Why Providing Parity Financial Support Is Essential

For The Economy As We Build Back Better

Martin S. Wood

26th October 2021

© Martin Wood - EUA Campaign 2021

Introduction

Why providing parity financial support is essential for the economy as we build back
better

EUA Official Campaign is continuing to raise awareness of the 3.8 Million British taxpayers
who have been unable to access and denied meaningful parity support for the previous 18
months.

“Nearly 4m adults excluded from government’s income replacement

schemes” (Standard Life Foundation, 2021).
These exclusions cover a wide range of industries to include: Hairdressers, plumbers, taxi
drivers, electricians, the list is endless; every SIC code has been affected. All have
contributed into the UK tax system who found themselves through no fault of their own
excluded from support schemes. These small and medium sized businesses are critical in
order to re-start the economy and are vital to the supply chain that exists between businesses
operating within the private sector.

“How can it be right for the Government to harm your business, leave you in
need - and not help you?” (Standard Life Foundation, 2021).
The exclusions from meaningful support are wide and varied but fundamentally it is
estimated that between 2.9 million and 3.8 million British taxpayers were unable to access or
were denied meaningful and fair support enjoyed by the rest of the workforce. Whilst these
figures have been disputed by the Chancellor it is only fair to reference the NAO (National
Audit Office) statistics that states that as many as 2.9 million people simply were not eligible
despite the Chancellor stating otherwise.

“A combination of policy decisions and constraints in the tax system

meant that as many as 2.9 million people were not eligible for the schemes.
People were excluded from the schemes either because of ministerial
decisions about how to target the schemes”(National Audit Office,2020)

Without adequate and equal support for the supply chain, the UK is in danger of further
economic slump with long term scarring and the associated social issues that occur.

Lives and livelihoods are being lost in for no other reason that these “gaps in support” have
been cruelly left unaddressed despite numerous calls from MP’s and industry bodies to
provide immediate fair access to schemes.

“This continued injustice is unconscionable. We will continue to fight for

workable solutions that will ensure parity for all those excluded. This country
can bounce back, but that means the Chancellor must put common-sense
economics before his obsession with self-promotion and spin” …
"Chancellor’s sums don’t add up” (Gaps in Support APPG, 2021).

© Martin Wood - EUA Campaign 2021

The EUA Campaign are calling for meaningful support and direct engagement with the
Government until these exclusions are addressed fully

 That a public enquiry date is set by Christmas in respect to the mistakes made with
Covid19 financial support schemes

 That the existing BBL loans are cancelled immediately without penalty.

 That the Covid19 financial support schemes are in line and equal to the self-
employment scheme (SEISS), backdated to people still denied and excluded from
support.

 That back dated financial support is targeted towards Ltd company directors of micro
companies whose financial statements are prepared under FRS105 rather than the
standard FRS102 along with an accountants letter to provide validation.

 That PAYE Freelancers who are taxed at source and whose tax records are readily
available receive backdated parity support by means of a grant.

 That the returned furlough money received from large corporate entities is made
available by means of recycled state aid to business in need of support based on job
retention and job creation.

© Martin Wood - EUA Campaign 2021

The narrative of 3.8 million British tax payers forgotten, excluded and denied access to
meaningful financial support schemes is well documented.

Since the Chancellor’s public statement made on 26th March 2020

“Musicians and sound engineers; plumbers and electricians; taxi drivers and
driving instructors; hairdressers and childminders and many others, through
no fault of their own, risk losing their livelihoods.

To you, I say this: You have not been forgotten. We will not let you behind.
We are all in this together.” (Sunak, 2021)

Some 3.8 million British citizens have clung onto these words in the now what is clear vain
hope that equal support measures would be applied.

The global pandemic has presented an array of issues that required a swift response by central
Government in un-chartered territory

This document will hopefully go towards providing greater much needed clarity as we fully
emerge from the pandemic as to valid informed reasons as to why this group of marginalised
people should be levelled up and provided back dated support to enable the economy to
function effectively moving forward.

I hope that there is a much greater understanding obtained by MPs and policy makers as the
overall huge benefits that the business community provides in relation to supporting localised
economies, providing employment opportunities, supporting families as well as the unique
supply chains that exist within the SME community and individuals who choose to operate as
self-employed within the structures defined by HMRC. The pain that has been felt within
this excluded community, who as whole operate within the UK’s defined tax and legal
system.

“The crux of the matter is simple – they (excluded, forgotten and denied
groups) all paid tax – so where was their support then they needed it most?”
EUA Campaign Team
Without adequate support moving forward or some form of respite it is clear that many
previously viable businesses now face unserviceable debt. This will lead to further business
closures, poverty, over reliance on the welfare system as well as loss of tax revenue due to
productivity levels not being optimised fully.

© Martin Wood - EUA Campaign 2021

The statements made by the Chancellor in respect to providing fair unparalled support have
been ambiguous at best of times and ill received by parts of the business community denied
access to meaningful support schemes. In short the financial support schemes were not
applied fairly which has left an untenable situation for this group which if still left un-
addressed will further hamper the economic recovery.

