PP 2020/0107(2)

STANDING COMMITTEE OF ON PUBLIC ACCOUNTS

EMERGENCY SCRUTINY

THIRD REPORT FOR THE SESSION 2019-20

MACRO ECONOMIC EFFECT OF THE EMERGENCY AND FINANCIAL SUPPORT SCHEMES

Volume 2 of 2

STANDING COMMITTEE OF TYNWALD ON PUBLIC ACCOUNTS EMERGENCY SCRUTINY THIRD REPORT FOR THE SESSION 2019-20 MACRO ECONOMIC EFFECT OF THE EMERGENCY AND FINANCIAL SUPPORT SCHEMES

3.1 There shall be a Standing Committee of the Court on Public Accounts.

3.2 Subject to paragraph 3.6, the Committee shall have –

(a) a Chairman elected by Tynwald,

(b) a Vice-Chairman elected by Tynwald,

(c) four other Members, who shall be Chairman of each of the Policy Review Committees (ex officio) and the Chairman of the Committee on Constitutional and Legal Affairs and Justice;

and a quorum of three.

3.3 Members of Tynwald shall not be eligible for membership of the Committee, if, for the time being, they hold any of the following offices: , member of the Council of Ministers, member of the Treasury Department referred to in section 1(2)(b) of the Government Departments Act 1987.

3.4 The Committee shall –

(a) (i) consider any papers on public expenditure and estimates presented to Tynwald as may seem fit to the Committee;

(ii) examine the form of any papers on public expenditure and estimates presented to Tynwald as may seem fit to the Committee;

(iii) consider any financial matter relating to a Government Department or statutory body as may seem fit to the Committee;

(iv) consider such matters as the Committee may think fit in order to scrutinise the efficiency and effectiveness of the implementation of Government policy; and

(v) lay an Annual Report before Tynwald at each October sitting and any other reports as the Committee may think fit.

(b) be authorised to require the attendance of Ministers for the purpose of assisting the Committee in the consideration of its terms of reference. (c) be empowered to issue directions under Standing Order 5.6(3), provided that any direction so issued shall be reported to Tynwald within a year.

(d) be the Accounts Committee referred to in section 3 of the Tynwald Auditor General Act 2011, with the relevant powers and responsibilities in relation to the Tynwald Auditor General; and

(e) be the Tynwald Public Accounts Committee referred to in section 3 of the Tynwald Commissioner for Administration Act 2011, with the relevant powers and responsibilities in relation to the Tynwald Commissioner for Administration.

3.5 The Chairman, Vice-Chairman and any member of the Committee shall not sit when the accounts of any body of which that person is a member are being considered.

3.6 Should the need arise in relation to a particular matter, such as a conflict of interest, Tynwald may elect an alternate member for the purpose and duration of the Committee’s consideration of that matter. Subject to paragraph 3.5, a conflicted member so replaced shall continue to serve as a member of the Committee for all other purposes.

The powers, privileges and immunities relating to the work of a committee of Tynwald include those conferred by the Tynwald Proceedings Act 1876, the Privileges of Tynwald (Publications) Act 1973, the Tynwald Proceedings Act 1984 and by the Standing Orders of Tynwald Court.

Committee Membership

The Hon J P Watterson SHK () (Chairman)

Mr L L Hooper MHK (Ramsey) (Vice-Chairman)

Mr R E Callister ()

Ms J M Edge MHK (Onchan)

Mrs J P Poole-Wilson MLC

Mr C R Robertshaw MHK ()

Copies of this Report may be obtained from the Tynwald Library, Legislative Buildings, Finch Road, Douglas, IM1 3PW (Tel: 01624 685520) or may be consulted at www.tynwald.org.im

All correspondence with regard to this Report should be addressed to the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, , IM1 3PW. Table of Contents Volume 2

ORAL EVIDENCE ...... 1

15TH MAY 2020 EVIDENCE OF HON. MHK, TREASURY MINISTER; AND CALDRIC RANDALL, CHIEF FINANCIAL OFFICER, TREASURY 3

WRITTEN EVIDENCE ...... 23

APPENDIX 1: 15TH APRIL 2020 - EMAIL FROM MR ALF CANNAN MHK, TREASURY MINISTER TO MEMBERS OF TYNWALD 25

APPENDIX 2: 4TH MAY 2020 - EMAIL SUBMISSION 29

APPENDIX 3: 4TH MAY 2020 - EMAIL FROM JOANNA MAYLIN 33

APPENDIX 4: 5TH MAY 2020 - EMAIL FROM NICKY CRAIG 37

APPENDIX 5: 5TH MAY 2020 - EMAIL FROM CHARLES MILLER 41

APPENDIX 6: 5TH MAY 2020 - EMAIL FROM DAVID MIDGHALL 45

APPENDIX 7: 5TH MAY 2020 - EMAIL FROM JASON NEWMAN 49

APPENDIX 8: 5TH MAY 2020 - EMAIL FROM TIMOTHY JOHN SWIFT, PRESIDENT, ISLE OF MAN LAW SOCIETY 53

APPENDIX 9: 5TH MAY 2020- EMAIL FROM NIKOLAUS MEIER 67

APPENDIX 10: 5TH MAY 2020 – EMAIL FROM STEVEN MCKENZIE 71

APPENDIX 11: 14TH MAY 2020 – EMAIL FROM SYLVIA CONSTANTINE 75

SUBMISSIONS RECEIVED AFTER REPORT LAID BEFORE TYNWALD ...... 83

APPENDIX 12: 18TH MAY 2020 – EMAIL FROM HON ALF CANNAN MHK, TREASURY MINISTER 85

GOVERNMENT RESPONSE TO REPORT...... 89

APPENDIX 13: 24TH JULY 2020 – LETTER FROM HON ALF CANNAN MHK, MINISTER FOR TREASURY 89

ORAL EVIDENCE

1 2 15th May 2020 Evidence of Hon. Alfred Cannan MHK, Treasury Minister; and Caldric Randall, Chief Financial Officer, Treasury

3 4

S T A N D I N G C O M M I T T E E O F T Y N W A L D C O U R T O F F I C I A L R E P O R T

R E C O R T Y S O I K O I L B I N G V E A Y N T I N V A A L

P R O C E E D I N G S D A A L T Y N

PUBLIC ACCOUNTS COMMITTEE

EMERGENCY SCRUTINY

HANSARD

Douglas, Friday, 15th May 2020

PP2020/0105 PAC-ES, No. 3/2020

All published Official Reports can be found on the Tynwald website:

www.tynwald.org.im/business/hansard

Published by the Office of the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW. © High Court of Tynwald, 2020 5 STANDING COMMITTEE, FRIDAY, 15th MAY 2020

Members Present:

Chairman: Hon. J P Watterson SHK Mr C R Robertshaw Ms J M Edge Mrs J P Poole-Wilson

Clerk: Mrs J Corkish

Assistant Clerks: Miss F Gale Mr S Wright

Contents Procedural ...... 43 EVIDENCE OF Hon. Alfred Cannan MHK, Minister; and Mr Caldric Randall, Chief Financial Officer; Treasury ...... 44 The Committee sat in private at 12 noon...... 57

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Standing Committee of Tynwald on Public Accounts

Emergency Scrutiny (Financial support schemes)

The Court met virtually at 11 a.m. Proceedings were conducted and broadcast live from the Legislative Council Chamber.

[MR SPEAKER in the Chair]

Procedural

The Chairman (Mr Speaker): Well, good morning everyone and welcome to this public meeting of the Public Accounts Committee. As you know, this is one of a series of meetings in which the aspects of the response to the state of emergency first declared on 16th March 2020 are being examined. My name is , I am the Speaker of the and I 5 chair this Committee. With me are Mr MHK, Mrs Jayne Poole-Wilson MLC and Ms MHK. The topic today is the macroeconomic effect of the emergency and the Treasury financial support schemes. Before we go on, I would like to declare that as a director of Southern Befrienders, we are in receipt of the Salary Support Scheme. 10 Mr Robertshaw.

Mr Robertshaw: Thank you, Chairman. Yes, I am … my business has been in receipt of the original £3,000 grant and is currently in receipt of the Wage Support Scheme. 15 Thank you.

The Chairman: Thank you. Mrs Poole-Wilson.

20 Mrs Poole-Wilson: No interest to declare, Chairman.

The Chairman: Thank you. And Ms Edge.

25 Ms Edge: Thank you, Chairman. I can declare that some family members have received the grant and have applied for the Salary Support Scheme. Thank you.

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EVIDENCE OF Hon. Alfred Cannan MHK, Minister; and Mr Caldric Randall, Chief Financial Officer; Treasury

Q83. The Chairman: Well, welcome, Treasury Minister and Mr Randall, Chief Financial 30 Officer. Treasury Minister, if would care to make your opening statement. Thank you.

The Minister for the Treasury (Mr Cannan): Good morning, Mr Speaker. It is now 10 weeks since the enormity of the challenges posed by coronavirus became fully 35 apparent. Every single day of the last 10 weeks has put extraordinary pressure on the divisions of Treasury and of course across Government. I would like to take this opportunity today to pay tribute to all those officers for what they did during those weeks and for what they continue to do now. It is worth, I think, Mr Speaker, reflecting on some key dates and words. On Tuesday, 10th 40 March, I wrote to Tynwald as follows:

I am conscious that concern continues to grow about the spread of Covid-19 and that Honourable Members may be experiencing a heightened level of contact from constituents and businesses regarding local and international economic impacts. I want to reassure you that these matters are being given the highest priority. There is a significant amount of information, action and reaction that is happening at rapid speed, all of which needs to be digested, considered and if necessary acted upon. Our first and foremost consideration is the health and security of our people, closely followed by a need to act appropriately to help and support our economy. To that end we currently have £7m of contingency funding available to immediately support our Health and frontline services in tackling any Covid-19 outbreak on the Island. The Treasury will act immediately and decisively if we consider it necessary to ask Tynwald for further funds to protect the Health of our people. Economic concerns are growing particularly with businesses associated with Tourism and Leisure. We are in daily contact with our colleagues in [the Department for Enterprise] to assess the economic impact from Covid-19 on local businesses. As we get clarity on these impacts, we will work in conjunction with [the Department for Enterprise] to bring forward appropriate supporting measures and again act decisively if we consider it necessary to ask Tynwald for further funds to protect our economy. Finally we may need to take enhanced social security measures to provide additional support to those who may be suffering directly from Covid-19 and these options are under consideration. We will work with urgency to tackle these … [measures], but calm and considered decision making is also needed. I am sure that everyone will appreciate that we simply do not know at this stage for how long and to what extent Covid-19 may impact on the economy.

Mr Speaker, on Tuesday, 17th March, a week later, I asked Tynwald to approve the transfer of £40 million from the Operating Balance to the Contingency Fund. I said at the time that I wanted to be clear with Tynwald and that it was:

my intention, supported by the Council of Ministers, to use powers exercised under the Financial Provisions and Currency Act to undertake such actions as deemed necessary for the protection of the health and economy of the Island.

