Millions of self-employed people woke up today to the reality that the financial help they need is still months away.
The measures announced by Chancellor Rishi Sunak are welcome — many of us have been calling for them for weeks — and they will undoubtedly help a great number of the self-employed and freelancers who have seen work dry up due to the
Coronavirus pandemic.
However, the package of measures remains flawed and leaves worrying gaps, which means self-employed workers are facing some unenviable choices in their struggle to pay bills and put food on the table.
Under the government’s proposals, a self-employed worker who has suffered a loss of income will be eligible for a taxable grant worth 80% of their average monthly profits up to a cap of £2,500 a month — mirroring the help on offer for traditionally employed workers. The cash will be available for three months and payable in a lump sum.
But it’s not quite as clear cut as that when you look at the small print. The earliest the money will be available under the Coronavirus Self-Employment Income Support Scheme is the start of June. While I recognise that people need to be given time to file their tax returns, for those who already have, I urge the chancellor to get the payments out more quickly.
This critical delay compared to the help available to other workers, who will be able to access financial support from April, will leave many anxiously wondering how they will cope over the coming months. For all the fanfare about claiming Universal Credit, it is much less generous and often only comes after a long wait.
Most worryingly, there is the frightening prospect that some self-employed workers will feel they have no choice but to ignore government advice to stay home and will risk their lives and those of others by going out to work to earn the cash they need.
If self-employed workers feel they are forced to continue working until the support is available, that could add to the overcrowding on public transport that should be kept clear for public health and other key workers.
There are other gaps here that need addressing.
All those who have become self-employed recently, who include some of the most vulnerable, those who have just left college or university and those in precarious jobs, will be excluded from the scheme.
Self-employed workers who qualify will have to have completed a 2019 tax return in a move that effectively bars thousands of self-employed workers. Anyone incorporated as a one or two-person business will not benefit either, whatever their earnings level.
The proposals include a number of arbitrary cliff edges when it comes to who gets support under this scheme, which will cost around £3 billion a month.
To qualify, more than half of a worker’s income must come from self-employment. So, if 49% of a freelancer’s income comes from self-employment, they will be excluded.
Only people turning a profit of less than £50,000 a year are eligible, meaning those earning £50,001 will not be able to claim, affecting thousands of workers who we will need to help rebuild our economy.
Agency workers and those on zero hours contracts also seem to remain between the gaps. People who were sick or on maternity leave during the three years also seem to be an oversight in terms of their average profits being calculated. The proposals include a number of arbitrary cliff edges when it comes to who gets support under this scheme, which will cost around £3 billion a month.Bizarrely, the grant will be available whether self-employed workers need it or not. Those whose work has not dried up will be allowed to carry on earning as well as claiming the support. That seems to be a waste of taxpayers’ money when there are so many demands on it, not least from the NHS.
I’m doing all I can to support the self-employed and everyone in my constituency affected by this crisis. And the government has my support for what is an incredibly difficult job tackling coronavirus.
However, it is vital that government urgently addresses the gaps that I have outlined if we are to support as many as possible of the five million self-employed who are such an important part of our economy. There is also a moral duty to ensure help is there by making advances on universal credit available quickly to help people until the scheme kicks in.
Lenders also have a role to play and must ensure loans are on offer at affordable rates to tide over the self-employed and businesses. They benefited from government bailouts in the financial crisis, and they need to stand behind businesses, workers and the self-employed in this one.
We must build the strongest possible safety net, particularly for the most vulnerable, to support people now and to put us in the best possible place to rebuild our
economy and return to growth once this crisis is over.
Rachel Reeves is
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