The coronavirus pandemic has changed the way that we live our lives. It is an anxious and distressing time for our country, and while the primary concern is of course health, many of us will have lost jobs, been furloughed by our employers or even in a state of financial limbo.
A Charity Today investigation has found there is a growing feeling of discontent amongst the UK’s self-employed who are feeling increasingly left behind citing feelings of, ‘being hung out to dry,’ ‘dispirited’ and ‘crippled’ financially.
With more than five million self-employed people in the UK, many will not have had an income for 16 weeks by the time the Self-Employed Income Support Scheme is launched in June, and this is proving a significant problem for many households across the country.
Bad news when you consider that nearly half (49%) of those self-employed adults aged 25 and over are already earning less than the minimum wage.
The UK was put into an official state of lockdown on 23 March, but Charity Today has found that it is clear the financial impact for many of the self-employed had already begun long before that. Members of the public began to grow increasingly uneasy at the scenes developing across Europe in places like Italy and with the warnings not being heeded officially, the public began self-isolating and taking matters into their own hands; children, parents and teachers were taking themselves out of school, people were panic buying and people staying home fearful of what was to come.
While the government, albeit belatedly, did table an unprecedented support package for businesses, worth hundreds of billions of pounds. There remained a significant disparity between the prompt support offered to PAYE employees and the self-employed.
After growing pressure, the UK government announced that HMRC would contact the UK’s self-employed mid-end May if they are eligible for the Chancellor’s Self-Employed Income Support Scheme.
However, this has left millions of people in a state of financial limbo and uncertainty as to whether they are even entitled to support. Assuming they do qualify for the support it will not be coming until June, approximately 16 weeks after some people last saw any form of income.
Better News In Scotland
Small businesses and Scots who are newly self-employed will be given a ‘vital lifeline’ thanks to a new £100 million fund set up amid the coronavirus pandemic.
Economy Secretary Fiona Hyslop said:
“The move means thousands of people not eligible for help under UK Government schemes could now still receive some financial support.
“Those who have recently become self-employed can apply for grants of £2,000, while small firms in the creative, tourism and hospitality sectors could get grants of up to £25,000.
“The additional £100 million we allocated last week will be a vital lifeline for Scottish individuals and businesses to relieve hardship, protecting the newly self-employed ineligible for other support, and viable micro and SME businesses in distress who may be ineligible for UK Government sources of funding or not in receipt yet of the funds they need to survive.
“Because of our decisions, thousands of more businesses, including some vital sectors of the economy, benefit from support not available elsewhere in the UK.”
Back in the UK, Charity Today asked for observations from any of our self-employed readers, the responses arrived thick and fast!
Freelance journalist and RAF veteran Andy Wasley, 37, only registered as a sole trader in April last year, so will not have his average earnings partly met by the government bailout scheme because he does not possess a full year of accounts.
He says: “I won’t qualify for any help. I feel completely dispirited.”
Thom Bartley, a 32-year-old photographer in Wolverhampton, said he was pleased that provisions had been made for the self-employed, but was concerned about the time delay until the payments are sent.
“Personally, I should be OK, but I’ve got friends living paycheck to paycheck, who have got rent payments due, so I don’t know how that’s going to work,” he said. “It’s that delay which is the crippling thing – June is a long time away to have had no income.”
Self-employed Sarah Farrelly from Sheffield told Charity Today: “I have not been able to work successfully for 8 weeks due to the coronavirus impact and the lockdown. Going another 8 weeks is a very scary prospect, no income for 16weeks and that’s assuming I am eligible for the scheme and if it works straight from the offset with no further delays in support!”
Hung out to dry
Chris Peachey, 59, a self-employed market trader from London made his feelings perfectly clear, he said:
“It’s no surprise to me the corporates are looked after from the offset. It’s like everything with this outbreak the government seem to have sat on their hands for as long as possible with everything, I feel we’ve all been hung out to dry. You just have to look at the PPE delays for our NHS workers and see how our manufacturers had to sell abroad to help! What chance have we got, they’ve known since January about this!”