I also said on that day, as well as outlining a number of initiatives around Social Security, the 45 initiatives that I was bringing forward were a ‘phase one approach’ and that:

I must be clear and honest with [Tynwald]. These measures may not be enough. £40 million may not be enough. We may need more and much work continues on further support mechanisms both for business and individuals. I said we will not wait … we will act decisively. We will seek the recall of Tynwald if we need additional measures that require by law Tynwald’s authorisation …

Also on that day, I made a commitment for a further public announcement on Friday, 27th March 2020. So the day after that sitting, Mr Speaker, on Wednesday, 18th March, the

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Department for Enterprise and Treasury politicians and officers came together into a joint meeting. That was our first joint meeting to further understand the scale of the crisis and by 50 Friday afternoon, 48 hours later – almost 48 hours of virtually continuous work – we had thrashed out what we believed to be a comprehensive package of support for our economy and for our people. So these were the Salary Support Scheme, the MERA, deferring VAT, options to defer Income Tax, the Business Support Scheme, the Bank Loan Guarantee/Business Interruption Loan 55 Scheme, the Business Adaptation Grant, the Asset Purchase Scheme and a ban on evictions from tenancies and rental properties for the duration of the crisis. But during that following weekend, detail was added to the schemes that we believe were needed. The packages were presented to various groups and by Sunday, 22nd March at 5 p.m. Council of Ministers had agreed and approved the support packages. 60 I then announced these measures directly to the public on the morning of 23rd March and by 27th March legislation had been prepared and Tynwald approved the expenditure and approved the Treasury's major support schemes: the Coronavirus Salary Support Scheme and the Manx Earnings Replacement Allowance, or MERA. The MERA went live on 6th April and 2,051 people have so far received payments, at a cost of 65 £1.84 million. The Salary Support Scheme opened on 16th April with the first payments being made to businesses on 23rd April. For the 1st March period, in terms of salary support, 1,363 applications were received and £7.7 million has been paid out supporting 9,537 employees and for April 1,412 applications have been received and £8.5 million has been paid out supporting 8,443 employees. 70 In total to date, £16.2 million has been distributed through the Salary Support Scheme, supporting, we estimate, 11,000 separate employees and their jobs. The Coronavirus Business Support Scheme has also been successfully joint administered with the Department for Enterprise and the Scheme has paid out £8.3 million supporting 3,600 businesses and individuals. Treasury has diverted all available resources to delivering these Support Schemes, 75 with officers being moved to assist with the MERA and virtually all the officers of the Income Tax and Customs and Excise divisions being dedicated to administering the Salary Support claims. In addition, deferred income of £2.4 million of Income Tax and National Insurance and £11.8 million of VAT and duties has been granted so far. Whilst the administration of the schemes is now settling, the economic uncertainty that we 80 and the rest of the world now face has not and we must now focus our attentions on our economic recovery. Thank you, Mr Speaker.

Q84. The Chairman: Thank you, Minister. 85 If we can launch straight into the macroeconomic position that we find ourselves in, what did you estimate initially that the emergency would cost Government per month or … either in total or per month, and where are you now in reality?

The Minister: So I think at the time, Mr Speaker, I stated figures that we thought that the cost 90 of the total support packages over the six-month period would be approximately £300 million, ‘up to £300 million’ I think were the words I used, per quarter and so possibly up to £600 million. The reality of the situation at present is that we are below, well, potentially well below that estimate. But I must tread with caution with you because clearly there are a number of uncertainties 95 around any forecasts. But, actually, as it stands at the moment, for the first quarter I expect that in total, as at stands today, we estimate about £60 million in total will be our negative net position. But we have a long way to go. Obviously claims are still coming in. We do not actually effectively close this first stage of the Salary Support Scheme until the May payroll. So there are

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still figures to come in, estimates to be realised. But as it stands at the moment we are below 100 where we thought we would be. But clearly, obviously, we now have to think about where the longer term potential projections are, and as you will appreciate, there still remains a lot … or a lack of clarity around that, and I do not know whether I might just ask Caldric just to give you a bit more detail around anything I have just said there, please. 105 Q85. The Chairman: Well, given we are on tight timescale, could I just ask, that negative-£60 million, that is just the cost of the Schemes, is that right, rather than other potential overruns, perhaps in Health or lost income? Is that fair to say?

110 Mr Randall: Should I come in here?

The Chairman: Please.

Mr Randall: That is a combination of the estimate of the lost revenue. These are scenario 115 positions at the moment, it is extremely difficult to determine our final position, but the cost of the schemes in the first month during April, we think, will be somewhere around £25 million. We are working on the basis that the lost revenue that we will incur, which is very difficult because we have got deferments, it is not quite clear how they will play out, will be around £30 million to £35 million. So that gives you a net loss, a net cost if you like, of £60 million, which is lower than 120 we were working on before, which was our one scenario. We are now looking at another scenario and that is the kind of position that we would expect to continue with the levels of lockdown that were in place in that month. Obviously, as things start to release slightly, we would expect that to improve.

125 Q86. The Chairman: Thank you. Minister, you were very realistic at the outset and said on 23rd March that the measures announced would not save every business and every job. But what data do you have about how that is going?

130 The Minister: Actually, I believe that we have done incredibly well. I think, Mr Speaker, it is going to be some time before we are able to fully digest how this is played out, how businesses are able to recover as they get back to work and potentially support schemes start to fall away. We have done significantly well, I believe: over 90% of our applications for salary support have been accepted. In terms of the business support, well, you 135 covered a lot of that I know last week. The vast majority of Business Support Schemes have gone through and of course on the MERA applications as well. I think that when you start to look at the percentage-wise of how many have not gone through, and bear in mind we have had 2,851 applications on MERA, (Interjection by the Chairman) only approximately 650 of those have been disallowed. 140 So actually I think the support generally, given the figures we have told you, has got out to the public and has reached its destination in pretty quick time when you compare our performance against the benchmarks being set around us.

Q87. The Chairman: But too soon to tell, to talk about long-term unemployment and in terms 145 of how many businesses have not made it through so far? Okay. How long can we continue to provide support along the same lines as currently before reserves are exhausted? Obviously we are operating about a tenth of the estimate, so presumably if we carried on in this vein for another year that would still be affordable?

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150 The Minister: Well, if we stayed at the current position, Mr Speaker, then we could afford it, if that is the right word. I think at the moment we are forecasting potentially a negative outturn of about, maybe, up to £300 million for the next 12 months. We have to believe that certain sectors will get back into work successfully. I think there are going to be some headaches around perhaps tourism and leisure, we can see that. But we are comfortable that we can afford it. But 155 as you know we are being prudent and that we are going to seek additional reserve support to make sure that we do everything we can to support the economy and jobs as much as possible in the next 12-month period.

Q88. The Chairman: Understood. How far advanced are Government's plans regarding taking 160 on the debt envisioned by the changes in the Loans Act and when will that happen? And have you been required to liquidate investments unprofitably?

The Minister: Caldric?

165 Mr Randall: I can take that. So in terms of looking at securing a short-term borrowing facility, we have been through a process and have appointed a lead arranger – that is Lloyds– to help us put in place a syndicated borrowing arrangement and we would expect that to come back to Tynwald in July. So we are putting in place those arrangements at the moment. So that is active and ongoing. It is there as a 170 kind of a failsafe because we have still got quite good liquidity. At the moment we have got around £300 million in cash, plus about a £103 million in cash equivalents. We have asked the investment managers to hold 15% in cash where they can, so that has happened. We have not been forced to liquidate any assets unprofitably at the moment. That is something that we have been very aware of and even with the cash equivalents there is some 175 fixed income in there as well and we want to hang on for that as long as we can to maximise our position going forward.

Q89. The Chairman: Thank you. I noticed when comparing us with Jersey that they are publishing their macroeconomic 180 indicators on a weekly basis. I see that there is an awful lot of information that you are collecting on a regular basis. Is that something that we could do as well, please?

The Minister: I think we do need to publish data, Mr Speaker. Obviously we have been very open in terms of the numbers and the detail that is being paid out. I absolutely can take that 185 point away and examine how we can better publish data to give a better picture to you and to the public as to where the levels of expenditure are, the numbers that we are dealing with. I am quite happy to take that point away and look at that.

The Chairman: Thank you very much. 190 I am now going to hand over to Mrs Poole-Wilson.

Q90. Mrs Poole-Wilson: Thank you, Chairman. Turning to the eligibility for the financial support schemes, and accepting the point made by the Minister that these things were put together very rapidly over a short timescale, Minister, 195 could you tell us how the criteria for the schemes were initially decided and how that has evolved?

The Minister: Yes, I will give that a go. So initially, obviously bear in mind, we were having to make a lot of assumptions as to what 200 the potential impact we were facing. It was clear to us immediately there were certain sectors that were materially impacted by the virus and were going to be impacted, and there were

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sectors of the economy that we believed had a reasonable chance of continuing to maintain levels of business and cash flow and it was not clear to us whether they would or would not need support. So we identified initially the broad areas of the economy that needed support and 205 we defined those, and we felt that we could potentially avoid having to give mass support across every single business and try and bring some control to it by making some assumptions about both the likelihood of the business being able to continue and its likely sustainability from its size and scale. So that set us out on our pathway initially and we have had to refine that as time has gone on 210 and we began to understand more about some of the assumptions that we initially made. So that is from a business sector perspective and, of course, one of the issues that we have all become very aware of is particularly around the self-employed, the structures of certain businesses and the varying needs, disparate needs, across the community for support. So we have changed the schemes, particularly the Salary Support Scheme, where we have made 215 amendments to try particularly to deal with those very small businesses and, as you know, we have also made amendments to the Business Support Scheme as we have moved through this process.

Q91. Mrs Poole-Wilson: Thank you, Minister, and yes, particularly thinking about the Salary 220 Support Scheme and the change, for example, to include small local accountancy businesses and certain legal practices. We have heard, for example, from a small local IT business that is struggling and would you not say the time might have come that the scheme like the Salary Support Scheme, might be open to all who could demonstrate a loss of earnings?

225 The Minister: Well, in effect, it is actually, because there is a route for any business to come to the Salary Support Scheme and appeal directly to the Chief Financial Officer for an exemption and to claim support. So I think we have been cognisant of the fact that we need to provide the routes for any business to come to us because we cannot be 100% certain of everybody's circumstances. But we have also got to balance that out with a need to bring some control to 230 that. Bear in mind, clearly, obviously, public funds need some kind of mechanism to ensure that we are, the public, is getting value for money. So actually, I would argue that any business, Mrs Poole-Wilson, could come to us and get a proper overview as to whether they should get salary support and, as you know, we have obviously adjusted that Scheme to allow for, yes, some businesses, accountancy, legal practices, 235 particularly small businesses in the financial services sector. We also have adjusted that Scheme to allow, for example, charitable businesses to come and obtain salary support and we have also adjusted that to allow care homes to obtain salary support so that care staff, for example, were being looked after. So we have adjusted it and there is the option there for any business to come to us, large or 240 small, and say that they need salary support, and due consideration will be given in those circumstances.

Q92. Mrs Poole-Wilson: Thank you. So, a question then for Mr Randall, on the process of exceptions or exemptions: are these 245 actually being strategically reviewed to ensure consistency and perhaps to identify where there may be a previously unidentified need for support, whether by sector or otherwise?

Mr Randall: Firstly, if I may, just picking up on the Minister, if anybody does want to apply for the exceptional support, can they do so via the website. There is a specific kind of process, it is 250 on the website, it says ‘Consideration of exceptional applications’ and that will guide you through and that will make sure you get to the right place very quickly. Yes, there have not been that many applications so far. We have had 30, 28 of those became eligible for introduction of changes to the Scheme. So, for example, the businesses with one

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employee and we have got two of those underway at the moment. But yes, they will go through 255 a strategic review. The criteria by which the assessment that we done have been published there and are there for everyone to see, and, in fact, when someone is asked to make that application they are asked to comment on those things. So there is an opportunity to give a narrative, there is a process behind it in which we would look at it, consider what was there. 260 When we are doing these things we are looking about what the initial purpose of the Scheme was, and it was to maintain employment and the employment relationship between employer and employee. And if that can be demonstrated, that that is there and there is a genuine need and that without it it would remove that relationship, then they will receive a favourable view. But at the moment, as I say, those levels are quite low. 265 Q93. Mrs Poole-Wilson: Thank you. Could I just now turn to the criteria that are applicable to the MERA? Some of the concerns that have been raised with us are that small business owners require a minimum profit or certain length of trading history and in other cases the six-month assessment period does not 270 reflect their trading history, as they have a seasonal summer business. So can I ask whether the criteria are being or can be adjusted to take account of that?

Mr Randall: Sorry, is this the individuals that want to claim MERA that are self-employed?

275 Mrs Poole-Wilson: Yes.

Mr Randall: Obviously there are some rules that they need to have met. I think we have not picked up on any of those specifically, as far as I am aware, but obviously we want to make sure that it is fair for all. There have been some concessions made in terms of allowing people to 280 bring their arrangements up to date, but really the idea of or the purpose behind the Earnings Replacement was as simply that: it was an earnings replacement and somebody would have to demonstrate that they had had earnings to replace of at least £200 over the previous 26 weeks. So we have not seen a need –

285 Q94. Mrs Poole-Wilson: If I could interrupt? Sorry, if I could interrupt you there, Mr Randall. I think the difficulty is that the seasonal business owners their main earnings period is the spring and summer and so they would struggle to comply for the period before these schemes came into effect.

290 Mr Randall: I understand that, but I do not think, I am not aware, that we have had any representations. So if they could drop me a line on that, I will look into it.

