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The UK government has been warned millions of self-employed workers risk an “income crisis” as their work dries up during the coronavirus outbreak.
The government has been under mounting pressure to extend sick pay to the low-paid, hike payments and cover firms’ costs during the outbreak. Two million workers earn too little to qualify, and the legal minimum is less than a third of average incomes.
But around five million self-employed people not only have no employer to cover several weeks’ pay if they fall ill, they also face the growing threat of lost work for months to come.
Calls are growing for a state-backed financial lifeline for the self-employed. There are concerns some who run their own firms will feel no choice but to keep working to pay their bills, even if they are ill or should be self-isolating.
“This is not just a health crisis, this is going to become an income crisis for millions of people,” said Alasdair Hutchison, policy development manager at the Association of Independent Professionals and the Self-employed.
Giving evidence to a select committee of MPs on Tuesday, he warned freelancers could see their income wiped out for several months if projects or events were cancelled.
He called for a “temporary income protection fund” for such workers, and urged firms using freelancers to pay on time or upfront and not cancel work at short notice.
The government has encouraged the self-employed to use the benefit system if needed, but Hutchison said it was not prepared for such large numbers of potential claims. He warned they would also “struggle to navigate” accessing universal credit, and still face a significant shortfall compared to their normal earnings even if they did so.
Meanwhile other expanded business support schemes announced in the Budget last week are “not tailored” to how the self-employed operate, he claimed.
Martin McTague, policy and advocacy chair at the Federation of Small Businesses (FSB), said he was also “seriously” worried about the self-employed.
Giving evidence alongside Hutchison to the committee in parliament, he said he had heard from electricians and carpenters more frightened for their incomes than their health.
The temptation for workers such as Uber drivers to take rides when they should be self-isolating would be “very real.” One MP replied that one taxi driver had said he was continuing to work to pay back the loan for his vehicle.
McTague urged the government to take on the role of a “benign employer,” providing a greater safety net to stop the self-employed working while ill.
Chancellor Rishi Sunak is expected to announce further measures to support the economy on Tuesday afternoon.
The government has already announced a £5bn package of support for firms, ‘fast-track’ benefit access for those unable to work over the outbreak and sick pay rights from the first day of absence.