Michelle Baker, 50, who runs a small fudge business, said she was concerned that the three months of support being offered wasn’t even long enough, and does not account for the seasonal variations.
“I work in the events sector, and we make our money off shows in the summer. We earn our money in the summer and that’s our money for the winter, so if we don’t get any money in the summer, we won’t have any to live off in the winter,” she said.
“It’s really a temporary fix, and I think it should have been done sector by sector,” she added. “No one really thinks about this industry.”
Alfie Stirling is head of economics at the New Economics Foundation he told The Guardian in March that, ‘you can’t simply rebuild a safety net in a week after destroying it for a decade. The next move must-see Rishi Sunak properly reinforce our country’s safety net, not just for the next three months but for the coming decades as well.’
Many people who work for themselves are facing immediate financial hardship, due to gaps in eligibility for the Self-employment Income Support Scheme and the delay in payments until June.
The Money Advice Trust, the charity that runs National Debtline and Business Debtline, is calling for the government to:
- Provide additional funding to enable all local authorities to offer payment holidays on council tax bills for those struggling to pay due to Covid-19, and instruct councils to pause arrears collection and enforcement action
- Set up a dedicated hardship fund for self-employed people facing immediate financial difficulty, and extend income support to owner-directors who receive most of their income in the form of dividends
- Take bolder action to help private tenants to meet their rent payments by increasing the Local Housing Allowance rate to cover 50% of average rents in each local area
Joanna Elson OBE, chief executive of the Money Advice Trust, said:
“Self-employed people are facing immediate hardship and private renters are particularly at risk of falling into serious financial difficulty. The government must take urgent action to close the gaps in its Covid-19 financial support package, or many more households will fall into problem debt.
“At the same time, we know millions more are turning to Universal Credit – and we need the government to listen to the growing calls to put an end to the five-week wait for payments so that people get the immediate help they need.
“In the meantime, debt advice services like National Debtline and Business Debtline are working hard to help as many people as we can through the financial impact of Covid-19 – and to prepare for what we expect to be an unprecedented surge in demand for debt advice in the months ahead.”
Julia Rouse, Professor of Entrepreneurship at Manchester Metropolitan University Business School, said:
“While the support package announced by the Chancellor is welcome, we cannot ignore the fact that a significant proportion of self-employed people simply aren’t protected under the headline measures.
“This substantial group is made up of people most vulnerable to a loss of income – including those new to self-employment or for whom it has only recently become their main job.”
“Many of these people are crying out for help right now and, unless the Government responds positively, we’re in danger of seeing a whole generation of early-stage entrepreneurs decimated by this crisis.”
Mark Hart, Deputy Director of the Enterprise Research Centre and Professor of Entrepreneurship at Aston Business School, said:
“For people who took the plunge into entrepreneurship relatively recently, or have built their business up from scratch in the last year or two, the lack of available support will feel like a kick in the teeth.
“Furthermore, even established self-employed people are generally excluded from the small business grant scheme announced by the Government, as most don’t have premises or employ staff. And most will be extremely wary of taking on additional debt to see them through.
“All of this means that there are serious holes in the Government’s support package for the self-employed. We need to fix them urgently before it’s too late.”
Enterprise Research Centre has produced an infographic detailing support entitlements of different types of self-employed workers. Their report entitled ‘Covid19: Critique and Proposals to Develop More Comprehensive and Inclusive Support for the self-employed’ can be accessed here.
The government says HMRC will contact you directly by mid-May if you’re eligible, and payments will be made in June.
If you’re struggling now, you can claim for Universal Credit (5-week wait), which you should record as part of your income from self-employment. You may also consider applying for the Coronavirus Business Interruption Loan Scheme, which is being made available to most, according to the Treasury.