Government fends off criticism with plan to pay self-employed
Chancellor to announce taxpayer will support up to 80% of earnings
The chancellor, Rishi Sunak, is expected to announce that the taxpayer will pay self-employed workers up to 80% of their recent earnings to help contain the economic impact of coronavirus, as 470,000 extra benefits claims prompted warnings of an unemployment crisis.
Sunak has been under growing pressure to do more for the UK’s 5 million self-employed workers after announcing an unprecedented job retention scheme for employees last Friday, which will see thousands paid to stay at home.
It comes as Covid-19 claimed the life of a 21-year-old woman from Buckinghamshire, according to her family, and Britain’s deputy ambassador to
Hungary, who was 37. The number of confirmed UK cases stood at just over 8,000 last night. The death toll rose by 41 yesterday to 463.
Boris Johnson promised yesterday that the government was preparing to “put its arms around every worker”.
The prime minister said the selfemployed would be offered “parity” with employees – though Whitehall sources cautioned that did not mean the two schemes would be identical.
Details of the support package were still being finalised last night but sources with knowledge of the plan suggested it would echo the promise of covering 80% of recent earnings that Sunak made to employees last week.
It could be subject to a lower cap than the £2,500 in monthly pre-tax income available in that scheme, however – because the self-employed tend to pay less tax.
Some groups, including those already claiming universal credit, could be excluded.
Speaking at the daily Downing Street press conference, the prime minister said: “I genuinely don’t think there’s been a time in our history in the last century, certainly, when the government of this country has put its arms around so many people to get us through a very tough time.”
Johnson added: “We will
‘The government has put its arms around so many people ...’ Boris Johnson Prime minister
get through it, and we will get through it together.”
Sunak significantly increased the generosity of universal credit (UC) as part of last week’s package, and made it available to more self-employed workers.
A sharp surge in claims for UC has underlined the severe economic toll the coronavirus is already taking on Britain’s workforce.
The work and pensions secretary, Thérèse Coffey, revealed yesterday that 477,000 people had applied for the benefit in the past nine days. That is more than during any entire month of the 2008-09 financial crisis.
“We don’t know if they’re selfemployed or at different stages, and I want to assure people that help, even if it’s not currently the level of help they would like, is there to help them through the safety net of the welfare state,” she said.
Karl Handscomb, economist at the Resolution Foundation, said: “The unprecedented surge in new universal credit claims showed that the UK was already in the midst of an unemployment crisis. The increase in claims was putting huge pressure on our social security system, and was driven by a huge hit to family incomes.
“The government was right to increase the generosity of the benefits system last week. It now needs to ensure the resources are there so that claims are processed quickly.”
The Department for Work and Pensions (DWP) is redeploying 10,000 staff to process the extraordinary upsurge in new applications, making it the main focus in the weeks ahead. Its permanent secretary, Peter Schofield, said: “We made a decision that managing claims and making payments is a No 1 priority for DWP. Operationally, we can deprioritise other things.”
The department has so far redeployed 1,500 staff to help with the sharp rise in UC claims and is to increase this to 3,900 this week.
John McDonnell, who will return to the backbenches in 10 days when a new Labour leader takes over, used what is likely to be one of his final speeches as shadow chancellor to call for the government to announce details of its scheme for supporting self-employed workers urgently.
“If people claim fraudulently while still working, they will rightly be prosecuted. But right now millions of cabbies, childminders, plumbers, electricians, painters and decorators and actors have all lost work or closed down their businesses. As have builders, designated as the self-employed under the Construction Industry Scheme and they have no income. They need a solution, now,” he said.
Meanwhile, businesses called for clarity about who can keep travelling to work, as firms urged staff to come in despite Monday’s plea by the prime minister to “stay at home”.
Carolyn Fairbairn, director general of the CBI, tweeted: “It’s clear that many firms do not know whether to stay open or to close.” She said she would request better guidance.
The warnings come amid widespread confusion among businesses about how to respond to the lockdown. Halfords, the car parts, bike and servicing group, is reopening some of its
stores this week after being designated as an essential service. It had closed its shops on Monday night as Johnson addressed the nation.
Mike Ashley’s Sports Direct retail chain sought to remain open but had to backtrack after a public outcry.
Frances O’Grady, TUC director general, said the government needed to crack down on non-essential firms making staff attend work, telling ministers they needed to directly intervene if employers flouted the rules.
“Companies like Sports Direct shouldn’t be putting their profits before people’s lives. No one in nonessential services should be forced to go to work. And no one should be sacked for following official instructions and staying home,” she said.
Off-licences and other shops licensed to sell alcohol can now stay open, after an 11th-hour change, while several companies are lobbying ministers to be allowed special treatment.
The Manchester metro mayor, Andy Burnham, called for tough enforcement against companies forcing their staff to travel to work in non-essential jobs during the lockdown.
He said: “In the absence of a clear government instruction to end nonessential work, I am taking legal advice about whether Greater Manchester police or other agencies can take enforcement action.”
▲ Rishi Sunak: under pressure to do more for the UK’s self-employed