A raft of self-employed workers are still being denied help as a second lockdown arrives – more than seven months after the first coronavirus support measures were announced.
This week’s announcement that the Self-Employment Income Support Scheme will be extended through to January has been welcomed, but all those who weren’t eligible before the extension are still being ignored.
These include the self-employed who have had trading profits of more than £50,000 in previous years – and will have paid tax in full on those earnings – even if their income has collapsed since March.
Also excluded are the recently self-employed, those working for themselves as limited company directors and freelancers.
The Chancellor confirmed that self-employed workers will receive a grant covering 80 per cent of average trading profits between November and January up to a maximum of £2,500 per month.
Many self-employed workers are still being denied help months more than seven months on
This is another uplift for the third round of the scheme from 20 per cent to 40 per cent and then 55 per cent of average monthly profits.
The furlough scheme for employees, which pays 80 per cent of their wages up to £2,500 per month, has also been extended to January as England’s second lockdown got underway.
Only those who were initially eligible for the self-employed income grant earlier this year are eligible for the extension of this scheme.
This means that a sizeable chunk of those who are self-employed, from those who have earned more than £50,000, to freelancers and first-time entrepreneurs have been left in the cold, yet again. They receive no help whatsoever.
Limited company directors who employ themselves through their own company – something often demanded by clients – are also not eligible. Whilst it is a grey area if limited company directors are technically self-employed, they have made up an increasing element of Britain’s self-employed workforce in recent years.
Some have been able to furlough themselves but have found their income drop substantially as they paid themselves through dividends – a tax move that is legally allowed
The Federation of Small Businesses’ national chairman Mike Cherry said: ‘The uprating of the SEISS to 80 per cent for November is generous and will likely help around two million self-employed people, while bringing forward the application date is helpful.
‘However, many of our self-employed are still not included in the initiative. This is a five million strong community that drives our economy forward, but the Government has insisted that large swathes of it do not warrant any help where income is concerned.
‘We have sadly already seen 250,000 self-employed people stop working and become economically inactive, a figure which is set to continue rising.’
Derek Cribb of IPSE said: ‘The first lockdown drastically undermined self-employed incomes, and the gaps in government support led to huge drop in self-employed numbers.’
Derek Cribb, chief executive of the Association of Independent Professionals and the Self-Employed, agreed the extension does not ‘fix the devastating gaps in the scheme’ despite urgent recommendations from the Treasury Select Committee.
He added: ‘After so many calls to resolve the problems, it now looks as if the Government is wilfully ignoring a third of the self-employed.
‘The first lockdown drastically undermined self-employed incomes, and the gaps in government support led to the biggest drop in self-employed numbers on record.
‘Unless government wakes up to the problem and supports all the self-employed, the second lockdown will accelerate the decline and hollow out swathes of this vital sector.’
Many also fear the second lockdown, which came into force in England today and will run until 2 December, will result in the permanent closure of small businesses and a rise in unemployment across the country.
Cherry added: ‘To address the looming unemployment crisis we now need to make it cheaper to employ people by reducing employer national insurance contributions and creating new support measures for those looking to set up firms and become self-employed.’
ExcludedUK, the volunteer-run not-for-profit organisation representing a claimed three million excluded self-employed workers in the UK, said the second lockdown is a devastating blow to many small businesses.
‘To many of these people who had just started to see light at the end of this very dark tunnel, this is potentially and literally life threatening,’ a spokesperson said.
The furlough scheme extension has also been met with some criticism with some saying ‘throwing money at the problem only goes so far’.
We are teetering on the brink of the worst unemployment crisis in a generation
Aude Barral, co-founder of developer recruitment platform CodinGame, said: ‘While extending furlough until March will be welcomed by millions of people who will have been panicking about having no income just before Christmas, it’s just a temporary solution.
‘Many furloughed workers will still be worried they won’t have a job to go back to when the financial support eventually ends.
‘We are teetering on the brink of the worst unemployment crisis in a generation, and throwing money at the problem will only go so far.
‘The government needs to recognise that some industries, which have been decimated by the pandemic, may never fully recover once we’re through the other side.’
Small Business Essentials
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.