© Martin Wood - EUA Campaign 2021

Key Findings

The plight of the excluded groups of people is well known across all political parties. The
number of times raised in Parliament is truly astonishing in relation to the lack of engagement
from the Chancellor in looking to provide a genuine equitable solution.

One only has to review the transcripts held at Hansard; (Hansard transcripts all official
reports of all Parliamentary debates.) to understand how many MP’s have raised the issue of
“excluded” groups of people to understand how deep this issue is. It is fair to say that the
amount of times this has been raised in Parliament is exhaustive.

Whether it is the self-employed, small business owners who pay themselves via
dividends, or people who were timed out last time, there are still 3 million
people excluded in the UK. Will the Prime Minister resist the temptation to
simply roll over the current arrangements, and address those 3 million
excluded? (Christian Mattehson, MP Labour, 2020)
Figures show that around 6-7% of the working population were either denied access to
financial support schemes or received little in the way of meaningful and equal support.

“If it is the role of the Government to protect and improve the lives and
livelihoods of citizens, it is incomprehensible that 10% of the working
population can be accepted as collateral damage and left to be ground down
by poverty and despair by a Government who claim to be business-friendly”
(Owen Thompson, MP SNP 2020)
The issue of exclusions is well known by all politician and policy advisor and to continue to
ignore the pleas of MP’s raising this issue on behalf of their constituents along with the
Treasury Select Committee makes very little sense. When questioned by the Treasury Select
Committee as to why these exclusions had not been addressed, the Chancellors response was
to state that it was a policy decision. This is particularly exasperating for individual tax
payers who felt that the gaps in support would be addressed allowing them to access what
they rightfully should be able to in a time of need at being unable to operate their business.
Further questions need to be asked around what is now clear to be a deliberate policy
exclusion that has seen this cohort of people literally left without anything.

“The gaps in support have been well rehearsed and argued over, and I will
not go over them again here. I suspect it is futile to ask my right hon. Friends
to close the gaps in support, but I particularly plead for the self-employed
earning just over £50,000 a year. They have been especially hard hit, and
there are a number of other groups, which we do not need to go through now.
However, I encourage the Government to close those gaps. – (Steve Baker,
MP Conservative (2021)

© Martin Wood - EUA Campaign 2021

This issue should no longer be subject to simple debating whilst people’s lives and
livelihoods are put further at risk, this hampering any economic recovery further. The
treasury select committee have made numerous recommendations in order to resolve this
issue, yet none seem to have been adopted by the Chancellor in moving forward. It should be
a fundamental right that people who have paid into the tax system as well as contributed
towards the economy through their work regardless of their employment status i.e. Ltd
Company Director, freelancer et al; are not refused the same financial support measures
afforded to others.

“It cannot be right that distinct groups of individuals fail to benefit from the
Government’s principal support schemes when the shutdown has taken away
their livelihoods overnight through no fault of their own.” Treasury Select
Committee, Gaps In Support Recommendations (2020)
There is a grave and clear breach of any social contract that would have previously existed
between the small business community and others excluded from support and central
Government. In fact it is fair to point out at this stage that most people faced with financial
ruin due to deliberate policy decisions made during a pandemic probably know more about
politics than they would have swished for. I wonder if the SPADS, policy makers and MP’s
have taken quite as much time to understand us in moving forward.

© Martin Wood - EUA Campaign 2021

Understanding the contribution towards wealth & tax generation and employment
opportunities made by the small business community and why they require immediate
support to ensure post pandemic economic recovery.

Pre-pandemic data showed around 1.5 million Ltd companies provided employment for an
estimated 7.6 million employees (Owen Thompson SNP, 2021).

These businesses operate within the tax system as defined by Her Majesty’s Treasury (HMT).
The collective power of these organisations easily surpasses the size of a large UK
corporation in respect to tax generation and employment opportunities. Often these SMEs are
intrinsically linked within the supply chain providing services and products to one another.
They are interdependent on being able to freely trade and are crucial to any form of robust
economic recovery. The failure of any of these small suppliers is not something that can be
easily dismissed as trivial in respect to” its business therefore its survival of the fittest” or
“business is risky and business people understand the risks.”

Many of these companies were forced to close to reduce the spread of Covid which they did.
The support measures of CJRS in order to protect jobs were well received and followed the
EU guidelines and directives at the time. However, the EU guidelines and directives around
supporting freelancers and SMEs were not followed in line with other countries (Anderson et
al., 2020).

There is no doubt that these measures protected thousands of jobs which would simply have
disappeared over night with organisations unable to run the payroll whilst in a state of
closure. One of the main gaps in support is that Ltd company directors were either unable to
furlough themselves due to having to continue to administer the company or they were only
able to access the scheme without taking into account dividends. At the time HMT made the
following statements. Firstly, those dividends were not classified as regular income and
therefore could not be included. This is an unfair application of the scheme in as much that a
sales person paid on commission; also not guaranteed income was able to fully access the
CJRS scheme up to £2,500. This quickly changed to Ltd Company Directors being identified
as a potential tax fraud.. This is particularly aggravating as Ltd Companies operate within
clear defined legal and tax legislation as defined by HMT.

