Government increases support for self-employed

The government has announced that it is increasing its support to the self-employed over the coming months.

Chancellor of the Exchequer Rishi Sunak said “So far we’ve provided £13.7 billion of support to self-employed people through the crisis – and I’ve always said we will continue to do everything we can to support livelihoods across the UK.”

“The rapidly changing health picture has meant we have had to act in order to protect people’s lives and I know this is incredibly worrying time for the self-employed. That is why we have increased the generosity of the third grant, ensuring those who cannot trade or are facing decreased demand are able to get through the months ahead.”

The Money Advice Trust has welcomed the Chancellor’s announcement that Self-employment Income Support Scheme grants will be calculated on the basis of 80% of average earnings, for the month of November – bringing this into line with the extension of the Coronavirus Job Retention Scheme.

However, the debt charity says that the minimum income floor calculation in Universal Credit which was temporarily scrapped in March to give self-employed people fairer access to Universal Credit  is still set to expire later in November.  The charity has joined growing calls for this change to be extended or made permanent.

Joanna Elson CBE, Chief Executive of the Money Advice Trust  said “We welcome the Chancellor’s decision to increase Self-employment Income Support Scheme grants to 80% of average earnings for the month of November – bringing this into line with the furlough extension.  While many self-employed people continue to find themselves excluded from this support, today’s move will at least improve the support available to those who are eligible for it, as we enter a second lockdown.”

“The Government must go further, however, and extend its temporary scrapping of the Minimum Income Floor in Universal Credit – which has given self-employed people fairer access to welfare support since March.  As it stands this measure expires later this month.  While this may sound like a technical change, the real-world impact of the Minimum Income Floor returning will be that many self-employed people will see their Universal Credit payments cut at the worst possible time.”

“More widely, it feels like the Government will eventually have to extend its £20 a week uplift in Universal Credit beyond its current expiry in April.  It would be far better to announce this now – to give people who have unfortunately lost their jobs the reassurance they need that this additional support will continue.”

Federation of Small Businesses (FSB) National Chairman Mike Cherry, said “It’s a relief to see the Prime Minister listening to some of our calls for extra support for small businesses and the self-employed.”

“The uprating of the Self-Employment Income Scheme to 80% for November is generous and will likely help around two million self-employed people – 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.’

“Our recommendation for an emergency loan application deadline extension has been embraced which is encouraging. We are now speaking with the Treasury about the installation of the option to top-up these facilities given that many sought them months back, when the full extent of disruption was unknown. They should be allowed to apply for a second time. We also need to see lenders opening their doors to new customers again. Without this, the impact of the extension will be minimal.”

“The Government has committed to looking again at the reinstatement of the unfair Minimum Income Floor for self-employed people accessing Universal Credit. We now need to see words turned into action. It is cruel to impose a false assumption of earnings just as people need support the most.”

“The cash grants on offer are important but are not as generous or comprehensive as the Small Business Cash Grants provided in the Spring – most won’t even be enough to cover rents. The restrictions imposed on firms are stifling settings which SAGE advisers state have a minimal impact on the R rate.”

“At the same time, far too many small firms are still being caught by an outdated, bruising business rates system and are looking to 2021 with a sense of real foreboding, wondering how they will be able to afford government-imposed upfront costs without any revenues.”

“To address the looming unemployment crisis we now need to make it cheaper to employ people by reducing employer national insurance contributions, creating new support measures for those looking to set up firms and become self-employed, and introducing UK Transition Vouchers to help small businesses as they attempt to manage both a new trading relationship with Europe and fresh restrictions linked to Covid.”

“Fundamentally, the business support landscape still remains too much of a mixed picture – a fact made all the more concerning given that this fresh lockdown in England is taking effect during the critical festive season.  There are those – including company directors, the newly self-employed, start-ups, those without physical premises and those further down supply chains in especially hard-hit sectors – who are struggling to access any meaningful support at all. Until these cracks are addressed, our economic recovery is destined to keep faltering.”