UK under pressure to offer urgent aid to 5 million self-employed

Pressure is mounting on the government to provide urgent aid to Britain’s 5 million self-employed workers as the coronavirus outbreak intensifies and the economic costs of the crisis dramatically escalate.

As the shutdown, in effect, of large sectors of the economy threatens to push millions of people into financial hardship, the Trades Union Congress urged ministers to rapidly extend the worker wage subsidy scheme to the self-employed.

The chancellor, Rishi Sunak, outlined plans on Friday to pay employees 80% of their salaries, capped at £2,500 a month. However, the self-employed can so far only access £94.25 a week in universal credit benefits and defer their self-assessed tax payments until next year.

The TUC, which helped develop the wage subsidy plan alongside business groups and the Treasury, said the government could match the guarantee to help the self-employed, using incomes based on their last three years of self-assessment tax returns. It said payments of at least 80% of incomes could be made directly as a tax rebate.

The union umbrella group said countries including Norway and Belgium had already announced similar plans. Frances O’Grady, the TUC general secretary, said: “All workers – both employed and self-employed – should have their wages protected.”

Treasury officials are understood to be putting together a fresh financial support package for the self-employed after working over the weekend, although they believe it is more important to get the proposed scheme right than rush it out.

Ministers are believed to be grappling with three issues: the technical means of delivering financial help to the self-employed; how the level of support should be calculated; and the need to make sure there is equal treatment for the employed and self-employed.

Government sources also said critics were underestimating the impact of the £7bn package of extra welfare spending – including higher universal credit and more generous housing benefit – announced alongside the wage subsidies.

However, the shadow chancellor, John McDonnell, and other Labour MPs challenged Sunak on Monday, saying there were still “significant gaps” that urgently needed tackling. Alongside more help for the self-employed, the party said the level of statutory sick pay – currently at £94.25 a week – should be increased.

After a sharp rise in the decade since the financial crisis, about 15% of the UK workforce is self-employed, with larger proportions in some sectors and regions, including construction and the creative arts.

Earlier on Monday a former governor of the Bank of England, Mervyn King, called on ministers to support self-employed people, while warning that the coronavirus crisis posed a more serious threat to the economy than the 2008 financial crash.

King, who led the Bank’s response in 2008, said the government should give self-employed workers the same level of support as employees as a minimum first step. “It’s a good starting point because it would be equivalent to the support that’s being given for paying wages,” he told BBC Radio 4’s Today programme.

A Treasury spokesman said: “We have always said we will go further where we can and are actively considering further steps.”