Many Ltd Company Directors operate as that legal entity as a requirement within their
respected supply chain. Limited company directors are not classified as self- employed and
this appears to be a common misunderstanding both with MPs and policymakers. To exclude
this cohort of people on the premise that they represent a fraud risk is it appears to be nothing
more than an excuse and deliberate policy decision. By not providing the same levels of
support enjoyed by groups benefiting from CJRS or SEISS, Limited company owners, the
people that provide employment opportunities have not been able to recover fully in response
to the pandemic. In comparison with self- employed traders who were able to continue to
derive an income from working as well as receive support up to a maximum of £37,500 in
grants. With each business forced to close and unable to fully re-open back into production it
causes a “butterfly effect” of staff, families, suppliers that are reliant on the business

© Martin Wood - EUA Campaign 2021

remaining open. It is not as simple to expect that new more efficient entrants will enter into
the supply chain dynamics as with any business closing a huge range of specialist skills and
knowledge goes with it. The disparity between the SEISS (Self Employed Income Support
Schemes) and the less than generous CJRS afforded to Limited company directors is truly
astonishing, unfair and unjust.

Providing fair parity support in line with the SEISS schemes afforded to the self-employed
categories would greatly reduce the predicted unemployment figures and improve the
economic outlook for the UK as we emerge post pandemic.

“Institute of Fiscal Studies forecast unemployment increasing to 5.5% in

2022 Q1 as furlough unwinds.” (Nabarro, 2021)
Ltd Company Directors were unable to access SEISS due to their employment status are in
many cases employers that providing employment and job creation throughout the supply
chain. There is an opportunity to provide further levelling up support that would represent
good value for tax payers in as much that this would contribute significantly towards both job
creation and safeguarding jobs and business vital to the economic recovery.

This is again supported by the Institute of Fiscal Studies.

“Continued policy support may yet be necessary to secure a complete

economic recovery.” …”we think policy should err on the side of providing
more rather than less support.” (Nabarro, 2021)
The Government needs to provide a measured response and plan of action in addressing the
identified “Gaps in Support” as outlined by the Treasury Select Committee, Standard Life
Foundation, Campaign groups along with other leading industry bodies all of whom have
addressed concern as to the lack of meaning full support experienced by some 3.8 Million
UK Tax payers if the UK is to avoid long term economic scarring due to a slow recovery.

“A faster recovery could see COVID-related scarring (i.e. the permanent

economic damage done by the pandemic) limited to just 1–1.5% of GDP,
versus 3% under the OBR’s March 2021 scenario. A slower recovery could
mean larger hysteresis effects and greater permanent losses” (Nabarro, 2021)
Small businesses play an important role within the UKs economic infrastructure. They
provide jobs. jobs are created, but also jobs are destroyed. There is too much emphasis on
using experimental data that shows gross vacancies. This skews viable data sets and does not
paint an accurate forecast that is beneficial. The key metric is net job creation. This is the
amount of new position created and safe guarded minus jobs that have been filled or closed
down. In short it is the physical head count per organisation. It would be more accurate to
take data sets from payroll figures at HMRC than using unreliable data scraping techniques
from online job boards using invalidated aggregated experimental data.

© Martin Wood - EUA Campaign 2021

“Studies show that “smaller companies predominate in the process of net job
creation” and that “smaller companies create more jobs” (Pryce, Ross and
Urwin, 2015)
By not supporting viable Limited companies during the pandemic and post pandemic, there is
a huge opportunity to drive the economy forward lost with genuine new jobs being created as
well as retained.

“History has shown that Small business bring the bulk of growth early on in
recovery” (Pryce, Ross and Urwin, 2015)
Many of the excluded groups of people would consider themselves entrepreneurs or “self-
starter” regardless of how their employment status is set.

“Entrepreneurs are important to society in that they are able to shift economic
resources out of low productivity and into areas of high productivity with
greater yields” (Pryce, Ross and Urwin, 2015)
Recessions provide an opportunity to move into self-employment. We have seen business
people unable to receive support for the following reasons. They worked from home, they did
not have premises, they were structured as a Limited company, they earnt over 50k on their
tax records. All of these appear to be excuses simply not to provide support where it was
needed and leave these people high and dry. Whereas others received generous support
packages and in some cases did not require it as they were still able to derive an income.

The Government should allow these business immediate access public funds by means of
recovery grants similar to start up grants made available.

The Government should allow freelancers who were unable to access any support, despite
their tax records being available, to obtain a one off recovery re-skilling or training grant if
they are unable to return back to their previous industry. This could be made on the proviso
that they go into business on a self-employed basis should they wish to. Covid has presented
many challenges but the key to good leadership is to capitalise on moving forward and use
this a spring board opportunity that everyone can benefit from

“When an economy stalls, millions of lives suffer, even rich countries.

