23 March 2020 22:32
Pressure is mounting on the government to provide urgent aid to Britain's 5 million self-employed workers as the coronavirus outbreak intensifies and the economic costs of the crisis dramatically escalate. As the shutdown, in effect, of large sectors of the economy threatens to push millions of people into financial hardship, the Trades Union Congress urged ministers to rapidly extend the worker wage subsidy scheme to the self-employed. The chancellor, Rishi Sunak, outlined plans on Friday to pay employees 80% of their salaries, capped at £2,500 a month. However, the self-employed can so far only access £94.25 a week in universal credit benefits and defer their self-assessed tax payments until next year. The TUC, which helped develop the wage subsidy plan alongside business groups and the Treasury, said the government could match the guarantee to help the self-employed, using incomes based on their last three years of self-assessment tax returns.
Frances O'Grady, the TUC general secretary, said: "All workers – both employed and self-employed – should have their wages protected." Treasury officials are understood to be putting together a fresh financial support package for the self-employed after working over the weekend, although they believe it is more important to get the proposed scheme right than rush it out. Ministers are believed to be grappling with three issues: the technical means of delivering financial help to the self-employed; how the level of support should be calculated; and the need to make sure there is equal treatment for the employed and self-employed. Government sources also said critics were underestimating the impact of the £7bn package of extra welfare spending – including higher universal credit and more generous housing benefit – announced alongside the wage subsidies. Alongside more help for the self-employed, the party said the level of statutory sick pay – currently at £94.25 a week – should be increased. Earlier on Monday a former governor of the Bank of England, Mervyn King, called on ministers to support self-employed people, while warning that the coronavirus crisis posed a more serious threat to the economy than the 2008 financial crash.
Speaking in the House of Commons on Monday, former Business Secretary Greg Clark said that the Chancellor's wage support for workers could have "saved more jobs than any of his predecessors". But he added that Mr Sunak should "urgently come back to this house" with "a comparable package on the self-employed whose businesses are crucial to every constituency in this country". Labour has also demanded a system of wage support for the self-employed, with the Government picking up part of their usual pay packet, while Frances O'Grady of the Trades Union Congress said: "Without more action many won't be able to meet basic living costs." Last week Mr Sunak said the Treasury would subsidise the wage bills of firms which would otherwise have to lay off their employees due to the economic crash. By contrast, self-employed workers can no longer support themselves must apply for universal credit. The Treasury is under pressure this morning to stump up more cash to help self-employed people during the coronavirus outbreak. Trade groups representing self-employed workers have criticised Rishi Sunak's rescue package for businesses, announced on Friday, which promised to pay at least 80% of the salaries of employers' staff but failed to extend the same help to the self-employed. The chancellor (pictured) said self-employed workers, who account for 37% of the construction workforce, would be granted £94.25 a week in an equivalent to statutory sick pay, gain access to full universal credit and have their self-assessment payments deferred from July to January. But following a backlash from trade groups, secretary of state for housing, communities and local government Robert Jenrick yesterday said the Treasury would "review" the provisions given to self-employed workers. It follows comments by chief secretary to the Treasury Stephen Barclay on Saturday, who said that helping the self-employed would be "operationally difficult". It was reported over the weekend that the government may be considering paying grants worth 80 per cent of self-employed workers' previous average incomes, based on tax returns from the past three years. Self-employed workers in France whose income has dropped to less than 70% year on year because of coronavirus can apply for a €1,500 payment from the government and for their rent, gas and electricity bills to be suspended. The Creative Industries Federation is among 30 trade bodies to write to the UK chancellor Rishi Sunak calling for a temporary income protection fund to benefit freelancers and the self-employed. The self-employed sector of the economy was notably absent from unprecedented measures announced last week to protect Britain's employers and employees from the worst ravages of the coronavirus crisis - an oversight which it is now hoped will be addressed. On Friday Sunak pledged to cover 80% of the salary of all workers impacted by the coronavirus, in a bid to persuade employers not to lay off staff. In a statement, the Federation wrote: "The package of support for employers and employees announced on Friday 20th March was unprecedented and welcome. Whilst employees are entitled to claim 80% of their monthly salary up to £2,500, by contrast self-employed workers are eligible for just £408 per month of government support via Universal Credit." In response, the federation is calling for all self-employed workers to be paid a monthly income matching their average existing earnings over the past three years, with a minimum bound set by the Real Living Wage (£1,100) and a cap put in place at average UK earnings after the basic rate of income tax is applied (£1,800).