The Daily Telegraph

Sunak gives self-employed workers an £8bn boost

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

- 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.”

Newspapers in English

Newspapers from United Kingdom