Enterprises and entrepreneurs which might otherwise have flourished, fail.
Dreams are dashed by unemployment and reduced opportunity and paying for
social services and health becomes harder” (Pryce, Ross and Urwin, 2015).
Providing back dated parity support to businesses and individuals who did not receive the
same level as support as the SEISS grants would be paying forward and aid the recovery
process. It would be the correct course of action to take. Anything less seriously damages the
social contract that exists between the business community and central Government.

© Martin Wood - EUA Campaign 2021

“Based on historical evidence long term growth is proven to be the most
efficient way to reduce deficits whilst protecting the country from long term
economic scarring and the associated issues that come with that (i.e. poverty,
welfare, mental health etc)” (Pryce, Ross and Urwin, 2015).
These are all known socioeconomic issues and have been well documented from previous
recessions. Policy makers, SPADS and MP’s are able to alter the economic future by
ensuring that lessons are learnt in how to utilise the levers available to move forward in this
crisis. Failure to do so is simply inexcusable and a symptomatic failure on behalf of these tax
payers when the key performance indicators and data are readily available, both historically
and with projected figures.

© Martin Wood - EUA Campaign 2021

Bouncing Back or Bouncing Under? Why debt pardoning the Government Bounce
Back Loan scheme is the correct course of action in building back better.

“UK Chancellor Rishi Sunak said the country has entered a severe recession
and was sorry for not helping everyone in exactly the way they would have
wanted.” (Sunak) (BBC News, 2020)
The execution and rushed delivery of so called Bounce Back Loans known as BBLS and
CBILS known as Covid Business Interruption Loans as part of a measured fiscal response has
been subject to much debate within the business community. As individuals came to the stark
conclusion that they were not able to access the SEISS scheme of CJRS scheme at the outset
of the pandemic, the only alternative option that was made available was the implementation
of short term finance made though the banking system

To date some £47.36 Billion pounds of Bounce Back Loan (BBLS) debt has been pushed
onto around 1.56 million businesses along with around £26.39 Billion Coronavirus Business
Interruption Loan (CBILS) loan debt to companies that qualified for this scheme (HM
Treasury, 2021).

These loans were designed as a quick fix to get through the” flattening of the curve” many
were taken as a very short term fix on the assumption that they were guaranteed by the
Government, that they probably would not be used to their fullest extent and that they could
be settled early. Imposing this level of debt on business that were forced to close by the
Government is not measured fair support in any shape or form. These loans cannot be part
paid and have to be settled in full. This debt burden has put significant pressure on business
owners who some 18 months down the line were still unable in many cases to trade and start
bringing in an income due to continued stop starting of different industries.

In a recent report by the Bank Of England “Businesses, particularly small

firms, have increased their debt levels through the pandemic” (Bank of
England, Financial Stability, 2021)
Of particular concern to the excluded community, is that many of these SME micro business
denied access to support would have had no requirement to take on debt in their previously
viable business operation. There is a very valid growing resentment felt within the
community that the only way to survive the pandemic was to take a Bounce Back Loan
(BBL) in order simply to pay for operating costs. Many of these categories are single
operated Ltd Companies that were identified as being at high risk at the outset of the
pandemic by the European Union due to low liquidity levels used in the operation of their
business. Providing parity support to this category of micro business at the earliest possible
stage would have relieved financial pressure. Instead the only option that many faced was the
facility of a short term Government backed loan pushed as support.

© Martin Wood - EUA Campaign 2021

“Overall, the level of debt taken on by UK businesses has increased
moderately during the pandemic. But there has been a larger increase in
borrowing by small and medium-sized enterprises (SMEs). Many of these
businesses had not previously borrowed.” (Bank of England, 2021)
Again, supporting the Ltd Company Director category with a revised scheme instead of
increasing the debt burden on an already fragile economy, would be significant if the
Government are to be taken seriously in their continued stance of protecting jobs and
ensuring that no one would be left behind

“A high level of debt among UK businesses can lead to risks to the financial system.
Higher debt levels can cause businesses to cut back on employment and investment more
in the face of economic shocks. This can have a negative impact on people’s jobs and
incomes. Banks can also take losses if businesses struggle to pay back their loans.” (Bank
of England, 2021).

The majority of business that found themselves having to access the Bounce Back Loan
Scheme has been small business which could have easily been provided with an alternative
support mechanism to enable them to continue to operate unencumbered with debt post
pandemic. As we emerge from the pandemic many of these small business will find
themselves unable to service this debt due to low productivity levels caused by failings within
their vertical markets and supply chains from sectors that have undergone a continual stop
start circuit breaker approach; along with a lack of understanding as to how the SME market
place operates within the UK

“Most of the borrowing under government-guaranteed loan schemes has been

by smaller businesses” (Bank of England, 2021).

It is of particular interest that the take up for Bounce Back Loans was insignificant in
Northern Ireland and it is fair to say that this is due to Northern Ireland, who operate under
the same tax and legal structure as the rest of the UK did provide adequate financial support
schemes to their Ltd company business owners. This remains an unanswered anomaly as why
the same or similar support schemes enjoyed by NI were not made available to the rest of the
UK.