Q95. Mrs Poole-Wilson: Thank you. I think another area of concern that we have certainly heard about is, accepting that 295 Government should not be paying businesses more than they make, does the minimum profit criterion actually discriminate against part-time workers and, for example, those with caring responsibilities? So in the same way it is possible to prorate the Salary Support Scheme, would it be possible to prorate the MERA?

300 The Minister: I will have to look into that. What I can tell you in terms of … well, we have done some analysis of where the disallowances have come in. Of the statistics that I have here, of the 354 self-employed who have been disallowed MERA, just under half had not paid Class 2 National Insurance, 60 of them had received the Business Support Scheme’s £3,000 and approximately between 10 and 20 of them were receiving other benefits above the rate of 305 MERA already. Of course, this issue of not earning £200 a week is something that has cropped

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up. But then again, we have also felt that actually there are other access and other benefits within the Social Security system that should give people who have been in that category access to benefits if they need it. So yes, I think throughout this process, in the main, I would argue very strongly that the 310 majority of people who have needed support have got it. There have been exceptions. We have had to iron out where there have been bulk exceptions, if you like, which we have needed to address or we have needed to get right. We have worked to try and address those and there are always individual circumstances that require further examination and we have done our very best to try and find ways round that. And of course, once you get into the Social Security 315 element, we have to also try and apply it as fairly as we can and those are essentially the main reasons that we are looking at the issues that you have highlighted are perfectly correct. But in the main, we have found the way round for the vast majority of people.

The Chairman: Thank you. Again, just to reiterate a plea for brevity. But I am going to hand 320 over now to Ms Edge.

Q96. Ms Edge: Thank you, Chair. I would just like to ask with regard to the wage support rates, they seem low at 75% of the 2019 Living Wage, or around 40% of the UK support levels. How did you set the rates at £200 for 325 a person or £280 for an employer?

The Minister: Thank you. I think it is important to recognise that we were paying … Very much, we were putting the payment into the hands of the employer. So yes, absolutely they had to demonstrate they are 330 paying their employee and that employee has to be receiving at least £280 a week. But of course, it was also intended … it was not just the payment support that was going to employees. Basically the business was able to use the excess and they were having to declare that they had suffered a 25% decrease in their turnover. So they were actually able to use the money even if the employees are working, bear in mind. 335 So actually, the figure that we are getting is only the basic support that somebody might be receiving, £280, which is 75% of the living wage and because of the way we structured our scheme, which is different to the way that they are operating, for example, in the UK, where it is just furloughed employees. So I think we took the view, actually, this will allow business the flexibility – owners and employers – to make proper decisions about how they pay their staff 340 and of course employers can top up that figure. So I think that, actually, the way we approached it was different. Perhaps people are slightly confused that these have to be furloughed staff – they do not. Employers can take this money, providing they have been impacted by COVID, and use it to keep people in jobs, keep paying employees if they choose to effectively sit them at home or sit them off the active staff, if you 345 like, and that will give them, we felt, the best chance of making their own decisions on how to keep their businesses going during this period. So that was the basis for that. Of course, what we tried to do in terms of then deciding the MERA rate was to pick on a rate that was below what we felt someone would get by being laid off. So in other words, we were trying to encourage and incentivise the process for employers, even if they were dubious about 350 what the future was, to maintain that relationship by recognising that, actually, the employee would be better off being paid £280 a week rather than being let down to take the MERA or put under the Social Security system.

The Chairman: Ms Edge, are you still there? 355 Q97. Ms Edge: Apologies.

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What sort of data are you looking at with regard to that and the effectiveness of it, and are you considering reviewing that going forward?

360 The Minister: I will take the second part of that question first. We are considering our options as to how these schemes progress, but more so around how they need to continue and to whom they need to be continued to be offered. I guess it is very difficult to determine the success, other than to say I think the feedback that we have received from both individual businesses and through DfE and the Chamber of 365 Commerce has been extremely positive, particularly around the Salary Support Scheme. I think it will be at least, probably, two or three months before we really recognise how valuable or successful or otherwise the schemes have been. Clearly, businesses returning to open does not necessarily mean that they are going to quickly resume their previous levels of turnover and I think we are going to have to continue to 370 manage this process extremely carefully. But we will get further clarity and in fact I intend to announce to Tynwald early next week and what we will do, how we are going to keep the Salary Support Scheme and the MERA functioning beyond the periods that we initially set out.

Q98. Ms Edge: Thank you. 375 So is the rise in the number of registered jobseekers in line with what you would have expected? So if the £280 is achieving what it intended or employers failing to take advantage of it?

The Minister: Again, clearly there has been significant impact. I think, I have not done the … I 380 have not got to hand the full analysis and breakdown of where all those individuals come from. It was not unexpected to see the Jobseeker’s Allowance rise so dramatically, particularly given that what we intended to be a tourist season, hospitality, the leisure, pubs, clubs, restaurants, were likely to have a lot of seasonal workers. So it is not surprising that that total has risen like that. I think there is still quite a lot of analysis to be done before we have actually got a clear 385 picture. What we need to obviously do as we get these sectors back to work, in theory what we should start seeing is the MERA in particular starting to reduce down and clearly, obviously, you would hope that Jobseeker’s would also start to decline slightly. But it is just too early at the moment to be able to give you an indication of an expectation level, I guess, as to where we are. 390 Except to say that we expect the situation is serious. You can clearly see it is not just the Island but one has to be cognisant of the fact of the forecasts that are going on around us in terms of both the UK's economic forecasts and the global forecast. It is hard to say definitively what that means in terms of the impact on the economy, both from those businesses, our international-facing businesses, and clearly, obviously, our domestic 395 businesses, which are going to be more or equally as impacted by what happens, for example, in terms of border travel and our ability to facilitate tourism, a broader tourism offering.

Q99. Ms Edge: So for the MERA, why do earnings of £50 or any remuneration from an employer disqualify you for the week? You cannot live on £50, but we should not be 400 discouraging economic activity. So could a top-up amount not be paid?

The Minister: I think that anybody who is earning would then start to qualify for other benefits and I guess also the other issue that is a complex issue for us is trying to administer these schemes as simply as possible and to make sure, given the numbers that we are dealing 405 with, that we were able to administer them as simply as possible. I think as we move forward we are going to … One, I think we will keep the MERA. We may need to refine the MERA. I think we will have more time to be able to refine some of these schemes and of course we may look, have to look, given, depending what the numbers are, as to the effectiveness of the Social Security

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offering going forward, particularly both in the interim period over the next 12 months and this 410 may be a chance in any case to look and review how Social Security is delivered depending on the scale and numbers that we are needing to support.

Q100. Ms Edge: And once you do that analysis of the potential for MERA recipients to return to work, to their previous jobs, what thought has been given to identifying new opportunities 415 and support for reskilling those with regard to your review of that system and benefits?

The Minister: It is just far too early at the moment. I think what we need to do more broadly is get clarity on our vision on the economy going forward and reskilling and retraining will be a fundamental part of that. 420 Q101. Ms Edge: With regard to the Loans Guarantee Scheme, has this uptake been as expected? We have had evidence that banks have found it bureaucratic. One had commented to a business owner, ‘It is just too difficult to sort out, so we are not bothering, and requires a charge against business assets.’ Is that what was envisioned? 425 The Minister: I was not aware of that specifically. The Government is underwriting 80% of the Loan Guarantee Scheme and part of the idea, obviously, of the banks having some skin in the game, was that they were going to make a realistic or take a realistic view from the information that they had of the way that business was run and its sustainability in the longer term. It is just 430 too early to tell, again. And I am not trying to dodge the question, Mr Speaker, it is just a lot of this is just still very early in the great scheme of the progress of this virus as to how this is performing. In fact, the feedback from the banks remains that businesses are preferring not to borrow if they can help it, and they have received lots of ‘in case of need’ enquiries. We are aware that 435 some applications are beginning to being processed, but I will be able to provide greater information in the next two or three weeks in terms of what has actually been paid out, unless Caldric has some current information that he can provide the Committee.

Q102. Ms Edge: Could I just come in there? If the banks are saying that businesses are not 440 choosing to take up the option to borrow, is that possibly because there is something wrong with the process and the system?

The Minister: Well, as I said, I am not aware of that at the moment. I have not had any formal feedback. I know I have certainly seen some indications that the schemes are now being utilised, 445 that slowly but surely these applications are coming through. I understand that money is starting to flow from the banks out through this guarantee support and I would just suggest that I will be in a better position to really understand that in the next two or three weeks. We are tracking it. We have a feedback system that is working at the moment. I think the banks are reporting that, as far as I understand, somewhere between 25 to 30 facilities have 450 been sanctioned at the moment, that £1.27 million has been so far taken down on through the loan scheme. We will see, I think, in the next few weeks where we are at to get a better understanding of how successful that has been or the need. I mean clearly businesses, yes absolutely, we want them to take advantage of this, but of course the individuals themselves are trying to stay out of debt and one can understand that. 455 Q103. Ms Edge: Okay, and one last one from me. Will there be reconsideration of supporting retailers and small business premises owners with a form of rate relief rather than just a deferral?

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460 The Minister: Again, we are continuing to discuss with our colleagues in the Department for Enterprise what is going to be needed going forward. We did provide … Initially, actually, that £3,000 figure was effectively a comparable figure to the rate relief that was being offered in the UK. We stand by to try and help businesses as much as we can, but we also have to be cognisant that we also have to protect public funds and we 465 also need a clear economic strategy moving forward. So this will continue to be dealt with literally on a week-by-week, if not day-by-day, basis as situations become clearer to us and we are working incredibly closely with our colleagues in the Department for Enterprise to make sure that the support is getting out there as and when needed.

470 Ms Edge: Okay. Thank you, Chair.

The Chairman: Thank you. Mr Robertshaw.

475 Q104. Mr Robertshaw: Thank you, Mr Chairman. Good morning, Minister; good morning, Mr Randall. My series of questions, in what is a very short session, is more focused on us trying to unwind out of the emergency powers into the new normal. It is obviously, and remains, an utterly extraordinary period and it has changed us all. But bearing in mind we are looking for short and 480 quick answers, are there any early lessons that you have learned as Minister from this whole process? There will be time enough much later on for a wash down, but could you give us a few of your thoughts thus far?

The Minister: Thank you very much. 485 I think we are always learning and understanding as we move along. I think for us we have clear understanding now that some things need to change in terms of how the community, the business community particularly, is paying and contributing towards the broader revenues of Government. In particular, I think most people now recognise that where we have had difficulties mostly has been around self-employed individuals and business directors and how 490 they have been paying and contributing their National Insurance payments. So clearly there is a lesson for us there. I think what we need to do, and alongside that, to me it is pretty clear and it is objective, but it is pretty clear that a lot of people do not actually necessarily understand how they have structured themselves in terms of their own self-employment and their own business structures. 495 So we have to question, I suppose, whether they are simple enough or what we might need to do to improve that understanding moving forward. There have been lessons I think for us, as we know, about communication. You are in a crisis situation, communication obviously is absolutely vital. But there has also been a huge amount that we have learned that is positive. There has been 500 significant cross-government working on this, Mr Robertshaw. We have been very open, I have been very open, to encouraging the support politicians in Treasury and in DfE to work very closely together and that has been positive, I think, and long may that kind of working continue, particularly where we are trying to address problems moving forward.

505 Q105. Mr Robertshaw: You will not be surprised when I say hear, hear to that, Minister. Moving on, emergency powers have their limitations – they are very black and white. And as we try to navigate our way back to, or to, a new normal, what consideration has been given to guide employers and employees in how to deal with what used to be called social distancing and now increasingly is being called physical distancing, and other encouragement as well, in 510 guidance form, to help people find their way back into the workplace?

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The Minister: Well, I think to be fair, most of that really has fallen on DfE to knuckle down and deliver that. (Interjection by Mr Robertshaw) I think we have … Clearly it is of interest to Treasury how people get back, and absolutely, as a Minister I have been contributing to that 515 within the Council of Ministers forum and more generally encouraging people when I have been speaking to individual businesses and people, that they should think about how to successfully operate their businesses. But primarily that has been driven through DfE, Mr Robertshaw, and our role really is to equip and to continue to equip businesses and the community from a financial perspective to deal with this. 520 Q106. Mr Robertshaw: Thank you. In some respects I think you have already answered my next question, which is dealing with the next 12-week period. I think I heard you say earlier in this session that you intend to make an announcement next Tuesday. Will that concern itself simply with the next 12 weeks or will it try 525 to include some pointers in terms of forming a vision for beyond the next 12 weeks?

