Chancellor unveils coronavirus rescue package for self-employed
● Individuals must wait until June to get 80 per cent of earnings covered ● And Sunak warns they must expect a higher tax bill in the future
Millions of self-employed workers across the UK have been thrown a lifeline by the Chancellor, but must wait until June before they receive any money as Rishi Sunak completed what he called “one of the most significant economic interventions in the history of the British state” in response to coronavirus.
The government will pay selfemployed workers 80 per cent of their average profits over the past three years, up to a limit of £2,500 per month – the same guarantee offered to employees whose companies are forced to cease operating due to the virus outbreak.
However, the self-employed will be forced to fend for themselves for three months, with the first payments under the scheme not being made until June.
Details of the scheme came as it was announced that 578 people who have tested positive for coronavirus in the UK have died. Some 11,658 people have tested positive across the UK as of yesterday morning.
Payments to the self-employed will be backdated to March, but workers will need to apply for benefits, dip into savings or seek commercial loans to bridge the gap.
There was also a warning from the Chancellor for the self-employed to expect a higher tax bill in future as a result of being bailed out by the state to the same extent as employees, who pay higher national insurance.
The Resolution Foundation thinktank has warned that one in three people in self-employment, a total of 1.7 million across the UK, are at risk of losing their income – including around 330,000 in Scotland.
Mr Sunak said the scheme, which will last for at least three months and cost an additional £9 billion on top of £350bn an already-announced
financial stimulus ,“is one of the most generous in the world”.
“Together with support packages for businesses and for workers, I am confident we now have the measures in place to ensure we can get through this emergency together,” he said.
The Chancellor said the measure covers 95 per cent of people who receive the majority of their income from selfemployment.
But he warned it was “now much harder to justify” the tax breaks on offer to the selfemployed, adding that everyone would be “chipping in together to right the ship afterwards” once the crisis is over.
There was widespread concern at the payment delay, particularly with a backlog of tens of thousands of new claims for Universal Credit from those already out of work.
“My worry is that if people cannot get access to the scheme until June it will simply be too late for millions,” Labour’s shadow Chancellor John Mcdonnell said. “People
need support in the coming days and fortnight.
“Asking people to rely on Universal Credit when more than 130,000 people are queuing online will be worrying to many people, so there is a real risk that without support until June the self-employed will feel they have to keep working, putting their own and others’ health at risk.”
The SNP’S Westminster leader Ian Blackford said the delay until June was “unacceptable”, and repeated his call for an increase to benefits and statutory sick pay, as well as an emergency universal basic income to provide security during the coronavirus crisis.
“Many self-employed people rely on a regular flow of income, including thousands from low-income households and key workers, and they need support now,” Mr Blackford said. “However, the Chancellor’s delayed plans fail to deliver for many households already in difficulty.
“While they are being forced to wait for months, they are also being asked to apply to a Universal Credit regime which continues to have a five week wait. This is unacceptable and people will struggle to make ends meet.”
Anyone earning an average of £50,000 or more over the past three years will not be eligible for any support.
There were also concerns that people who entered into self-employment in the past year will fall through the cracks, as support will only be offered to those who filed an income tax self-assessment in 2018-19.
Mr Sunak said the government couldn’t make payments based on 2019-20 self-assessments due to the risk of fraud.
Rachel Reeves, the chair of the Commons business, energy and industrial strategy committee said the wait until June to receive support would be “agonising”.
“It also appears that that if you have become selfemployed in the last year then you will not get this support from the Government,” Ms Reeves said. “It’s important that people don’t fall through the cracks of what is a big and much-needed package of support – the Chancellor should look again at how he can support these people too.”
Sarah, a 30 year-old tour guide based in Edinburgh, said she was now looking at taking work picking fruit after being left out by the scheme.
After working as a hotel manager, last year she became a full-time freelance guide for tour groups from France, but her earnings will only appear on her 2019-20 self-assessment.
“The year that we’re just about to finish now was really busy for me. My sales were over £40,000… I wish I could have that taken into consideration, and that they would think particularly of the hospitality and tourism industry.
“Tour guides are at the very end of this food chain, and we’re going to be hit really badly. We’re only going to start working again, not when the lockdown is lifted, but when tourism restarts again. I’ve calculated that over the next three months, I’ve already lost £10,000 of bookings that were cancelled.
“If they don’t take the year 2019-20 into consideration, I won’t be helped at all.”
The Chancellor’s announcement was welcomed by unions, with GMB general secretary Tim Roache saying that “millions of selfemployed workers will sleep easier tonight”.
With large numbers of selfemployed workers in the construction sector, there had been concerns in recent days that labourers were continuing to go to work despite advice to stay at home.
Brian Berry, the chief executive of construction trade body the Federation of Master Builders, said: “I am delighted thatthechancellorhasheeded our calls to be generous with his offer to the self-employed, who make up almost 40 per cent of those working in the construction industry.
“Building companies will now also be able to close sites to protect workers and public health without having to worry about the losses faced by self-employed workers on those sites.”