“Northern Ireland accessed around 2% of the Government backed facilities

made available around 42,000 loans in stark comparison to London which
saw the highest take up of 19% of the business population around 320,765
loans totally an eye watering sum of £10,789,608,981 granted within the
London region alone". (Bank of England, 2021)

© Martin Wood - EUA Campaign 2021

Whilst this has in doubt gone in some way to saving cash strapped business from closure, it is
not support in line with what could be considered as state aid. Adopting the Northern Ireland
schemes or similar would of ensured that SMEs were able to recover far more quickly and
contribute towards that tax system by being able to get back into production more swiftly.
(Low Incomes Tax Reform Groups, 2021)

“Limited Company Director's Support Scheme available in Northern Ireland

mitigated the need for many small businesses to have to take on debt just in
order to survive” (Low Incomes Tax Reform Groups, 2021) EUA Campaign
The Government should re-evaluate proposals that have been made previously by other
campaign groups along with industry bodies. Firstly to provide support to individuals who
were denied access to support schemes and secondly to provide a robust support structure in
the event of further lock down measures imposed in the future. This would be a sensible
course of action to take to ensure that contingency measures and a clear plan of action are in
place. There are numerous proposals that would provide support moving forward the most
notable those proposed by Rebecca Seely Harris along with the Gaps In Support APPG.
These would have offered much needed support at great time of need and we would ask that
these schemes are re-evaluated to ensure that should we face another lockdown of the
economy by the Government that individuals will never face another crisis alone.

There appears to be little reason why either of these proposals could not have been adopted
and used to provide much needed support to these cohorts of excluded tax payers. Providing
support equal measures would have clearly seen a reduction in companies having to take on
BBL debt, simply to survive.

‘There's no need to self-certify' Ms Seeley Harris confirmed that either way,

HMT appears not to be getting DISS. “We’re basing it on the CT600, the
corporation tax return, and it’s based on trading profits. These are figures
that HMRC already has, so there’s no real need for self-certification.”
(Harris, 2021)
In a recent report published a stark warning is made that around a third of independent high
street businesses will eventually default on the government’s Bounce Back loan scheme.
Source

“Why involve [these businesses] in debt? The heartache, the mental anguish
and then the devastation of closing the business is coming at them because of
this lending and you did it, you facilitated it.” (Armstrong, 2021).

This is a truly tragic situation faced by business owners, staff and the people that rely on that
business being open and is so counter intuitive to British values and our way of life it has left

© Martin Wood - EUA Campaign 2021

the private sector community both astonished and exasperated by what is now clear to be a
policy decision by central Government.

Offering forbearance on the Bounce Back Loan (BBL) debt would prevent many companies
simply going to the wall and enable them to flourish as the economy emerges

“Bankruptcies or converting loans into grants might be forms of forgiveness...

Putting off making decisions risked supporting “zombie companies”, but
forcing them to the wall would just as likely further depress demand.” Wrote
Jonathan Ford in The Financial Times
Commenting on the wider dilemma, Jonathan Ford wrote in The Financial Times on 17 July
that the Chancellor essentially had to decide between “forgiveness and
forbearance”. Bankruptcies or converting loans into grants might be forms of
forgiveness.
In an article supported by former Conservative Chancellor George Osborne, The AAT
Association of Accounting Technicians) urges Treasury to write off bounce back loans as
being a good course of action which would offer savings to the tax payer as well as offer
much needed respite to the SME community.

“By writing off this debt would avoid the need for banks to utilise costly debt
recovery agencies and eliminate the chance of any small businesses being
mistreated, as has frequently happened when banks have sought to recover
funds from SMEs in the past.”

It would also provide a much-needed boost for the SME sector and enable
more investment and growth and hence a quicker recovery, AAT added.”
(Lloyd, 2021)

It would be prudent and the right thing to pardon the BBL debt which would go some way in
both levelling up and providing an equal level playing field afforded to the “other” self-
employed business community who could access schemes. This would enable groups of
people within the excluded community to continue with their lives and livelihoods
unencumbered moving forward debt free with loans that were rushed and not fit for purpose
in their delivery.

There are again numerous proposals and options available, however it would appear that the
Chancellor who is always open to new ideas and suggestions simply fails to listen to industry
heads and regulatory bodies at any period in trying to reach a viable resolution.

“The Treasury was open to interesting ideas that we think might help drive
the recovery. As you know, many different institutions, bodies and think tanks

© Martin Wood - EUA Campaign 2021

continue to come up with ideas and send them our way; we will happily take a
look at them.” (Sunak, Browning, 2021 – House of Commons Library)
The time is long overdue to right the wrongs of the previous 18 months. Learn from the
mistakes by made and get on with the task at hand that is expected of the Government and
ministers. Follow the Conservative party manifesto around small business and fully engage
with campaign leaders and their advisors to reach a satisfactory solution to the excluded
issue.