The Minister: Yes. So I think initially we will be taking legislation to extend the schemes and we need to try and provide some clarity to you, Tynwald, allow some kind of discussion around how those schemes are refined in terms of who can apply. I think we need to give reassurance 530 that we are not just giving money away for the sake of giving money away, that it is being … the public have some confidence that we are doing our best to ensure that the funds are going to the right places. It is absolutely vital that we need to continue to support businesses and individuals. It is just in terms of how big and big that scope is moving forward. I have set out an intention to give a budget update and potentially some measures that we 535 think we will be in a position to further understand by July. But broadly moving on, Mr Robertshaw, I think it will then start to become both … well, first of all, understanding what the economic vision is for the Island on the back of this crisis, that will be very important; and secondly, I think then we will need to be down into areas of defining this almost by sector as to the sort of support mechanisms that we need, and I then would refer back to 540 Ms Edge’s comments about, well, how does that look in terms of retraining and reskilling? So a lot to think about there and I think in the coming weeks and building up to July we will try to need to bring some further clarity, but that is how I think it is going to play out.

Q107. Mr Robertshaw: Do you think you will have to adjust the Scheme somewhat as we 545 withdraw from the emergency powers situation with regard to recognising the fact that businesses will in a number of clear areas really struggle to get back to pre-emergency powers revenue status?

The Minister: I am not so sure. I think I would not necessarily tie … I mean these are 550 obviously emergency situations, but I would not necessarily start to tie up the support mechanisms, the financial mechanisms, with the emergency situation. I think from my perspective I, like many people, would like to see us exiting from the emergency and dealing with this well-worn phrase now, the ‘new normal’. But part of the new normal or transitioning out of the emergency and through the new normal will be making sure, I think, that we have the 555 support platforms in place to be able to do that. So it may well be that we exit from the emergency situation, but I certainly would not be seeing us doing that without financial support mechanisms in place. I think Treasury, parliament will recognise that we have got to and we will need to adjust these as we move forward. And, as I said, I certainly see an extension of the schemes for the next three-month period and then as 560 we move forward beyond that we need to define that around sectors specifically and of course tie that into a broader economic strategy.

Q108. Mr Robertshaw: Thank you.

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In one of your earlier answers you did touch on the fact – and it is very clear for observers 565 outside to see this – that the Government is working much more coherently across the Departments. Are there any plans for a cross-departmental team to establish thoughts about how to generate greater public confidence in that process of returning to work and for consumers to return to the new normal? Sorry to repeat that phrase again. 570 The Minister: Well, I think that is really being led by the Council of Ministers and the Chief Officers Group. So I think I would argue that part of returning people to work and giving them confidence to do so is being done on a cross-governmental basis. As I said, DfE will be channel primarily in terms of getting in amongst businesses and business 575 owners and managers to help and guide them through that process. I think, moving … as we are talking today, again, both Departments, DfE and Treasury, are working incredibly closely to try … and working, indeed, and consulting both with Tynwald Members, as you know, and with businesses to try and define what the Island thinks, business thinks, we need to do to sustain ourselves in the longer term, where the opportunities exist and I hope very much that in the 580 next few weeks we will shape that and be able to produce a document that will gain the support that we need to try and focus where are, both Treasury support, fiscal support, needs to go to try and take us through successfully. But yes, broadly speaking cross-governmental working needs to be a strong theme that comes out of this. We cannot and we should not let the positives, if you like, and I know there 585 are always a few negatives, but the positives from all this and particularly how Government interacts and where the opportunities exist for it to work far faster, more efficiently and more effectively. And a lot of that is co-production or working closely with the private sector. I think if we can really get down and analyse how we can do that and sustain that moving forward, because I think we are going to have to be nimble, we are going to have to react quickly. Bear in 590 mind of course that this virus itself could sweep back in – that there is a lot of talk about that. So we need to be nimble, we need to be able to work quickly and efficiently and effectively together and a lot of that has come out from, I guess, the emergency powers. I think we need to understand, and parliament will want to understand, how you can take that forward in a restored democratic process. 595 Q109. Mr Robertshaw: Thank you. My final question, Minister, and clearly you again intimated that tourism is actually in a rather particular position with the borders being closed and realistically the 2020 tourist season now finished. On the horizon there are significant opportunities that beckon tourism in the 600 medium to long term, but are you going to be able to continue to provide financial support and are you now start to consider measures as how to get tourism to that new beginning, if you like, in coming years?

The Minister: I think the answer to that is that we, all of us, recognise that tourism and 605 leisure is under pressure. There is an accommodation scheme in place at the moment. If I am brutally honest, I do not necessarily understand at the moment for how long, what the shape of that support needs to be. There are so many variables attached to that, including, I expect, the situation with regards to borders, how long we continue to maintain ourselves at this heightened level of awareness and alertness. 610 This is a very dangerous disease we are in – we all recognise that. They have got quite a lot of decisions still to come and I think they are not just decisions by the Council of Ministers. They are decisions also across parliament as to what sort of level and risks we are prepared to take in the future. But all that really materially … I guess the headline business out of all this is our tourism and hospitality because a lot of our other core businesses, the international-facing

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615 businesses, can still potentially, one would hope, have a good chance of successfully operating with technology and the infrastructure that they have got in place at the moment.

Mr Robertshaw: Thank you very much. Back to you, Mr Chairman.

620 Q110. The Chairman: Thank you. I think that brings us into the quickfire rounds now for Mr Randall, if that is possible; if we can just try and cover a little bit of extra ground. Some respondents have advised they have been passed from pillar to post between Enterprise and Treasury about their tax and NI status. Are you content with the current data-sharing arrangements between the Departments? 625 Mr Randall: I can understand how people would be frustrated by that. There are restrictions around the sharing of data in section 106 of the Tax Act. However, I think what is happening here is that – this is probably in relation to the Business Support Scheme – is people being rejected because of tax reasons, but then to kind of rectify their position or bring it back in, they 630 regularise and make payments to bring things back in or get understandings, they are having to talk tax officers because they have got the specialist knowledge. So I do not think this particular instance is in relation to data sharing. It is where that specific expertise lies to allow people to get the advice that they need. Clearly data sharing does have advantages and that is something we will look at into the future. 635 Q111. The Chairman: Thank you. It looks from the way that the schemes have been worded that whilst you as Chief Financial Officer can sign off exemptions, it does not seem to be an ability that is able to be extended to other Chief Executives; for example, Mr Lewin at DfE. Is that the case? 640 Mr Randall: Yes, that is correct. The only exemption in the legislation is in relation to the Salary Support Scheme.

Q112. The Chairman: Quick question then is why? 645 Mr Randall: When the legislation was put together it was because of the way that we added the sectors in at that time and obviously, as the Minister has already said, there was uncertainty around, at that stage, of the impact. That flexibility was in there to allow the sectors to be included, or businesses be included, should there be a requirement to do so. I guess that is a 650 learning from one scheme to the next.

Q113. The Chairman: Thank you. Going back to MERA, it is only able to be claimed if you are over 18. Obviously there will be people who are age 16 and age 17 who have been working who are now deprived of an income. 655 Can ask why MERA was not extended to those who had been working up until the lockdown for those who are 16 and 17?

Mr Randall: I do not have an answer for that. I think I will have to come back to you on that separately. 660 The Chairman: Okay. I suppose the final question that I will throw in is –

Mr Randall: Hello?

665 Q114. The Chairman: Microphone … The final question from me, if I might then, is about comparing us to the United Kingdom. In the UK there are working tax credits for those on low

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earnings, so those who would not be quite earning the £200 a week. So whilst I accept MERA is there to replace earnings, it does not seem to be very effective at the lowest end of the scale for those under £200 a week. There is a big gap between what this can provide and what income 670 support can provide. Is there going to be any consideration about bridging that gap as we go forwards?

Mr Randall: We will take that into account when we are reviewing the schemes forward.

675 The Chairman: Thank you so much. Well, Minister, Mr Randall, thank you very much for your time this morning. It has been very enlightening and we will look forward to no doubt continuing this conversation at a future time. In the meantime though, the Committee will sit in private. Thank you very much. 680 The Minister: Thank you.

The Committee sat in private at 12 noon.

______57 PAC-ES/2020 21 22 WRITTEN EVIDENCE

23 24 Appendix 1: 15th April 2020 - Email from Mr Alf Cannan MHK, Treasury Minister to Members of Tynwald

25 26 Archived: 11 May 2020 11:44:25 From: [Juan Watterson SHK] Sent: 09 May 2020 15:15:10 To: [Emergency Scrutiny] Subject: FW: Schemes and Exceptions Response requested: Yes Importance: Normal

From: Cannan, Alfred (MHK) Sent: 15 April 2020 15:20 To: All Tynwald Members and Contacts Cc: Randall, Caldric Subject: FW: Schemes and Exceptions

Dear Mr President

Exceptional Applications – Salary Support Scheme & Other Schemes

I know that Hon Members may be continuing to receive g a high number of emails over the recent weeks concerning the various schemes offered by and there is some confusion over the ability of the Chief Financial Officer (CFO) to allow exceptions to the schemes. To help with that, detailed below is some information that I hope you might find useful regarding any queries you may have and also provides contacts for you to raise any questions you have directly with the areas responsible.

Salary Support Scheme

The Salary Support Scheme exists to help businesses retain their staff in which Treasury will provide businesses with a flat rate contribution of £280 per week for every full time equivalent member of staff. Further details can be located here https://covid19.gov.im/businesses/funding-support/salary-support-scheme/

At present Treasury are working to get both the main Salary Support Scheme and the Exceptional Application process live on the dedicated COVID-19 website later this week. Where a business meets the criteria for the main scheme they will be required to complete an online form which will be assessed by Treasury. Where a business does not meet the criteria but feel they should be considered, they will be able to apply online to the CFO for an Exceptional Application using an electronic form.

The methodology for assessing these requests will be published on the website in the next couple of days and will provide guidance on what will be considered in making the judgement.

For any immediate queries regarding the Salary Support Scheme, please contact: [email protected]

For any immediate queries regarding the CFO Exceptional Application, please contact: [email protected]

Other Schemes

Please note that the CFO’s exception process does not relate to any of the schemes below, only to the Salary Support Scheme

Government is also offering other support schemes to businesses and members of the public to support them financially in the coming weeks/months.

Three of the schemes you may have been contacted about are: - MERA – Manx Earnings Replacement Allowance

27 - CBSS – Coronavirus Business Support Scheme - SCS – Strategic Capacity Scheme

Manx Earnings Replacement Allowance The scheme provides an income of £200 per week to people who have been temporarily or permanently laid off, or lost their self-employed work since 2 March 2020. Details of the scheme can be found here: https://covid19.gov.im/businesses/funding-support/manx-earnings-replacement-allowance-mera/

Claims for MERA can be made now online using the above link and any queries should be directed to [email protected] or to 685656.

Coronavirus Business Support Scheme This scheme is operated by the Department for Enterprise and offers financial support to eligible businesses in the form of a grant payment of £3,000. Specific details relating to the scheme can be found here: https://covid19.gov.im/businesses/funding-support/coronavirus-business-support-scheme/

Anyone who applies for this scheme cannot apply for MERA.

Strategic Capacity Scheme This scheme is also operated by the Department for Enterprise and exists to ensure the Island retains its strategic capacity in the tourist accommodation sector. Further details can be found here: https://covid19.gov.im/businesses/funding-support/strategic-capacity-scheme/

Queries regarding the CBSS and SCS schemes can be raised via the enquiry links at the bottom of the web page in the link provided above or alternatively you can contact the helpline email [email protected]. Please note this an internal help email address and should not be provided to the public.

I hope this provides some clarity on the schemes for everyone and the powers available.

Kind regards

Alfred Cannan MHK Treasury Minister Central Government Office Bucks Road Douglas Isle of Man IM1 3PU

Isle of Man. Giving you freedom to flourish

WARNING: This email message and any files transmitted with it are confidential and may be subject to legal privilege. You must not copy or deliver it to any other person or use the contents in any unauthorised manner without the express permission of the sender. If you are not the intended addressee of this e-mail, please delete it and notify the sender as soon as possible.

