EIC0342

Written evidence submitted by Nigel Rundstrom (Board of Directors (unpaid, volunteer) at Institute of Tourist Guiding, Standard member at British Guild of Tourist Guides, Standard member at Association of Professional Tourist Guides, Standard member at Driver Guides Association)

 

Economic impact of coronavirus – feedback from Blue and Green Badge Tourist Guides

 

This evidence is provided on behalf of

 

Who Tourist Guides are (to provide context)

 

N.B. The Tourism sector is the UK’s 5th largest export industry and 3rd largest employer

 

 

Executive Summary

 

 

 

 

1. What was the initial feedback to job protection scheme (CJRS) and self-employment income support scheme (SEISS) ?

 

 

It was initially very positive. The Treasury and HMRC did react quickly and roll out extensive support. This should be acknowledged up front and they deserve thanks for that. It was very impressive.

 

There were gaps in the scheme initially and people assumed they would be sorted out as we went along i.e. no problem to roll out widest coverage in shortest period of time as long as the anomalies are sorted out at some stage.

 

 

 

 

 

 

 

 

 

2. Are CJRS and SEISS providing enough coverage ?

 

 

CJRS - hardly any Tourist Guides are salaried so CJRS is mostly irrelevant

 

SEISS - this is a good scheme and is helping some Tourist Guides

 

The problem is that many are also being left behind i.e. not being covered at all

 

 

3. How accurate is the 95% coverage figure that HMRC & the Treasury are so fond of quoting ?

 

First of all, we need to look at the total labour market and then later we will apply it back to Tourist Guides.

 

These figures can get a bit confusing because some of the categories and definitions overlap. One thing is clear though, the ONLY reason the Treasury can claim to cover 95% of self-employed is because they have arbitrarily excluded large swathes of the total self-employed population

 

Paul Lewis (financial journalist) has done a good breakdown of the various categories on his blog http://paullewismoney.blogspot.com/ To try and summarise

 

 

 

 

For these 2 exclusions above, it is completely unnecessary to have a hard cliff edge type approach

 

So, by applying the 2 huge and arbitrary exclusions noted above the Treasury have now managed to reduce the total down to 3.8 million

 

 

 

 

 

However, there’s more (much of this is taken directly from the Paul Lewis blog)

 

Government figures fail to count four other excluded groups.

 

 

Conservatively we could say then that there are an extra 1 million people who haven’t been covered by SEISS

 

So, if you actually took at the total numbers of people who might consider themselves self-employed, HMRC are nowhere near covering 95% of them

 

The Treasury could argue that some of the Ltd company directors can claim via CJRS but only those that pay partially via PAYE and have made a payroll submission before 19th Mar.

 

Now back to Tourist Guides specifically

 

 

4. Why are so many Tourist Guides falling between the cracks ?

 

 

There are actually a number of different reasons so many Tourist Guides are NOT eligible for SEISS.

             

  1. Less than half their income comes from self-employed Tourist Guiding
  2. They are slightly above the £ 50,000 trading profits cut off point
  3. Operating as a Ltd company, they have paid themselves via dividends not salary
  4. Operating as a Ltd company, they have paid themselves via PAYE but annually not monthly thereby missing the arbitrary 19th March cut-off point
  5. They have been training for past 2 years so do not yet have a trading record as a self-employed person i.e. they are new starters

 

 

 

 

5. Are there solutions available ?

 

Absolutely, there are solutions available.

 

Industry groups and trade associations have all been inundated with examples of people falling between the cracks and have outlines solutions:

 

 

There are plenty of examples like this in the Press where industry experts are outlining clear, pragmatic solutions  http://www.irishnews.com/business/2020/04/28/news/owner-directors-should-be-treated-as-self-employed-by-business-support-programmes-1914993/?fbclid=IwAR2cLJSphVa_Rgg6o8Ba9Mlp7njjU4JurCTznA84u8Q9wbyXfD2zPFchT6U

 

The accountancy profession knows this, the Treasury knows this, everyone knows this.

 

Dozens of backbench MP’s, from across all political parties, have written to the Treasury expressing their concerns and asking them to do something.

 

It is now a question of intent i.e. are the Treasury willing to implement solutions ?

 

 

Back to the 5 different use cases for Tourist Guides who are not receiving support. This time adding some text in bold type to denote what possible solutions could look like

 

  1. Less than half their income comes from self-employed Tourist Guiding – as pointed out earlier the fair solution would be to apply a sliding scale and avoid a cliff edge
  2. They are slightly above the £ 50,000 trading profits cut off point - as pointed out earlier the fair solution would be to apply a sliding scale and avoid a cliff edge
  3. Operating as a Ltd company, they have paid themselves via dividends not salary – Directors declare any dividends on their personal tax returns. Most directors only receive dividends from their business (not from passive investment) so it would be relatively straightforward to get this signed off by their accountant (in the same way, their annual returns are done)
  4. Operating as a Ltd company, they have paid themselves via PAYE but annually not monthly thereby missing the arbitrary 19th March cut-off point – the Treasury can simply extend the cut-off point to 5th April and this will be sorted
  5. They have been training for past 2 years so do not yet have a trading record as a self-employed person i.e. they are new starters – they can get a grant for now and use their 2019/2020 tax return as the basis for any clawback

 

 

6. What about other schemes to provide help ?

 

 

The Treasury narrative over the last 2 weeks has been to emphasise Bounce Back Loans (BBL’s). Taken in isolation, BBL’s are a very good product and again the Treasury should be commended. Simple application process (varies by bank but most have been good), low interest rate, no need to repay for 12 months etc. etc.

 

If your business has no demand though, and faces the real prospect of no demand for the next few months (Tourism, Hospitality, Events etc.) just loading up with more debt is not a great solution.

 

The self-employed people who have been left out of support so far deserve the same support as others i.e. grants not loans.

 

There are a variety of other schemes available for businesses via Local Government; Small Business Grant Fund (SBGF), Retail, Hospitality and Leisure Grant (RHLG) etc. etc. These don’t help Tourist Guides though who don’t have physical premises and don’t pay business rates.

 

Basically, there are all kinds of schemes but SEISS is the one that should be helping Tourist Guides and it’s not working well enough.

 

 

7. How should the Govt support schemes evolve ?

 

Everyone understands that the current level of support is unsustainable. It seems that the Furlough scheme may be extended but changed to 60% rather than 80%

 

There are a few simple things we would ask for:

 

  1. Cover the gaps / cracks of those who have not been supported so far i.e. make support on the basis of ‘what is fair’ rather than ‘what is easiest to implement’ which it has been so far
  2. Extend SEISS for the same period as CJRS (no reason not to)
  3. Start looking at sector specific help, rather than across all sectors (it’s clear that some sectors will already be going back to work but some will take much longer to start up)

 

8. Future consequences

 

So many people have been excluded from support so far that it is inevitably leading to rising levels of anger, frustration, depression etc.

 

The challenge for the Govt is that there will be negative consequences from their lack of support:

 

 

 

To conclude, a rather telling Tweet from the financial journalist Paul Lewis On Sun May 10th

 

 

May 2020