“Every day, people risk their savings and their future by becoming
entrepreneurs. They invent the new goods and services that improve our lives.
We want to be a nation of start-ups, and of successful scale-ups.”
(Conservatives, 2019)

A good start would have been to have provided full, equal financial support measures for
these entrepreneurs. Instead they have been burdened with debt whilst crushing their lives
and livelihoods. The case studies amongst this group of people are truly heart rendering
which is disturbing bearing in mind there was an opportunity to provide the correct support
required at every point made clear to central Government by trade bodies, the Treasury Select
Committee, campaign groups and of course the voices of 3.8 Million people and their
families.

© Martin Wood - EUA Campaign 2021

Moving forward post pandemic

The Covid pandemic was and still is what can be considered to be a “black swan” event.
However moving forward gives everyone the opportunity to re-evaluate what worked and
what did not work.

As mentioned earlier the Gaps In Support were identified very early on by the Treasury
Select committee chaired by Mel Stride. Earlier economic crisis have been exasperated by
lack of liquidity within the market place and been drawn out through austerity measures.

There is a clear case to suggest that the massive deficit that came from the last banking crisis
was driven, not by Government expenditure, but by a collapse in tax revenues caused by the
crisis.

“Treasury figures show that the deficit was overwhelmingly the result of
collapsing tax revenues (Corporation tax), not high spending following the
last financial crisis that caused the (last) recession” (Pryce, Ross and Urwin,
2015)
Policy makers and Government advisors should be mindful of this when creating a fiscal
response strategy. Providing longer term support for companies by means of Government
grants as opposed to debt would see the economy into greater production, increasing tax
revenue rather than the current situation of feeling “hamstrung” with a general lack of
confidence in the current climate.

The Chancellor should provide support for excluded groups. Denying access to excluded
groups of British working taxpayers and restricting their ability to generate income is
counterproductive in increasing tax revenue for Her Majesty’s Treasury.

The failure to support the wider business community which includes workers operating as
freelancers or structured as Ltd company directors by filling in the well-known “gaps in
support” fundamentally will lead to an increase in business failures and additional burden on
the welfare system. Providing adequate financial support at the fragile stage of re-opening the
economy will pay dividends long term towards the economic growth and stability of the UK.

Whilst there is an argument to ensure that taxpayers money is being well spent on supporting
viable business and jobs, this should not be used simply as an excuse not to provide the same
levels of support for the documented 3.8 million British taxpayers who despite contributing
into the tax system found themselves denied meaningful support simply because they were
the “wrong type” of self-employed.

Despite numerous valid scheme adjustments and proposals presented to Her Majesty’s
Treasury, for example TIGS and DISS the common rejection for adjustments is the potential
fraud risk. This would appear to be an inconsistent excuse based on anecdotal knowledge as
how the generous SEISS schemes have operated, enabling a self-employed contractors to
receive somewhere in the region of £37,500 over 5 grants made available. This group of self-

© Martin Wood - EUA Campaign 2021

employed workers were able to continue to work and derive income as well as claim SEISS.
Supporting this section of the self-employed enabled money to circulate within the economy.
Providing support to previously excluded categories would have the same effect; in as much
that they are also consumers within the private sector supply chain and therefore the economy
would obtain a much needed boost.

Ltd company owners who for the record are not technically “self-employed” were forced to
close and unable to derive income, denied access to SEISS. We would urge policy makers
and MPs to fully understand the nuances of different types of employment that exists within
the UK’s infrastructure as it would appear all too easy to make sweeping statements that
everyone was supported. The fact is around 6-7% of the UK’s working population did not
receive what they felt they were entitled to (Collard, Collings, Evans and Kempson, 2021).

The support that was made available to parts of the excluded groups, who were able to
access, was the provision of Bounce Back Loans. We do not consider that loans offered are
fair and equal support measures. In short, debt is never support for these tax payers.

 They were rolled out quickly and designed as a short-term interim offering to buffer
cash flow issues as business were forced to close.
 Many of the people who took the BBLS took them on the basis that we would be in a
short lockdown period to “soften the curve” with the ability to settle swiftly. The issue
now faced by many business owners is one of debt serviceability as the economy re-
opens the issue faced by every private sector enterprise is to get back into production
swiftly with adequate cash flow.
 The Government should debt pardon these sub-prime loans on. There is no provision
to make lump sum payments on the Bounce Back Loans which must be settled in full.
The only provision currently available is too simply to close the company taking the
debt down with it. Writing off the BBL would be mutually beneficial. In short it
would go some way in levelling up support for individuals unable to access any of the
support available afforded to others.
 The continued excuse that Ltd Company Directors, Freelancers et al and freelancers
are denied parity financial support due to being a fraud risk is aggravating. Self-
certification validated by a qualified accountancy professional is a low cost
workaround with little administrative impact. Her Majesty’s Treasury have the tax
records available and identifiable by the UTR (Unique Tax Reference). The
Chancellor should be mindful that the contentious Eat Out To Help Out scheme was
self-certified by restaurant owners claiming back the amount of customers served. For
this reason, there is no reason why a Chartered Accountant would not be able to
provide validated audited financial data to enable targeted support to be offered to
excluded groups of people.