No employee or agent is authorised to conclude any binding agreement on behalf of any of the Departments or Statutory Boards of the Isle of Man Government with any party by e-mail without express written confirmation by a Manager of the relevant Department or Statutory Board.

RAAUE: S’preevaadjagh yn çhaghteraght post-l shoh chammah’s coadanyn erbee currit marish as ta shoh coadit ec y leigh. Cha nhegin diu coipal ny cur eh da peiagh erbee elley ny ymmydey yn chooid t’ayn er aght erbee dyn kied leayr veih’n choyrtagh. Mannagh nee shiu yn enmyssagh kiarit jeh’n phost-l shoh, doll-shiu magh eh, my sailliu, as cur-shiu fys da’n choyrtagh cha leah as oddys shiu.

Cha nel kied currit da failleydagh ny jantagh erbee conaant y yannoo rish peiagh ny possan erbee lesh post-l er son Rheynn ny Boayrd Slattyssagh erbee jeh Reiltys Ellan Vannin dyn co-niartaghey scruit leayr veih Reireyder y Rheynn ny Boayrd Slattyssagh t’eh bentyn rish.

28 Appendix 2: 4th May 2020 - Email submission

29 30 Archived: 05 May 2020 08:10:30 From: [Contact details redacted] Sent: 04 May 2020 14:39:16 To: [Committees] Subject: my step daughter is a care assistant at a private northern nursing home. she has been off work 6 weeks self isolating .because we normally have[Name redacted] her[age] yr old son is she able to claim as salary support as the home says they are not able to claim .? Importance: Normal

Sent from Mail for Windows 10

31 32 Appendix 3: 4th May 2020 - Email from Joanna Maylin

33 34 Archived: 05 May 2020 08:07:23 From: [Contact details redacted] Sent: 04 May 2020 14:26:57 To: [Committees] Subject: MERA comments Importance: Normal

Hello Mr Watterson

My partner and myself are both self employed. We were both lucky enough to receive MERA,and are very grateful to be given it. My partner has since continued with his gardening business so our income is ok again. We don't live a lavish lifestyle,we have a manageable mortgage and don't drive vehicles we would struggle to pay for. We know several people also receiving MERA. We find the ones who complain are the ones who live in larger houses and drive luxury leased cars,both which they struggled to pay for before the coronavirus arrived. I think maybe they expected more help to pay for their lifestyle. What would be helpful is a set of guidelines for my job so I'll be ready to return when allowed. I travel to peoples houses doing beauty(facials/waxing)chiropody and massage. Many thanks Miss J Maylin

35 36 Appendix 4: 5th May 2020 - Email from Nicky Craig

37 38 Archived: 05 May 2020 09:48:37 From: [Contact details redacted] Sent: 05 May 2020 09:46:13 To: [Committees] Subject: Business Support Schemes Importance: Normal

Good morning

Please could our comments below be passed on to the Public Accounts Committee.

When the lockdown first came into place on 25th March 2020 we had initially thought we would have to place all staff on the MERA Scheme. As more information became available we decided to try for the salary support scheme which meant we could keep staff employed but on less hours.

We feel that the ability to offer this has kept team morale high in what is a very difficult time and reassured staff that we were doing everything possible to keep jobs secure.

We submitted a claim for the first period which we have received. Our claim for the second period is still outstanding and our third period claim obviously hasn’t been submitted yet.

We also found with various changes which have taken place we could claim for the business support scheme. We did receive this and it has helped pay suppliers.

We have also applied to defer the p12, 1 and 2 tax and national insurance and again this has been approved.

All of the above has helped us immensely in paying staff and suppliers. From feedback we know this has been appreciated and we hope this can stand us in good stead for when we can fully reopen.

If we had one criticism it is the lack of communication firstly when all schemes were announced a business helpline telephone number was given. Although we rang this number on various occasions and let it ring for long periods of time we never got an answer. We were left not knowing when the salary support scheme would be open and yet had to pay wages in order to claim it. Secondly once the claim form was available and we submitted it we are again left not knowing if it was either correct or would be approved. There is no formal acknowledgement of the claim form. This has happened again with our second claim. We submitted it last week and although I emailed a lady earlier this week to see if it was at least in the system she has replied saying they just deal with them on a first come, first served basis and doesn’t know where we are in this system.

We are now left with an outstanding claim for £[Redacted] which we have no way of knowing if or when we will receive the funds.

The same happened with the business support scheme. We submitted the form, had absolutely no acknowledgment regarding it but thankfully the funds just appeared in our account.

However we do feel that the positives far outweigh the negatives and without the Government financial support we would have been facing a very different future and so would our employees and for this we are grateful.

Regards

39 Nicola Craig Manx Glass & Glazing Ltd

40 Appendix 5: 5th May 2020 - Email from Charles Miller

41 42 Archived: 05 May 2020 08:13:13 From: [Contact details redacted] Sent: 04 May 2020 15:03:25 To: [Committees] Subject: Business Support Schemes Importance: Normal

Sirs

I write as a Director of Two Fellas Limited, a Peel based pub operating company with two venues in Peel and 14 staff.

Our venues were closed to the public at Midnight on 22nd March 2020 under the Emergency Powers Act.

While the initial business support in the form of the Business Support Grant and £3000 was most welcome, it has proved to be almost insignificant in terms of costs due and no income.

We currently await payment of the Salary Support Scheme which in its operation and scope appears surprisingly generous and we hope this will tide us over for the current 12 weeks of the scheme.

We do however have two comments to make on this. The first is that Treasury state in writing that the payment will be made 14 days after approval. If that is the case, then it is unhelpful.

Second, the scheme is designed to operate in arrears. Our company is less than three years old and has no cash reserves. We expanded in 2018 with significant expenditure and took on 12 staff. We have reluctantly now laid off 10 staff. If the Salary Support Scheme had been paid in advance, we could have probably paid our staff and kept them on the books. As it is we will have to see what our balances are like when the Salary Support Scheme is paid.

As things stand, we face the prospect of reopening to the public hopefully sometime in 2020 with no staff as we have not been able to carry them with us.

The requirement by Treasury that businesses continue to pay rates is, in our opinion unfair. The UK Government has given a 12 month Business Rates holiday. This would save us in Peel over £4,000. We have submitted an appeal to the Rent and Rating Appeal Tribunal but the Valuation Office are refusing to deal with a request for zero rating until 6 months have past. We find this unacceptable. The local authorities on the Island are insignificant in the main compared to their UK counterparts. The element of rates income paid by Manx businesses to our local authorities could easily be absorbed by the Treasury.

Financial help required by SMEs is required now, not in arrears. The more costs we can cut, the better the chance we have of coming out of the crisis in a condition to trade and provide employment.

UK businesses have been awarded £10000 or £25000 per venue, depending on rateable value. That level of support would be invaluable here and, in our case would immediately allow us to settle all our debts with Manx suppliers and keep paying our staff.

The Stay Safe document published this morning, 4th May puts our business at the back of the queue for reopening despite our attempts to engage with Ministers over the weekend.

We all appreciate the help given so far and that the Island’s finances are finite. We support the proposal by the Treasury to borrow money from the international money markets.

In conclusion we have to say, that whilst all financial help given is gratefully received, it is, with six weeks experience of being closed, not enough. Substantially more financial resources are needed.

Yours Faithfully

43 Charles Miller Director

[Contact details redacted]

44 Appendix 6: 5th May 2020 - Email from David Midghall

45 46 Archived: 05 May 2020 08:12:13 From: [Contact details redacted] Sent: 04 May 2020 15:00:46 To: [Committees] Subject: Medium Terms Response COVID19 Importance: Normal

Good Afternoon,

I would like to submit business issues in regard to our coach company Tours Isle of Man Limited, the medium terms response for COVID19 will be discussed I understand at the House of Keys sitting tomorrow.

The Tourism and hospitality industry was the first to be affected by COVID19 and is likely to be the last to recover, this will not be an easy quick fix and could take several years. I gave a speech at the Chamber meeting at the Palace Hotel on 18th March and the developments since have been rapid and for many unforeseen. Many of the points I raised are still valid and also many more issues that we simply could not have imagined nearly two months ago.

Hoteliers are getting assistance in regard to the strategic capacity scheme and we will need some kind of support such as this if we are to be in a position to offer our services for not only the immediate future but for 2021 and beyond.

The salary support scheme has enabled me to still employ 2 of our 6 full time staff on full salaries and keep the remaining in readiness for any start up. I do hope this scheme is extended beyond the initial 3 months. If not there will be redundancies. Our casual zero hours staff are not gaining any payment.

The business support scheme grant of £3,000 was very welcome but did not last very long in our account.

As for the disruption loan guarantee this simply is not a comfortable option as I do not want us to go in to a debt that we may not be able to honour. It is also to lengthy and complicated process, I spent an hour on the phone with[Bank] and were sent an application that is going to take hours to complete. The UK Government have got this right and the IOM Government need to copy this and businesses might become more confident in doing a bounce back loan, we certainly would look again if this was offered to us.

We have our property rent on a holiday period for April to June and also the same dates for the leases on our coaches. Beyond this I do not know what will happen.

Our income has been wiped out and a once healthy diary for May to July has gone, bookings are also in jeopardy for late summer, with the MGP being cancelled any hope of a late August boom has gone. The small amount of Government work that we are currently doing in regard to the weekly repatriation and meeting flights at Ronaldsway is very much appreciated. It does however only cover wages and a small amount of operational costs.

A lot of business bookings are being transferred to 2021 and this could cause issues for us if we are still operating then, a downsize of our fleet size is inevitable as we are not going to be able to sustain the current fleet beyond September, it is difficult to even do a business plan as we see no end in sight for us. If we go out of business as the last private coach company on the Isle of Man it will leave a big hole for the group tourist sector next year. Not to mention cruise ship calls to the island, they require coaches for tour work and not buses.

47 In March we lost £[Redacted] of private hire work that was cancelled, £[Redacted] of contract work cancelled and our off island Derbyshire coach holiday had to be cancelled. We have given in the region of £[Redacted] in refunds. Fortunately we have the monies for our coach holidays ring fenced and are able to honour refunds unlike many hoteliers.

April has been a complete disaster with Easter work and everything else cancelled.

For May to July we have received cancellations to the amount of £[Redacted] , local contracts are not operating and this is a shortfall of approximately £[Redacted] per month. This also does not factor in bookings that we would expect with shorter notice for now and the rest of the summer.

If the IOM Government is serious about Tourism and local business it needs to help with more grants as a matter of urgency.

If you have any queries please do contact me by email or phone, please bear in mind I am off the island tomorrow on the morning sailing for the repatriation runs. I will have access to emails whilst away.

Thanking you in anticipation of your consideration in these matters.

Best Regards

David Midghall Managing Director (working from home) Tours Isle of Man Limited

48 Appendix 7: 5th May 2020 - Email from Jason Newman

49 50 Archived: 05 May 2020 08:34:20 From: [Contact details redacted] Sent: 04 May 2020 17:55:44 To: [Committees] Subject: How effective the business support schemes have been Importance: Normal

Dear committee

My Name is Jason Newman,

I am a self employed osteopath who owns and runs [Redacted]

I am not a limited company and I am the only member in my business. As for support schemes I feel very let down and I would like to let you know why.

As an osteopath I seemed to not fall into any of the sectors for the £3000 grant which I think is not fair when you see that hairdressers, beauty therapists and nail technicians and even dog carers do. To me if it’s good for one it should be good for another. Why are the said sectors covered but osteopaths, dentists physios etc are not.

As for other support. I applied on the 6th April for the MERA scheme, 2 weeks later I was contacted back with no acknowledgement of my application prior. I was informed that I was turned down due to NI class 2 not being paid. This was as a direct result on my ex accountant [Name redacted] who is not in prison for embezzlement and so subsequently he was not doing the job he should have for me and left me owing a big tax and NI bills. as a result from being told that my Ni class 2 was not upto date I paid for the whole of 2019-2020 year On the 27th only to then be told that i would not be given any MERA payments from the 6th of April to the 27th which was when I applied. I consequently appealed and stated why this seems wrong and totally unfair as this was due to my above reason which was not a fault of my own to be told it would be escalated to Mr [Name redacted] manager and his manager would be in touch that’s was emailed on the 28th and stil I have had no communication from him and still not received any mera payments. My application was subsequently approved on 27th but as I say[Name redacted] was not willing to back date the payments to the 6th when I actually applied.

