MP presses for limited company directors’ support scheme

Sunday January 24th 2021


Midlothian MP, Owen Thompson, writes his monthly column for Midlothian View

When the Government announced its first Coronavirus relief package in March 2020, many Midlothian constituents got in touch to tell me that they had fallen through the gaps and were unable to claim any relief. At that early stage in the pandemic, it seemed regrettable but expected that some groups might be overlooked, so I set about writing to the Chancellor to ask him to plug these gaps urgently. Little could I have imagined that ten months later, in spite of hundreds of letters, questions and debates from my parliamentary colleagues and I, no significant action would be taken and three million people would remain excluded from any support.

One such group is limited company directors, who fall into a separate category from the self-employed and often pay themselves in a mixture of PAYE income and dividends. This widespread and common practice has meant that limited company directors are ineligible for the Self-employment Income Support Scheme, and furlough is an unattractive option because it would prohibit them from working to keep their business afloat whilst only allowing them to claim for their PAYE income.

Because of these technical gaps, many of the directors of around 2 million small and micro businesses have gone ten months without any income, and no support from the Government. These people – independent shop owners, events companies, family businesses, electricians, beauticians – are essential to our economy and communities, and will be key to our post-Covid recovery. Leaving them out in the cold is nothing short of a national scandal.

Ten months without income has caused many directors to take on personal debt to sustain furloughing their staff, but for every day that goes by the debt grows and furloughed staff have to be let go. With excluded directors employing an estimated 7.5 million people, it is clear that the consequences of the Government’s inaction will be an impending unemployment cliff edge.

Also, the effects of this exclusion on directors’ mental health cannot be understated. The stress of living for ten months on nothing has been utterly devastating – not only for the directors themselves, but their employees whose jobs have been hanging in the balance for far too long.

Above all else though, this is a fundamental moral issue. These people deserve to be supported in the same way that the Government has supported others, and nothing can justify their lives being shattered by mere technicalities. No wrongdoing has been done, and people are being punished for merely following normal practices and the Government’s own recommendations.

With this in mind, the Government’s response – or lack thereof – is almost incomprehensible. At first, the Chancellor had the nerve to paint limited company directors as fat cats not in need of support. Then, the Treasury spent months scrambling for technocratic excuses not to take action. Now, thanks to the work of campaign groups and MPs, the Treasury has seen proposals for a Directors’ Income Support Scheme that would take the first steps towards plugging these gaps while relying on the same infrastructure other schemes have been delivered on.

There are no longer any excuses for the Government not to act. A failure to do so would confirm the worst fears of many – that this Government simply does not care, and is willing to exclude limited company directors as a deliberate policy choice.

This Monday 25th January, I will be leading an adjournment debate urging the Government to put in place a substantial support scheme for limited company directors. This is the last chance for action before the Government plunges us into an unemployment cliff edge and a mental health pandemic.

In March 2020 the Chancellor declared that he would leave nobody behind. Let’s see if, after an unacceptable ten month wait, he backs these words with action.

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