type structures in relation to debt for SMEs, where repayments are conditional on them demonstrating appropriate financial health. TheCityUK has already carried out a comprehensive review on the recapitalisation of businesses, which should provide a starting-point for the Treasury’s work. (Paragraph 101) 56 Economic impact of coronavirus: the challenges of recovery
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Government response AI summary
The government rejects the recommendation to outline a plan for recapitalising SME balance sheets, stating that accredited lenders, not the government, are best placed to support borrowers with government-guaranteed loans. They have considered the proposed interventions but maintain their view.
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HM Treasury
26
Recommendation
Eighth Report: Economic impact of coron…
Rejected
The Treasury’s macroeconomic forecasting ability appears to have eroded since the formation of the OBR. The Treasury needs to maintain sufficient forecasting capacity outside the OBR so that it can ensure that it can adapt policy responses rapidly to an urgent situation. In its response to this report, the Treasury …
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The Treasury’s macroeconomic forecasting ability appears to have eroded since the formation of the OBR. The Treasury needs to maintain sufficient forecasting capacity outside the OBR so that it can ensure that it can adapt policy responses rapidly to an urgent situation. In its response to this report, the Treasury should explain in detail its short-term macroeconomic forecasting capabilities, and how macroeconomic forecasting analysis has informed the design, scope and scale of its interventions during the crisis.
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Government response AI summary
The government rejected the recommendation, stating that the Treasury does not produce its own macroeconomic forecasts and instead relies on independent forecasts from the OBR, Bank of England, ONS data, and external sources for policy advice.
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HM Treasury
5
Conclusion
Eleventh Report - Economic impact of co…
Rejected
By conspicuously leaving out a large proportion of limited company directors from support altogether, we are concerned that the Government is sending out the wrong message—that it is not adequately supporting entrepreneurs and employers, who have suffered significantly from a lack of support. However, we recognise that there are administrative …
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By conspicuously leaving out a large proportion of limited company directors from support altogether, we are concerned that the Government is sending out the wrong message—that it is not adequately supporting entrepreneurs and employers, who have suffered significantly from a lack of support. However, we recognise that there are administrative difficulties to overcome and fraud risks with the implementation of any scheme.
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Government response AI summary
The government responded to concerns about the exclusion of limited company directors by explaining that difficulties in identifying eligible individuals and high fraud risks prevent broader support through schemes like SEISS, while noting other available business support.
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HM Treasury
7
Recommendation
Eleventh Report - Economic impact of co…
Rejected
We question whether the Treasury could do more to investigate how to mitigate the fraud risks inherent in the DISS scheme and similar schemes, and whether the levels of fraud risk merit the Treasury’s position of not providing any support at all. We urge the Treasury to develop measures to …
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We question whether the Treasury could do more to investigate how to mitigate the fraud risks inherent in the DISS scheme and similar schemes, and whether the levels of fraud risk merit the Treasury’s position of not providing any support at all. We urge the Treasury to develop measures to support limited company directors and set these out in the Budget. (Paragraph 49) 34 Economic impact of coronavirus: gaps in support and economic analysis
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Government response AI summary
The government rejected the recommendation to develop new support measures for limited company directors, citing significant difficulties in accurately identifying eligible individuals from HMRC data, high fraud risks associated with self-certification, and the availability of other business support schemes.
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HM Treasury
8
Conclusion
Eleventh Report - Economic impact of co…
Rejected
Although we acknowledge the Chancellor’s intention to target the SEISS at those who are most dependent on self-employed income, not all of them would have access to the Coronavirus Job Retention Scheme, as we pointed out in our first report of this inquiry.
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Although we acknowledge the Chancellor’s intention to target the SEISS at those who are most dependent on self-employed income, not all of them would have access to the Coronavirus Job Retention Scheme, as we pointed out in our first report of this inquiry.
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Government response AI summary
The government defended its SEISS eligibility criteria, particularly the 50% self-employed income test, stating it is designed to target support at those most in need and citing data on other income sources for those who do not qualify.
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HM Treasury
9
Recommendation
Eleventh Report - Economic impact of co…
Rejected
We believe that the Government should reconsider the 50 per cent limit in the eligibility criteria for the fourth tranche of the SEISS grant so that those who derive less than half of their income through self-employment can receive some level of support.
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We believe that the Government should reconsider the 50 per cent limit in the eligibility criteria for the fourth tranche of the SEISS grant so that those who derive less than half of their income through self-employment can receive some level of support.
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Government response AI summary
The government rejected the recommendation to reconsider the 50% income limit for SEISS eligibility, stating the design aims to target those most in need and noting that stakeholders had initially supported an even higher threshold.
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HM Treasury
10
Recommendation
Eleventh Report - Economic impact of co…
Rejected
There is a striking inconsistency between the way the Government is treating employees earning more than £50,000 a year and those who are self-employed and have trading profits above £50,000 a year. Whereas those who are employed can receive support from the Government up to a maximum wage amount of …
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There is a striking inconsistency between the way the Government is treating employees earning more than £50,000 a year and those who are self-employed and have trading profits above £50,000 a year. Whereas those who are employed can receive support from the Government up to a maximum wage amount of £2,500 a month through the Coronavirus Job Retention Scheme, those who are self-employed receive nothing at all under the Self-employment Income Support Scheme. This is unfair. We believe the Government ought not to disadvantage the self-employed in this way.
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Government response AI summary
The government rejects the implicit recommendation to remove the £50,000 cap or introduce a taper for SEISS, stating it is not proportionate due to complexity and the small number of potential beneficiaries, and that SEISS and CJRS are fundamentally different schemes.
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HM Treasury
11
Recommendation
Eleventh Report - Economic impact of co…
Rejected
We reiterate our recommendation from our first report in this inquiry that the Government must tackle the cliff edge that exists in the design of the SEISS by removing the £50,000 cap and allowing those with profits just over this cap access to some financial support up to the total …
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We reiterate our recommendation from our first report in this inquiry that the Government must tackle the cliff edge that exists in the design of the SEISS by removing the £50,000 cap and allowing those with profits just over this cap access to some financial support up to the total monthly support cap of £2,500 (as for salaried employees).
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Government response AI summary
The government rejects the recommendation to remove the £50,000 cap and introduce a taper for SEISS, stating it is not proportionate due to the complexity of administration and the relatively small number of people who would benefit.
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HM Treasury
14
Recommendation
Eleventh Report - Economic impact of co…
Rejected
We recognise that it may not have been possible for the Government to help all those who have fallen through the cracks of the support schemes. However, we are disappointed that the Government has so far shown no inclination to expand or provide alternatives to the SEISS, which is providing …
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We recognise that it may not have been possible for the Government to help all those who have fallen through the cracks of the support schemes. However, we are disappointed that the Government has so far shown no inclination to expand or provide alternatives to the SEISS, which is providing a vital life-line to many but is not available to all those whom we believe should qualify. We recommend Economic impact of coronavirus: gaps in support and economic analysis 35 that the Government look at other models of support, including those developed by the devolved administrations with a view to extending support to people who require support and who do not currently qualify. (Paragraph 76) Economic analysis
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Government response AI summary
The government stated it had explored alternative support models, including Northern Ireland's Directors' scheme, but concluded they were not viable due to higher fraud risks and practical issues with identifying eligible populations.
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HM Treasury