As for the government backed loan scheme my bank[Name redacted] who I have a business account with since May 2019 said due to the government criteria I was not eligible as I would need to have been with them for 3 years and also made a minimum of 3 years profit each year to have been eligible. So again no help in respect to that. Also the bank were not able to offer a temporary overdraft service as again they didn’t have an emergency process I. Once to allow me to fit into the necessary criteria.

All in all I am not happy as not sure when as an osteopath I will be able to re open my clinic and also there is no guarantee I will have a steady amount of clients wanting to come so could still be very very quiet and unable to pay subsequent bills like[Name redacted] mortgage rates gas etc etc.

I have no earnings since 25th of March and I am extremely worried about how things will pan out. My partner is a[Redacted] who luckily is still being paid but the practice she works for but is working very reduced shifts but we are surviving on her wage and me having to defer bills from being paid at the moment.

51 I really do feel that I and many others are being let down by the schemes and I think to be honest what’s good for one is good for another certainly re the £3000 grant scheme. It’s schools not have had certain sectors cherry picked.

As for my MERA Application I feel it should have been backdated to when o applied especially as I have paid for the whole of 2019-2020 class 2 NI and I’m upset I have still not heard back from the said manager and also still had no payment into my account.

To be with no income since the 25th of March is not easy. Hope this helps with your understanding on how the schemes have been for me and from what I can gather many many others have also been having issues worries and concerns like me.

Your faithfully

Mr Jason Newman BSc (Hons) OST Registered Osteopathy & Owner of [Redacted]

52 Appendix 8: 5th May 2020 - Email from Timothy John Swift, President, Isle of Man Law Society

53 54

Isle of Man Law Society 13 Mount Havelock Douglas Isle of Man IM1 2QG

[Contact details redacted]

5th May 2020

Mrs Joann Corkish Clerk to the Account Select Committee Legislative Buildings Finch Road Douglas Isle of Man By email [Committees] Dear Madam,

Re: Business support schemes to be scrutinised

Please accept this letter as the Isle of Man Law Society’s (“the Law Society”) submission for the second Public Accounts Committee public emergency scrutiny session that will be held at 11.05 am on Friday 8th May 2020.

In the time available it has not been possible to undertake anything approaching a formal consultation with all members of the Law Society before drafting these submissions. A number of firms are only now in the process of reviewing their financial results for April, the first full month since the Covid-19 lockdown commenced, and, in some instances, they are yet to report their findings to the Law Society. However, as is evident from the submissions below, I and/or the Law Society’s Chief Executive, Mr Juan Moore, have been in contact with or approached by a number of Advocates and their firms during the on-going lockdown period, and the submissions below reflect their comments and concerns.

I should like to open by thanking and congratulating the Treasury Minister and the Treasury in putting together the wide range of financial measures for local businesses in such a short space of time and under very difficult circumstances. The Law Society was initially disappointed that the Legal Sector was excluded from the financial measures but pleased that the Treasury Minister listened to our representations and made some changes to the Salary Support Scheme. I should also like thank Michael Crowe and the Finance Agency who have been working with the Law Society’s Chief Executive, throughout this time.

I have attached a copy of the communication with the Treasury Minister for the Committee’s consideration, together with some further information that was supplied to the Finance Agency. In particular I refer to the e-mails of 25th March and 31st March 2020 sent to the Treasury Minister.

You can see throughout our communication that we have stressed that all firms have been affected by this pandemic, not just those undertaking Conveyancing and Legal Aid work. It was concerning that the Legal Sector was excluded from the financial measures entirely when they were first announced and whilst the concession to those undertaking Legal Aid work and conveyancing for the salary support scheme is welcomed it still leaves a large portion of

55 practices unable to access any assistance under this scheme. The rationale to only relax the exemption to those undertaking Legal Aid work and conveyancing is not really understood.

I appreciate that firms can apply to the Treasury on an exception basis, but that is necessarily more difficult to apply for and harder to access. It would have been preferable to include all firms within the main scheme and I would query why local Advocates’ practices have been included the same bracket as large firms of TCSPs, Gaming and other financial services businesses. The Isle of Man Government employs the largest number of Advocates, employing 32 in total. The largest practice employs approximately 60 members of staff with 31 Advocates, the next largest employs 21 Advocates followed by the remainder of firms employing 15 or fewer Advocates. There are 41 firms in total of which 39 employ 15 or fewer Advocates. All firms provide a vital service to the local community in many different areas of law and all are struggling due to the global pandemic. I should like to reiterate that the Isle of Man Government is the largest employer of Advocates whose job security and conditions of employment are not currently under threat.

To qualify for the Salary Support Scheme practices must undertake at least 30% Legal Aid work and/or Conveyancing. It is difficult to understand how the Treasury reached this decision and calculated these proportions and why other areas of law, that are equally affected by the lockdown, are not included. How the 30% is calculated is also unclear and does not account for Civil Legal Aid practitioners, who work under Legal Aid certificates, but may ultimately get paid by the other side, following success in their case and being awarded costs. It has not been possible to progress some matters through the Courts for example and even international facing business has slowed or in some cases stopped. Such is the nature of a global pandemic. Whether firms are paid privately or via Legal Aid, if cases cannot progress then Advocates cannot work and invoices cannot be raised.

The fundamental issue is that cash flow is what will finish any business (legal or otherwise) especially during this period of lockdown. Businesses must be able to meet their liabilities as they fall due to meet the solvency test.

We have been in constant communication with our members and member firms throughout this crisis. We have been told by a number of firms that:

 they are apprehensive about the future;  at present, there is little new work;  turnover is down, in some cases to 50% or more, with further reductions expected;  many staff are working reduced hours;  many Partners/directors have been drawing little or no salaries;  reserves are being quickly depleted in supporting staff;  they have serious concerns over future profitability; and  in some cases where discussions had been taking place between firms, negotiations to merge have fallen through;

This is only a small selection of comments received from members. We are aware that some firms have already taken the regretful step to make staff redundant.

I should like to point out that there are still a number of areas in which legal work can continue. Family law is very busy and in a number of other areas work is still coming in. The Court still wants to get on with matters and we are working with the Court to ensure this happens whilst still following health regulations.

In saying this, I must also point out that one of our member firms does not agree with extension of the schemes and has expressly stated that it believes that the schemes should not be

56 generally extended to law firms beyond those to whom it is currently available. That practice has said that it is their view that law firms should not be able to take advantage of the schemes if doing so results in the protection or, in some cases, maximisation of profits. To do so would, in their opinion, be unethical.

It is that firm’s view, that any law firm to whom assistance is provided at the current time should, at least, be required to take any such assistance by way of loan scheme (subject to personal guarantee by its owners). Furthermore, any such loan scheme should be transparent and subject to appropriate covenants including confirmation that its owners have waived any right to distributions until the loan is repaid in full, salary caps upon owners (if they pay themselves a salary in addition to receiving distributions) and related scrutiny and audit of their accounts by the relevant Government department.

It is only one firm at present that has expressed such a view – the other firms who have been in contact with me or with Mr Moore or indeed other members of Council have expressed concern and in some cases disappointment that the support scheme does not extend to all legal firms. Whilst I have not had confirmation from all firms as to the extent of the impact of the pandemic on their business, nor as to whether they will benefit from the current scheme, I do know that whilst many firms are trying to assist their staff wherever possible, they are experiencing such hardship that it is not clear how long they can operate. Firms still wish to assist members of the public and I know that some are offering services at reduced fees to assist the public who do not qualify for Legal Aid but might not otherwise be able to afford to access justice. A number of firms have also offered to provide COVID-19 related advice for free, which I understand has certainly been appreciated by the public accessing such service. Additionally, a number of Advocates have offered free assistance to members of Tynwald and Government generally in reviewing draft legislation and guidance during the crisis, under very tight timeframes.

A number of firms have told me that many of their clients are asking to pay invoices by way of monthly instalments, and where instalments have previously been agreed, there have been requests for these to be reduced or ceased at least temporarily. This will not necessarily extend to all businesses, but it does highlight the problem facing Advocates across a wide range of work types. As the whole population is affected by the lockdown, this has a huge knock on effect on all businesses and service providers. By way of example, one firm has told me that 85% of its staff are the main breadwinners in their house and if jobs are lost or salaries reduced, this will have an impact on many families. That firm has said that it will continue to pay the salaries of its staff for as long as it can, but it can only do so from funds that had been put aside for investment in the business.

As there are a number of other schemes that have been put forward by the Government to help businesses and individuals in the Isle of Man, alongside the salary support scheme, I have ensured that all firms are aware of what is on offer and I have asked firms if they have been able to take advantage of any of the other schemes available to them. The difficulty however as you are aware is that the Government backed Bank Guarantee Scheme is not available to legal firms. A number of firms have also expressed concerns about the VAT deferment scheme, rightly pointing out the VAT will need to be paid at some point and if they used that cash now they fear having a worse problem when the VAT must eventually be paid. Firms are reluctant to take on additional borrowing that they fear they will have difficulty in repaying. It is this difficulty in balancing the immediate needs against the needs in the future that is adding to the financial concerns of a number of member firms.

The picture I have seen from speaking with firms is that they are all hugely affected by the global pandemic and Island wide lockdown. Whilst it is recognised that the steps taken have been taken out of necessity, the income stream in many cases has stopped or slowed and in a number of cases I am told that it has been reduced by 50% or more. These are firms that supply services to the local community. If those firms fail the Island will be seriously affected in terms of Access to Justice, employment and revenue. The Isle of Man also has an excellent

57 international reputation. Those firms on the Island that undertake multinational work are central to this and attract business that benefits the economy of the whole of the Island. In certain aspects the damage done to the global economy will be as great, if not greater, than that which we may experience locally, with no certainty as to when normal levels of transactional legal work will return. Accordingly, the firms undertaking international work are also being seriously affected by the very fact that this is a global pandemic and any risk to the survival of such firms will have serious ramifications.

I would like to return finally to one point that I made in my previous submission to the Treasury Minister. Not only are Advocates dealing with the fall-out from this pandemic and the hardships that will inevitably remain as the Island slowly comes out of lockdown, but Advocates will then have to deal with yet more uncertainty in the form of the Legal Aid Consultation that is currently taking place. It will be difficult enough for firms to plan ahead as we move forward over the next few months; yet at the same time those undertaking Legal Aid will face uncertainty as they do not know what changes might be result from the Consultation. The Island will need a strong Legal Sector as life and business starts to return to normal, yet at a time when other business will be able to focus on a return to work, Legal Aid practitioners will continue to face even more uncertainty.

The Island is currently facing unprecedented uncertainty and will require a strong Legal Sector as the lockdown eases. I urge the Treasury to assist all firms in need however it can.

Yours sincerely,

Timothy John Swift President

58

From: Cannan, Alfred (MHK) Sent: 14 April 2020 16:12 To: Juan Moore Subject: RE: Financial Measurers

Dear Juan

Thank you for your email.

I can confirm that further guidance on these matters will be issued for Legal and Accountancy Firms on the Isle of Man.

As you will understand, this is a continually evolving situation and the full extent of the Coronavirus impact was not immediately apparent. We continue to examine how the IOM Government is responding to these matters and we are not convinced that the approach taken by the United Kingdom is in the best interests of the future sustainability and affordability of public finances and vital public services.

I hope that you will find that the guidance (which will be published this week) will assist your members in trying to find a way through this extremely difficult period.

Yours sincerely

Alfred Cannan MHK Treasury Minister Central Government Office Bucks Road Douglas Isle of Man IM1 3PU

From: Juan Moore Sent: 14 April 2020 14:18 To: Cannan, Alfred (MHK) Subject: Financial Measurers

Caution: This email is from an external sender. Please take care before opening any attachments or following any links. Dear Minister Cannan,

Further to your correspondence with the President, I should like to reiterate that the Law Society appreciate the effort that the Government has gone to in dealing with this global pandemic.

In his correspondence the President stated that a number of member firms have been severely affected by the restrictions that have been put in place, many of whom have raised concerns and questions on the financial measures. I have been working with the Treasury direct in dealing with many of the queries raised. I would, however, be grateful if you could advise on how you arrived at the conclusion that specific sectors should be excluded from the Financial Measures, including the Legal Sector. Our members have highlighted to me that there was no such corresponding restriction on the measures introduced in the UK.