© Martin Wood - EUA Campaign 2021

MPs would be wise to engage with their SME community to gain a better understanding as to
how small business operate and contribute towards their local community, tax generation and
employment and wealth contributions. The misnomer that business owners are substantially
better off than other types of employment are a fallacy.

“It is fair to say that there appears to be a fundamental lack of cohesive

understanding not only how businesses operates within the UK’s economy but
even an abject failure at ground level as to why people even start up a
business.” EUA Campaign (Department for Business, Energy & Industrial
Strategy (2021)

This is a failing that requires immediate attention if the Government are to retain any
credibility in respect to being the self-lauded “party of the business”.
Covid-19 has presented considerable issues that required a swift response to. It is important
that collectively as a society that we learn the lessons moving forward to enable us to respond
in a more measured and equitable response in the future.

Long term economic scarring within communities leading to poverty and well known
socioeconomic problems is avoidable where there is a will on behalf of Government to
provide adequate support.

By not providing equal support the UK Government runs the risk of languishing behind other
G7 countries where support measures have been structured in order to support the business
community and was adapted as and when required.

“Austerity measures simply hamper economic recovery by reducing liquid

capital available making debt burden even harder to carry. This is a counter
intuitive measure towards free market capitalism and one that should not be
deliberately introduced.” (Pryce, Ross and Urwin, 2015)

© Martin Wood - EUA Campaign 2021

Conclusion
There have been numerous opportunities to amend the schemes. By continuing on a course of
action that is not on track despite recommendations from the Treasury Select Committee at
the earliest stages. The Chancellor has continued to sail on without checking either his
compass or map.

There is a good opportunity to make adjustments now and target additional funds which are
available in order to re-ignite the economy. In short, this would be the right thing to do in
order to avoid a deep recession.

Finally the Chancellor has on many occasions promoted “ a dynamic low tax economy”
lowering taxes would give the UK massive advantages with an increase in production,
external business investment within the UK ,increase in tax revenue which in turn would lead
to an improvement in public sector services. This opportunity is here now with all-time
record low borrowing.

We can learn from previous mistakes gained from the last financial crisis in respect to
austerity measures.

“Austerity was not only preventing the economy from recovering, it was also
keeping down the tax revenues needed to pay off the government’s deficit.
Worse, it destroyed business optimism and decreased business investment.”
(Pryce, Ross and Urwin, 2015)
Raising taxes at this stage will put the UK backwards and lead to austerity measures.
Providing the infrastructure of a dynamic low tax economy would see the UK move into
higher levels of production per head count, in turn increasing tax revenues which can be used
to improve public sector services and level up.

Inflation combined with tax rises will undoubtedly see “stagflation” rear its ugly head.
Whereas history has shown, both in the UK and other countries; that cutting taxes and
supporting the economy leads to prosperity and growth.

The Treasury policy advisors should refer to back to previous measures imposed during the
last recession to understand from their own data that a deficit in tax receipts is directly
correlated with collapsing tax revenues, not high spending.

As profits in companies suffer, less corporation tax is paid. VAT is reduced as people stop
spending. By resolving the “gaps in support “ issue faced by the 3.8 Million excluded
taxpayers the damage to growth as well as economic, social and personal costs to lives and
livelihoods can be mitigated.

Providing a new range of financial support schemes by means of business grants; not debt,
would see the private sector small business community thrive stabilising the economy and
driving production. This is turn reduces unemployment along with the deep scarring that

© Martin Wood - EUA Campaign 2021

occurs and social decay that lasts for years following a recession. The Chancellor should
focus on internal investment and increasing GDP per head with genuine job creation in an
environment conducive to drive economic growth.

In short, the UK along with other countries has faced a huge challenge causes by the
pandemic and will continue to do so. The future will be defined by the correct responses
made at this time along with continuing to make adjustments to ensure that we are able to
face the challenges and opportunities that lay ahead. However, this will only occur through
fairness and equality, and for that reason alone recognising the mistakes and “gaps in
support” for these excluded, forgotten and denied tax payers requires the Government to
deliver on its promises by now backdating the support and cancelling the debt in order for the
UK to fully prosper and globally compete in driving forward. - END

© Martin Wood - EUA Campaign 2021

 References

Anderson, J., Bergamini, E., Brekelmans, S., Cameron, A., Darvas, Z., Domínguez Jíménez,
M., Lenaerts, K. and Midões, C., (2020). The fiscal response to the economic fallout from the
coronavirus. [online] Bruegel. Available at:
https://www.bruegel.org/publications/datasets/covid-national-dataset/

Armstrong, G (2021). “We are at a tipping point”: the £1.7bn debt mountain facing high
street retailers. [online] Available at: https://www.newstatesman.com/business/2021/07/we-
are-tipping-point-17bn-debt-mountain-facing-high-street-retailers

Bank of England. (2021). Financial Stability in Focus: The corporate sector and UK financial
stability. [online] Available at: https://www.bankofengland.co.uk/financial-policy-summary-
and-record/2021/october-2021/financial-stability-in-focus

Bank of England. (2021). What types of businesses have used government-guaranteed loan
schemes? [online] Available at: https://www.bankofengland.co.uk/bank-
overground/2021/what-types-of-businesses-have-used-government-guaranteed-loan-schemes

BBC News, (2021). Coronavirus: Chancellor Rishi Sunak sorry for not being able to protect
all jobs. [online] BBC News. Available at: https://www.bbc.co.uk/news/uk-politics-53346419

Browning, S. (2021). House of Commons Library - Coronavirus Business Loans Scheme.

