Su­nak gives self-em­ployed work­ers an £8bn boost

Pack­age wel­comed by cam­paign­ers, but cost to the tax­payer of job sup­port schemes heads to £100bn

The Daily Telegraph - - Business - By Michael O’dwyer

RISHI SU­NAK, the Chan­cel­lor, has thrown an £8bn life­line to mil­lions of work­ers by ex­tend­ing an emer­gency self-em­ployed bailout scheme for an­other three months.

Mr Su­nak re­vealed yes­ter­day that work­ers will be able to make a sec­ond claim in Au­gust for up to £6,570 un­der the Self-em­ploy­ment In­come Sup­port Scheme, which launched ear­lier this month to sup­port the le­gions of en­trepreneur­s whose liveli­hoods have been de­stroyed by lock­down.

The ex­ten­sion is a ma­jor boost for 2.3m self-em­ployed work­ers who had al­ready ap­plied for £6.8bn of tax­payer hand­outs by the end of last week.

How­ever, it will pile yet more strain on the pub­lic purse at a time when debt is rock­et­ing due to the costs of the coro­n­avirus cri­sis. It is es­ti­mated that the com­bined cost of the self-em­ployed scheme and fur­lough sup­port for em­ploy­ees could be more than £100bn.

As many as three-quar­ters of ap­pli­cants were en­tirely re­liant on the pay­ments af­ter their work dried up dur­ing the pan­demic, ac­cord­ing to re­search from worker cam­paign group Or­gan­ise.

Self-em­ployed work­ers un­able to re­turn to work had been fac­ing a fi­nan­cial cliff-edge as sup­port was due to end this week­end and the Gov­ern­ment was un­der grow­ing pres­sure to act.

Mike Cherry, na­tional chair­man of the Fed­er­a­tion of Small Busi­nesses, said: “Pol­i­cy­mak­ers have rightly recog­nised that self-em­ployed busi­ness own­ers work­ing in a lot of sec­tors – not least hair and beauty, events and travel – will be mas­sively im­pacted by the cur­rent down­turn for weeks to come.”

The sec­ond round of SEISS pay­ments will be slightly less gen­er­ous than the first. Mr Su­nak said this would en­sure fair­ness be­tween sup­port for the self-em­ployed and for com­pa­nies, which will be asked to shoul­der part of the cost of fur­loughed work­ers’ wages from Au­gust.

Work­ers such as free­lancers and con­sul­tants will be able to claim a sin­gle pay­ment in Au­gust worth 70pc of their av­er­age monthly trad­ing prof­its, capped at £6,570 over three months.

The cap on the first round of pay­ments was 80pc of trad­ing prof­its to a max­i­mum of £7,500. The Of­fice for Bud­get Re­spon­si­bil­ity pre­vi­ously es­ti­mated the cost of the SEISS would run to £9bn over three months.

Al­low­ing for the re­duced cap, ex­tend­ing the scheme could there­fore cost an­other £7.9bn if there is sim­i­lar take-up for the sec­ond round of pro­gramme. That would take the to­tal cost of the scheme to al­most £17bn.

Paul John­son, di­rec­tor of the In­sti­tute for Fis­cal Stud­ies, said the to­tal cost of the ex­tended fur­lough scheme and SEISS could eas­ily breach £100bn.

The Gov­ern­ment faced calls to widen the scheme to cover more of the UK’S 5m self-em­ployed. Andy Cham­ber­lain, di­rec­tor of pol­icy at self-em­ployed lobby group Ipse, said: “Groups like free­lancers work­ing through lim­ited com­pa­nies and the newly self-em­ployed have patently been for­got­ten.

“It is dis­ap­point­ing that there will still be two months when em­ploy­ees can ac­cess sup­port and the self-em­ployed can­not.”

Torsten Bell, chief of the Left-lean­ing Res­o­lu­tion Foun­da­tion think tank, said: “The ex­ten­sion of sup­port will be badly needed by many who have seen their in­comes dis­ap­pear. But the scheme is in­cred­i­bly gen­er­ous for oth­ers who have been hardly af­fected but still qual­ify for grants of over £14,000.

“The hun­dreds of thou­sands who have ac­tu­ally lost their job are re­ceiv­ing far less sup­port via Uni­ver­sal Credit.”

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