59

Kind regards

Juan

Juan Moore BA, FCIS CEO - Isle of Man Law Society

[Contact details redacted]

60

From: Cannan, Alfred (MHK) Sent: 31 March 2020 19:49 To: Juan Moore Cc: [, Mark Lewin, Tim Swift, Michael Crowe]

Subject: RE: Finance Package

Dear Juan

Thank you for your letter and others that I have received from your members.

These are difficult days and we continue to keep matters under review. I will be speaking with Treasury and DfE Boards tomorrow and I will update you further.

With best wishes

Alfred Cannan

From: Juan Moore Sent: 31 March 2020 17:52 To: Cannan, Alfred (MHK) Cc: [Laurence Skelly, Mark Lewin, Tim Swift, Michael Crowe]

Subject: Finance Package

Dear Minister Cannan,

Whilst I am reluctant to burden you with another pressing issue at this time of national emergency, I have no choice but to again raise with you the significant concern (and fear) raised by many members of the Isle of Man Law Society, and their firms, regarding their ability to trade through, and recover from, what is fast becoming a close down of large parts of the legal sector on the Island. I appreciate that I initially wrote expressing some concerns last week and that since then there have been various discussions and exchanges of emails dealing with certain parts of the legal sector and the pressures that they are facing; however I am sure that you will understand that we are dealing with a fast moving and ever changing landscape and many members and firms continue to express their concerns (and fears) over the impact that the Covid-19 crisis is having and will continue to have on the whole of the industry.

There is an unfortunate tendency among many commentators to view the Island’s legal sector as a homogenous industry which has lived well off the Island’s many years of success as an offshore finance centre. This view however is blind to the reality that a large number of Advocates, and their firms, do not do any, or any significant, international work, but dedicate themselves to serving the local community. The work they do is often not highly paid but is vital to the smooth running of the administration of justice through the Island’s criminal and civil courts and tribunals, and serves the needs of the local population; whether that be in providing local commercial advice, conveyancing, wills, probate, family law and child care and protection issues. Much of this work is carried out at low or legal aid rates which have not been reviewed for more than a decade.

61

Even those parts of the legal sector that do undertake international work are impacted by what is a worldwide crisis, with perhaps the most pressing concern being the significant reduction in cashflow which all firms, large or small, are already experiencing.

All of these types of activities have been affected by the Covid-19 crisis - some to a level at which no meaningful activities can take place at all. Conveyancing is a good example. I am informed that Douglas Corporation (and I assume other local government administrations), through no fault of their own, cannot process land search enquiries. This means no land transactions which require such searches (as you will know from your own experience this means nearly all such transactions) cannot proceed. Without completions of conveyancing transactions, some Advocates are receiving no income from conveyancing. Regular conveyancing income can be the cash flow which allows some firms to meet monthly pay-roll expenses. The Isle of Man Courts of Justice yesterday announced on their website that they encourage all parties to litigation, and their advisers, to avoid issuing claims or making applications to the court to the greatest extent possible. The local bread and butter work of many firms is becoming impossible to undertake. This is at a time when cash flow into firms is nose-diving as their existing clients also struggle to pay their bills, either timely or at all. Advocates remain willing, and to the extent that the situation allows, able to serve the community they love, but for many reasons their businesses face significant pressing financial stress.

Why should this matter? It matters as keeping skilled Advocates in practice is important to the ability of the Island to return to normal in due course, as must be hoped for in the future. It also matters because Advocate firms are businesses, and without immediate financial support where required, either to firms or their employees, many will be forced to take drastic action, laying off staff and, in worst case scenarios, closing their doors for good. I am referring to hard working and dedicated Advocates who already perform their professional duties out of dedication to the clients they serve rather than any significant financial reward. I am aware of a case in question where the principal of the firm is not able to look to the Banks for additional borrowings, and without some other form of support, fears that the business cannot continue. The impact of this goes beyond just the advocates themselves and extends to the many support staff employed in the sector who in many cases currently face an uncertain future.

In the circumstances, I am pleading with you as Treasury Minister to revisit the scope of the financial assistance which the Government is offering so as not to exclude the legal sector. The legal sector employs a significant number of Manx tax payers, some of whose livelihoods are on the line. The consequences to them and their families are scary. These people should not be excluded from help because of some misconceived notion that all lawyers are “fat-cats” and can survive the current situation unaided. Many cannot and nor can their staff.

I would be grateful if you would review the current proposals. If you require any further information or assistance please do not hesitate to contact me.

I look forward to hearing from you or your officers.

62

Kind Regards

Timothy John Swift President Isle of Man Law Society

Sent on for and on behalf of the President.

From: Juan Moore Sent: 26 March 2020 16:10 To: Crowe, Michael Subject: RE: Finance Package

Hi Michael,

Thank you for the update. All areas of law are affected. The courts are currently operating on only essential matters, whilst there may still be some work the majority of income for practices will cease very shortly. Conveyancing will put a huge hole in the cashflow of many practices. Completions cannot take place, or there are major problems affecting completions, there are filing difficulties with the registry and the public will be following the health guidance and staying in rather than looking to move.

I have now been contacted by seven practices expressing concerns as to how they will continue to operate. They all provide services to the local population working in very different areas, including but not limited to; conveyancing, immigration, insurance, criminal work, family law, civil litigation etc. These practices undertake a mixture of private client work and legal aid work. Whilst seven have contacted me specifically, as you would expect I am in contact with very many advocates and there is not one firm that will not be severely affected by this pandemic. If businesses on the Island cannot operate advocates servicing those businesses lose that income stream.

If there are any closures I fear for the future and how firms will be able to cope in dealing with the backlog when restrictions are lifted. Businesses will struggle to appoint advocates and the public will have difficulties in engaging advocates to enforce their rights as enacted by Tynwald. As you know from our discussions some firms have already been struggling to recruit as it is. What has added to the problem, as the President mentioned below, is the uncertainty from the Legal Aid review.

I have contacted the Legal Aid Office to see if there is any way they can make payments based of WIP for the time being. I await their comments, but I am not sure how flexible they can be.

Thank you for your efforts and I appreciate any assistance you can give.

Kind regards

Juan

Juan Moore BA, FCIS CEO - Isle of Man Law Society

[Contact details redacted]

63

NOTICE: The Isle of Man Law Society does not give legal advice. Nothing in this email is to be construed as legal advice. If you require legal advice you must contact a qualified legal adviser in your jurisdiction. The information contained in this E-mail may be confidential, privileged or otherwise protected from disclosure. It is intended only for the stated addressee(s) and access to it by any other person is unauthorised. If you are not an addressee, you must not disclose, copy, circulate or in any other way use or rely on the information contained in this E-mail. Such unauthorised use may be unlawful. If you have received this E-mail in error please inform us immediately and if you have printed it please destroy the paper version and delete the electronic version and all copies from your system

From: Crowe, Michael Sent: 26 March 2020 15:17 To: Juan Moore Subject: RE: Finance Package

Hi Juan

I have had detailed feedback from [Name redacted] about general matters but also on property transactions and conveyancing.

Please do provide feedback to me on any other areas you are seeing being impacted. As I mentioned the other day, all schemes are under constant review.

Kind regards

Michael

From: Juan Moore Sent: 25 March 2020 11:45 To: Cannan, Alfred (MHK) Cc: Skelly, Laurence (MHK); Lewin, Mark; Crowe, Michael; Tim Swift Subject: Finance Package

Dear Minister Cannan,

I should like to congratulate you on the financial measures you have put in place and announced on Monday. Clearly a lot of thought and time has been put into the measures announced that will be greatly needed by Isle of Man businesses.

Whilst I applaud your efforts I am concerned that the Legal profession has been excluded. You will appreciate that many advocates are providing vital front line services keeping the administration of Justice operating in these very difficult times. As you will be aware from the ongoing Legal Aid Consultation, not all of these services are well remunerated. Some services not only must continue throughout this global epidemic, but quite simply cannot be cancelled. Work such as court and police duty advocates, family advocates and in particular those dealing with child protection matters, to name but a few. It is vital that the administration of justice continues.

Many practices employ administration staff who assist in compliance, property, accounts and general administration. All of these support staff have salaries that must be paid and yet with the protective measures that have rightly been put in place there will be little income coming

64 into all the practices. You will appreciate that the legal firms on the Island largely serve the local population and all firms are hugely affected by this crisis. Our members have raised serious concerns with me about the fact that they have been excluded from the financial package announced. This is not justified in my opinion. Some members are concerned as to how they will continue to operate and one member has told me that she is having sleepless nights because of the worry that she will have to make people redundant and close a successful practice.

I am greatly concerned not just for the livelihood and wellbeing of those affected, but also the effects of any closures will have on the provision of legal services once this crisis has ended. Legal work will need to be resumed and all practices will be affected indeed the legal aid practices that are likely to be hardest hit. The profession has already been badly affected following the uncertainties created by the legal aid review and the fact that rates have not been increased for in excess of 10 years. I fear that this current crisis might be prove to be too much for some practices indeed not only those who do legal aid work.

In addition to those who do legal aid work Advocates are also a vital part of the Manx economy and service Manx business and individuals alike, and their loss due to the current crisis will cause severe damage. All businesses on the Island rely on the Legal Sector and without which business would not be able to function.

I therefore urge you to reconsider and include the legal sector within the measures announced.

I should be grateful of your comments by return to enable me to provide an update to our members.

Kind Regards

Timothy John Swift President Isle of Man Law Society

Sent on for and on behalf of the President.

65 66 Appendix 9: 5th May 2020- Email from Nikolaus Meier

67 68 Archived: 05 May 2020 09:37:28 From: [Contact details redacted] Sent: 05 May 2020 06:40:26 To: [Committees] Subject: Government business support Importance: Normal

Hi I have a small café and firstly want to thank the government for all that they have done to date. The £3000 was most welcome but to be fair this is going to go back to government as my rates payment. Usually this money would have come from TT.

The salary support scheme has been the most successful help for my business as it has allowed me to keep trading on a takeaway basis. If it were not for this scheme I would not be able to open.

I know this is not supposed to be a request email but could it be asked if this salary support scheme be continued for Perhaps another three months or until we are allowed to trade under the new normal.

Kind regards Nik Meier

69 70 Appendix 10: 5th May 2020 – Email from Steven McKenzie

71 72 Archived: 05 May 2020 09:45:26 From: [Contact details redacted] Sent: 05 May 2020 09:34:39 To: [Committees] Cc: [Juan Watterson SHK] Subject: Business Support Importance: Normal ______

Good morning,

I email you as a business owner and in relation to the current government schemes available with the belief that many businesses are still falling through the cracks.

I co own[Redacted] with my wife and we run the only indoor facility for airport travellers on the island with professional valeting facilities on site. We started[Redacted] in October 2018 after running a successful valeting business for the previous 4 years and I run it full time whilst my wife deals with accounts and payments. We borrowed from where we could to get the business up and running and everything we earned went into keeping our heads above water paying bills and promoting the business, rarely taking a wage. The 3 months from December 2019 saw our busiest to date with December and February full booked and January running at 85% occupancy, and the first weekend in March we acquired additional space for the weekend to help with the footfall of customers and 14 full valets we had to undertake.

Since the outbreak of the virus we quickly saw our bookings for the 6 months ahead cancel and managed to keep going until late March before work ran out. We applied for the £3000 grant which we received but didn’t last long by the time we paid our bills and overheads and this is where the problems start. Whilst there are many schemes available, many are difficult to obtain.

Government Backed Loan Scheme We currently have a working relationship with[Bank] for our jet wash and one of our business vehicles so approached them regarding the above scheme. We were advised that we did not meet the governments criteria and also told that because we had a payment break in January this was also looked at negatively. [Personal details redacted]

In an ideal world we would have liked to be able to borrow £[Redacted] so we could pay off the existing agreements, have funds available to support us over the coming months ahead and only have to pay interest for the next 12 months under the new agreement allowing us to be financially more stable through this time.

MERA and SSS We have been advised we are not eligible for either however on the advice from Mr Alfred Cannan we have now applied for SSS and awaiting a response.

Over 2 weeks ago I emailed Laurence Skelly, Mark lewin and Juan Watterson to raise my concerns and asked for help and advice, Mr Watterson was the only one who responded and asked to be kept in the loop.

