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Government accused of leaving self-employed 'in the lurch'

Suban Abdulla
·4-min read
Chancellor of the Exchequer, Rishi Sunak hosts a roundtable discussion for business representatives at a Franco Manca restaurant in Waterloo on 22 October 2020 in London, England. Photo: Stefan Rousseau-WPA Pool/Getty Images
Chancellor of the Exchequer, Rishi Sunak hosts a roundtable discussion for business representatives at a Franco Manca restaurant in Waterloo on 22 October 2020 in London, England. Photo: Stefan Rousseau-WPA Pool/Getty Images

The UK government has been accused of leaving almost half a million self-employed staff working in closed or struggling sectors of the economy “in the lurch.”

The Labour Party said self-employed workers will only have access to a grant worth two fifths of their usual monthly income despite renewed coronavirus restrictions.

The opposition claims that the extension of the Treasury’s Self-Employed Income Support Scheme (SEISS) leaves the self-employed in the cold.

According to Labour’s research an average self-employed worker in the arts or hospitality sector will get just £450 ($587) a month through the SEISS. This is half the level during the first lockdown. The amount remains the same even if their sector is shut or affected by tougher Tier 2 or 3 restrictions.

On Thursday, chancellor Rishi Sunak announced new grants for the self-employed worth 40% of past earnings — previous grants were worth 20%. The announcement was part of a new package for hospitality businesses affected by Tier 2 restrictions.

Under the SEISS, self-employed people will be able to apply for a grant worth 40% of their usual average monthly trading profits, but this is down from 80% offered during the first lockdown.

On average a grant paid to a self-employed worker in both the arts and hospitality sectors under the first tranche of the scheme was £2,700, or £900 a month, with this being 80% of their average monthly trading profit of £1,125.

A spokesperson for the Treasury said: “We’ve supported the self-employed with over £13bn in grants and the chancellor yesterday [Thursday] doubled the generosity of the SEISS Grant Extension from 20% to 40% of people’s profits. That makes the UK’s support amongst the most generous in the world.

“It is not true to say this is the only support available to these groups. Depending on their circumstances they might qualify for grants worth up to £3,000 a month, tax write-offs, deferrals and support through the reinforced welfare safety net.

“Similarly it is not true to say that the hospitality and arts sectors have not received targeted support. The former have benefited from VAT-cut, targeted grants and more, while we have committed £1.57bn of dedicated support to keep our culture industry alive through a difficult time.”

The analysis comes after figures from the Institute of Employment Studies revealed 450,000 jobs would still be at risk of redundancy this winter, despite Sunak’s latest support measures.

READ MORE: UK businesses in Tier 2 lockdowns get extra government support

Shadow business secretary, Ed Miliband, said: “The promise of doing ‘whatever it takes’ to protect workers is a distant memory. Despite public health restrictions tightening and many sectors being shut, ministers are leaving self-employed people in the lurch.

“Almost half a million self-employed people work in industries either partially or fully closed. They’re in desperately choppy waters with many deeply worried about their future.

“Yet ministers are taking away their life raft and leaving them to sink or swim. That’s not just callous, but economically wrong. These are our country’s artists and performers, and people in our vibrant tourism, sports, cultural and hospitality sectors.”

READ MORE: Job Support Scheme could cost UK government £10bn

Britain’s hospitality sector which has had to bear the brunt of the first lockdown, is likely to face similar devastation following tighter COVID-19 restrictions as coronavirus infections rise across the country.

Under the government’s three-tiered system, only businesses in Tier 3 qualified for state support.

Hospitality firms complained that Tier 2 restrictions — which stop households from mixing indoors in any setting — would devastate pubs, restaurants, and bars, while not qualifying them for any support.

Sunak also unveiled a host of new and improved financial support measures, including grants for businesses hit by local lockdowns and more generous wage top ups for part-time workers under the Job Support Scheme.

Meanwhile, analysts estimate that Sunak’s revised Job Support Scheme could end up costing the exchequer £10bn.

The government has so far spent £200bn ($263bn) to support the economy since the onset of the COVID-19 pandemic in March.

Watch: What is the Job Support Scheme and how has it changed?