Available at https://researchbriefings.files.parliament.uk/documents/CBP-8906/CBP-
8906.pdf

Collard, S., Collings, D., Evans, J. and Kempson, E., (2021). Income replacement schemes |
Standard Life Foundation. [online] Standardlifefoundation.org.uk. Available at:
<https://www.standardlifefoundation.org.uk/en/our-work/publications/those-excluded-from-
governments-income-replacement-schemes

Conservatives. (2019) A strong economy | Conservatives. 2019 [online] Available at:

https://www.conservatives.com/our-priorities/economy.

Department for Business, Energy & Industrial Strategy. (2021) Understanding the reasons for
forming a company. [online] Available at:
https://www.gov.uk/government/publications/understanding-the-reasons-for-forming-a-
company

© Martin Wood - EUA Campaign 2021

Ford, J., (2021). Zombies are the least of Britain’s small business problems. [online] Ft.com.
Available at: https://www.ft.com/content/6b2d6881-0d77-4e9b-9fd5-0930563ae10e

Gaps in Support APPG. (2021.). “A Budget that excludes millions.” [online] Available at:
https://www.gapsinsupportappg.org/news/a-budget-that-excludes-millions.

GOV.UK. (2020). Chancellor’s statement on coronavirus (COVID-19): 26 March 2020.

[online] Available at: https://www.gov.uk/government/speeches/chancellor-outlines-new-
coronavirus-support-measures-for-the-self-employed.

Harris, S., (2021). DISS architect to set Treasury straight on dividends. [online]
www.contractoruk.com. Available at:
<https://www.contractoruk.com/news/0014897diss_architect_set_treasury_straight_d

HM Treasury (2021). Final Covid loans data reveals £80 billion of government support
through the pandemic. [online] GOV.UK. Available at:
https://www.gov.uk/government/news/final-covid-loans-data-reveals-80-billion-of-
government-support-through-the-pandemic

Low Incomes Tax Reform Group (2021). Coronavirus: Help for businesses in Northern
Ireland, Scotland and Wales | Low Incomes Tax Reform Group. [online] Available at:
https://www.litrg.org.uk/tax-guides/coronavirus-guidance/coronavirus-help-businesses-
northern-ireland-scotland-and-wales

Lloyd, M. (2021). Accounting body urges Treasury to write off legitimate bounce back loans
| Peer2Peer Finance News. [online] Available at:
https://www.p2pfinancenews.co.uk/2021/02/09/accounting-body-urges-treasury-to-write-off-
legitimate-bounce-back-loans

Matheson. C (2020). Covid-19 Update - Monday 2 November 2020 - Hansard - UK

Parliament. [online] Available at: https://hansard.parliament.uk/Commons/2020-11-
02/debates/6AF57346-80F3-491D-AA67-9EF31B9B3B26/Covid-19Update?

Nabarro, B. (2021). UK economic outlook: the future isn’t what it used to be. [online]
ifs.org.uk. Available at: https://ifs.org.uk/publications/15691.

National Audit Office, (2020). [online] Nao.org.uk. Available at: https://www.nao.org.uk/wp-

content/uploads/2020/07/Implementing-employment-support-schemes-in-response-to-the-
COVID-19-pandemic.pdf

© Martin Wood - EUA Campaign 2021

Parallel Parliament (2021). Steve Baker - HM Treasury debates. [online] Available at:
https://www.parallelparliament.co.uk/mp/steve-baker/dept-debates/hm-treasury

Pryce, V., Ross, A. and Urwin, P. (2015). It’s the economy, stupid: economics for voters.
London: Biteback Publishing.

publications.parliament.uk. (2020). Economic impact of coronavirus: Gaps in support -

Treasury Committee - House of Commons. [online] Available at:
https://publications.parliament.uk/pa/cm5801/cmselect/cmtreasy

Standard Life Foundation (2021). 3.8m Excluded. [online] Available at:

https://www.standardlifefoundation.org.uk/en/media-centre/media-centre-news-
article/excluded-figs.

Standard Life Foundation (2021). Nearly 4m Excluded | Standard Life Foundation. [online]
Available at: https://www.standardlifefoundation.org.uk/en/media-centre/media-centre-news-
article/nearly-4m-excluded

Thompson, O. (2021.). Covid-19: Government Support - Wednesday 7 July 2021 - Hansard -

UK Parliament. [online] Available at: https://hansard.parliament.uk/Commons/2021-07-
07/debates/02E8A17E-0E8F-4DA0-9D34-7E6DFFE5A1B5/Covid-19GovernmentSupport

© Martin Wood - EUA Campaign 2021