Again, over a week ago I contacted Laurence Skelly, Mark Lewin and Alfred Cannan to ask for help and Mr Cannan was the only one to respond advising me to apply for SSS. I have received no response for Mr Lewin or Mr Skelly on either occasion.

It is a worrying and frustrating time for all local businesses and whilst I understand the need to phase in the restart of our businesses and economy, my business will be in the last phase due to the travel restrictions currently in place meaning if we don’t get the support we need we will fold very quickly. Should this happen this will have an adverse effect on our personal life too as we currently only have my wife’s wage coming in which just about supports our personal circumstances and we will be left with no business and in debt.

73 I hope that Tynwald members will understand from the points that I have raised that whilst government is doing a great job and keeping us all informed, many small businesses are really struggling to keep there heads above water now and these people too have families to support.

Kindest Regards Steven Mckenzie

74 Appendix 11: 14th May 2020 – Email from Sylvia Constantine

75 76 Archived: 14 May 2020 08:17:51 From: [Juan Watterson SHK] Sent: 14 May 2020 08:12:00 To: [Emergency Scrutiny] Subject: Fwd: A bit more research Importance: Normal

The Hon. Juan Watterson BA(Hons) BFP CMgr FRSA FCA FCMI SHK Speaker of the House of Keys Member for Rushen

Legislative Buildings Douglas Isle of Man British Isles IM1 3PW

[Contact details redacted]

------Forwarded message ------From: "Sylvia" Date: Thu, May 14, 2020 at 6:11 AM +0100 Subject: A bit more research To: "Watterson, Juan (SHK)"

Caution: This email is from an external sender. Please take care before opening any attachments or following any links.

Hi Juan,

Just to complete my research. My friend and I will also not qualify for MERA

The self-employed must have actually registered to be self-employed with The Treasury before 2 March 2020 and have paid Class 2 National Insurance contributions in at least 13 of the 26 weeks prior to the date of their claim. Some self-employed people who have had low earnings won’t be able to qualify.

I noticed in the committee, you compared IoM covid-19 provision with the UK. In the UK, self-employed on low profits are entitled to working tax credits of up to £3040 per year. This has been going for nearly 15 years and is not new for Covid 19. The only close IoM equivalent is the personal tax credit which is £400 per year and is only paid to over 65s.

Regards

77 Archived: 14 May 2020 08:19:44 From: [Juan Watterson SHK] Sent: 14 May 2020 08:14:31 To: [Emergency Scrutiny] Subject: Fwd: Eligibility Importance: Normal

The Hon. Juan Watterson BA(Hons) BFP CMgr FRSA FCA FCMI SHK Speaker of the House of Keys Member for Rushen

Legislative Buildings Douglas Isle of Man British Isles IM1 3PW

[Contact details redacted]

------Forwarded message ------From: "Sylvia" Date: Wed, May 13, 2020 at 10:40 PM +0100 Subject: Eligibility To: "Watterson, Juan (SHK)"

Caution: This email is from an external sender. Please take care before opening any attachments or following any links.

Hi Juan,

Now I know what I am looking for, I have found the relevant rule:

Not have been granted a certificate of Small Earnings Exception or would have been granted such a certificate had an application to Treasury been made

In other words, must have a tax net profit in excess of £6136 for tax year ended 2019. Even though I have not applied for an exemption and have paid 10 years class 2 NI (I should have typed 2010 not 2012 in my last email), I do not qualify. This is the same for both the £3000 and for the strategic capacity scheme. I will email my friend and let her know the bad news before she puts hours into an application. She has obviously been given incorrect information. I just hope she has enough income from other sources and enough savings in order to cope. I would say she has well and truly fallen through he cracks. Why should she bother to continue with her B & B, if this is how she is treated?

I have received my first request for a deposit refund tonight. To uphold the reputation of my B & B and the island, I will pay up.

78 Archived: 14 May 2020 08:20:35 From: [Juan Watterson SHK] Sent: 14 May 2020 08:14:51 To: [Emergency Scrutiny] Subject: Fwd: Covid 19 business support Importance: Normal

The Hon. Juan Watterson BA(Hons) BFP CMgr FRSA FCA FCMI SHK Speaker of the House of Keys Member for Rushen

Legislative Buildings Douglas Isle of Man British Isles IM1 3PW

Contact details redacated]

------Forwarded message ------From: "Sylvia" Date: Wed, May 13, 2020 at 7:50 PM +0100 Subject: Covid 19 business support To: "Watterson, Juan (SHK)"

Caution: This email is from an external sender. Please take care before opening any attachments or following any links.

Good evening Juan,

I managed to get round to listening to the your committee today. The question about net profit came up. The answer given by DfE that the amount of net profit was not a qualification criterion, was not quite accurate. My net profit is still too low for me to qualify for the £3000 grant. This has come this week directly from Treasury. Not only that, but a friend of mine who runs a B & B out of your constituency of Rushen has sent me an email. I have copied the relevant section:

No doubt like me, you are experiencing a distinct lack of business with no immediate prospect of any improvement in the situation. All of our bookings right through to the MGP have been cancelled although we have one booking scheduled for mid September (car rally) but I think that will have to be cancelled in due course. It is a matter of writing this season off.

I have been sent a lot of information from the Department of Enterprise the first scheme being the Coronavirus Business Support Scheme but unfortunately for me when I started the business my estimated income was below the threshold for paying Class 4 NI contributions and therefore I am not eligible for any support under this scheme.

79 However I have recently been sent another email from the Department of Enterprise called the Coronavirus Strategic Capacity Scheme (Tourist Accommodation). I am working my way through all the information with a view to applying under this scheme as the email advised me that my business would be eligible - nothing ventured nothing gained!

I don’t have any other information about their financial situation and would not want to pry. I have therefore decided to provide you with information about my own situation, simply as an example. I would also point out that it is virtually a negative means test. Again, I don’t know enough specifics, but I suggest that somebody like[Name redacted] would have enough net profit from her B &B to qualify, even though she is in receipt of a[Redacted] pension. I planned my early retirement a long time ago. However, several factors have had a major impact on my plans 1. The unprecedented low interest rates that have existed for many years and devalued our life savings. 2. Waiting for my state pension an additional 6 years. We still have a good lump sum of life savings, but need to be careful about drawing on it too much. We also have no mortgage on our property. Because of this, we are financially better off than many people. As usual, I have empathy for others less fortunate. I would ask how much it would cost the government if my friend and others in our situation ceased trading and signed up for unemployment benefit instead? I would repeat that all my returns etc are filed in time and I have paid class 2 NI since I started in 2012. I also feel a certain amount of stigma implied and attached to me after the wording of the email from DfE and the reply they gave your committee. There are no issues with my tax.

For the tax year ended April 2019 my net profit was[Redacted] from a gross sales turnover of[Redacted] . I have had discussions about this with the tax office in previous years. They say it is very hard for a one bedroomed B & B to make a profit. There are several factors that have coincided: 1. Bob and I have happily given my 90-year-old Aunt a safe and welcoming home for the last 10 years. She has the downstairs bedroom and bathroom and is welcome for stay for as long as she wants. Consequently, I cannot possibly expand the B & B to 2 bedrooms. 2. We are ambassadors for the island and promote it at every opportunity 3. Many of our guests have also become ambassadors 4. We are open 365 days a year and have done everything we can to get more bookings 5. We could reduce our food costs, if we went for cheaper options instead of choosing Manx 6. Our guests spend money in cafes/restaurants, shops and transport 7. We consider our garden to be a vital part of our business because visitors can enjoy their breakfast in the conservatory overlooking the back garden or sit out on our patio. I have previously promoted the Isle of Man as a wonderful place to enjoy gardens. In 2016, my garden featured in the UK based [Redacted] “Amateur Gardening” magazine. It was fabulous free marketing for[Redacted] and the Isle of Man. Last year we spent a much larger and exceptional amount (Nearly £1,100) preparing the garden for “Port Erin Hidden Gardens”. We had over 1,000 people through our garden and many of them were visitors to the island. This was also good marketing for[Redacted] and the Island as a whole. 8. In 2017/18 We invested considerable capital from our life savings, of which £[Redacted] was allowable for tax. This was to upgrade our facilities, improve internal accessibly and become more energy efficient. We have consequently increased our price per night and[Redacted] was awarded 4-star silver as a result. 9. In 2019/20 we have spent £[Redacted] reupholstering the furniture in the conservatory (where we serve breakfast to guests). We did the work ourselves in order to reduce the costs 10. We were planning this year to improve external accessibility and extend the porch to better enable guests with mobility impairment to enter the house and sit down properly to change their footwear 11. We have a potential liability of £[Redacted] to refund deposits and pre-payments for this season. 12. Because I cannot access my state pension until I am 66[Redacted] ,[Redacted] represents 70% of my personal income and 12.9% of our joint income. Setting up the B & B was my response to the change of state pension rules 13. Bob counts as “vulnerable” under Covid 19. If something happens to him, approx.[Redacted] of his pension income dies with him. That is causing him a great deal of worry. 14. My personal pension fund has suffered from the Covid 19 stock market collapse and I cannot draw against it until it recovers. 15. I don’t want to close the B & B

80 I advised the tax office that I started a gardening business on 14.8.19 to do an average of a few hours per week for a few octogenarian friends. Unfortunately, shortly after starting the business, I injured my right heel and was diagnosed by a physiotherapist as having plantar fasciitis. I had only just recovered by the time the lockdown started. Since then, I have realised that I cannot physically cope with more than my original few hours per week. I may be a fairly fit 61-year old, but there are limits.

If you add together my refund liability of £[Redacted] and my lost net profit of £[Redacted] (based on last year) it comes to more than the £3000 for which I applied. I will pursue the strategic capacity scheme as it should allow me to claim for the refunds. I won’t hold my breath.

Sylvia Constantine

81 82 SUBMISSIONS RECEIVED AFTER REPORT LAID BEFORE TYNWALD

83 84 Appendix 12: 18th May 2020 – Email from Hon Alf Cannan MHK, Treasury Minister

85 86 Archived: 18 May 2020 12:52:30 From: [Juan Watterson SHK] Sent: 18 May 2020 10:26:07 To: [Alf Cannan MHK] Cc: [Caldric Randall, Jonathan King, Joann Corkish] Subject: Re: U18 MERA Importance: Normal

Dear Minister

Thank you for your email. Unfortunately our report has now been finalised ahead of the 12:00 papers deadline. We will be publishing a “Volume 2” in due course containing the Hansard and other evidence and will include your email there to demonstrate that this issue has been addressed.

Kind regards, Juan

The Hon. Juan Watterson BA(Hons) BFP FRSA FCA FCMI CMgr SHK Speaker of the House of Keys Member for Rushen

Legislative Buildings Douglas Isle of Man IM1 3PW

[Contact details redacted]

Tynwald - The World’s Oldest Continuous Parliament

Sent from my mobile telephone- please forgive any typos!

On Mon, May 18, 2020 at 9:43 AM +0100, "Cannan, Alfred (MHK)" [Alf Cannan MHK] wrote:

Dear Mr Speaker,

At the third Public Accounts Committee Emergency Scrutiny session, we were asked what the rationale was for restricting access to MERA to over 18s and the CFO undertook to provide the Committee with an explanation.

This approach is consistent with that for jobseeker’s allowance, where there is usually no entitlement for under 18s. However, under 18s who need to live independently from their parents because, for example, they are estranged, would be able to access income based Jobseeker’s Allowance which -if they had housing costs to pay - would be payable at a rate similar to MERA.

I hope this provides a satisfactory response.

Yours sincerely

87 Alfred Cannan MHK Treasury Minister Central Government Office Bucks Road Douglas Isle of Man IM1 3PU

Isle of Man. Giving you freedom to flourish

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Cha nel kied currit da failleydagh ny jantagh erbee conaant y yannoo rish peiagh ny possan erbee lesh post-l er son Rheynn ny Boayrd Slattyssagh erbee jeh Reiltys Ellan Vannin dyn co-niartaghey scruit leayr veih Reireyder y Rheynn ny Boayrd Slattyssagh t’eh bentyn rish.

88 GOVERNMENT RESPONSE TO REPORT

24th July 2020 – Letter from Hon Alf Cannan MHK, Minister for Treasury

89 90 [Contact details redacted]

91 92 [Signature: Alf Cannan MHK]

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