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Sunak mulls an end to self-employment and furlough schemes

Tom Rees
Rishi Sunak with money and two hands shaking - The Telegraph

The fortunes of millions of workers are hanging in the balance as Rishi Sunak weighs up whether to axe a crucial self-employment support programme and separately prepares to block new furlough applications.

A decision on whether to extend the self-employment income support scheme (SEISS) beyond May is expected to be made within days - and a sudden stop to the grant is still on the table, according to sources close to the discussions. 

Meanwhile the Treasury is reportedly preparing to stop accepting new applications for the furlough programme, a different subsidy aimed at helping employees.

The self-employment scheme, which pays 2m people up to £2,500 a month, has been hailed as a lifeline for desperate entrepreneurs whose incomes vanished overnight due to the lockdown. But it is due to end in five days' time, pitching workers into the universal credit system and putting many of their homes and livelihoods at risk.

The Chancellor was mulling options over the bank holiday weekend and is yet to decide on whether to extend or ditch the SEISS payments.

Three-quarters of self-employed people receiving a grant are completely reliant on the scheme, meaning 1.5 million workers could be left without any income at all if support is withdrawn, according to workers' support group Organise.

Sources said some form of extension is more likely than not, particularly after a lower than expected uptake of the scheme.

The Treasury has “more headroom and more money to play with” after expecting more to sign up from the 3.5 million invited to apply, a source said. 

Small companies and the self-employed | Numbers to call

Business groups last night urged Mr Sunak to back an extension, warning a sudden stop would deliver a huge blow to self-employed workers' incomes.

Craig Beaumont, of the Federation of Small Businesses, called for a full extension until August to match the taxpayer-funded employee furlough scheme. Any additional support beyond then could be tapered off as workers get back on their feet.

Andy Chamberlain, director of policy at self-employed trade body Ipse, said extending the furlough scheme for employees while pulling the rug from under self-employed workers would be "a glaring injustice".

He said: “The Government will need the self-employed to kickstart the economy after coronavirus yet most of them cannot continue their work in the midst of this deadly pandemic and are relying on Government support to keep their businesses afloat."

Sunak and Bailey vs coronavirus

The Job Retention Scheme - which pays up to £2,500 a month to furloughed employees during the pandemic -  has already been extended until October. Businesses will have to make a contribution to their pay from August. 

Employees relying on the subsidy will shortly be able to come back on a part-time basis, with more details expected to be announced this week. The Financial Times reported that the Chancellor will shortly announce a ban on new entrants to the furlough scheme, which supports 8m people and could cost up to £80bn.

Almost 90,000 people have signed a petition by Organise to extend the self-employment income support scheme.

Payments to self-employed workers are backdated to cover income lost during March, April and May.

If it is extended, the Chancellor could also unveil how the scheme will be eventually wound down. Tapering could involve a cut to the scheme’s £50,000 trading profits threshold or a reduction in the proportion of the income support provided. 

A Treasury spokesman said: “The Chancellor indicated the SEISS would be a temporary one when he announced it at the end of March, but it could be extended if necessary. The Government is keeping this under review.”