The government must take urgent action to support the self-employed

Rachel Reeves

Now that the government has taken action to lock-down the UK and enforce social distancing measures, it is even more vital that they make sure self-employed and freelance workers who do the right thing and stay home are not left to live on £94.25 per week. Further action must be taken by government to ensure self-employed and freelance workers can pay their bills and keep their businesses solvent.

The measures announced by the Chancellor on Friday were extremely welcome. The government’s income replacement scheme will ensure that millions of workers’ jobs and livelihoods are protected over the coming months. But there are still gaps within the government’s strategy that require urgent redress, and millions more people who remain acutely exposed to the economic impact of necessary measures to contain the spread of coronavirus. If we as a society are to get through this together, we will need equality of sacrifice. As we ask every person and every worker to make sacrifices, so we should expect that every worker enjoys protection against lost work and income.

Around five million people are self-employed in Britain. While employed workers are covered by the new income replacement scheme, there are many who are self-employed, freelance or otherwise precarious who are not. Currently, should they lose work or be unable to work, they only have recourse to Universal Credit at a rate of £94.25. And as they are not covered by the government’s income replacement scheme, they are also in danger of losing income if they cannot work due to the extra burden of childcare commitments now schools and nurseries are closed.

It is arbitrary that the self-employed should see the large part of their income disappear, while other workers enjoy at least some government protection. As the Federation of Small Businesses have argued: “It cannot be right that an employee currently earning £25,000 a year could access £20,000 per annum through the new job retention scheme, while someone who’s self-employed earning the same sum might only access around £5,000 worth of support.” Norway, Germany, Italy, France and the Republic of Ireland have all introduced ambitious schemes to support their self-employed and freelance workers; the UK must follow suit.

We should look to the examples set by other countries’ governments in supporting self-employed and freelance workers. Norway has included the self-employed and freelancers within its income protection scheme – they are entitled to claim the equivalent of 80% of their average pay over the past three years. I believe this is the best model, but other countries are also trying to help. The German government has plans for a €40bn fund, made up of grants and loans, to support individual freelancers and businesses employing below ten people. The Irish government has introduced a new COVID-19 “pandemic unemployment payment”, available for all workers including the self-employed, of €203 per week for six weeks. In France, the self-employed may be entitled to compensation up to €1,500; in Italy, they are entitled to €600 per month; and the Greek government is issuing payments of €800.

The UK is the world’s sixth largest economy. There is no reason we cannot afford to match the support extended by these countries to self-employed workers. I believe the government should extend the income protection scheme announced on Friday to the self-employed. In Norway, a scheme similar to the one unveiled by the government also makes provision for the self-employed and freelancers. They are entitled to the equivalent of 80% of their average pay over the past three years. We could do the same using tax returns.

The government must also, as a matter of urgency, increase the rate of statutory sick pay to the real living wage to support those who are sick or self-isolating, and ensure that no parent loses out if they are forced to take on extra childcare responsibilities due to school and nursery closures.

The government is facing immense challenges on all fronts. However, if we want people to be able to follow the government’s own guidance to curb the spread of this pandemic, then the situation of many people in the most precarious work and living conditions must be treated with greater urgency. And to ensure we have an economy to rebuild after coronavirus we should do all we can to support fledgling businesses and the self-employed. I believe that proposals along these lines would provide essential protection for millions of hardworking people who are crying out for reassurance.

Everything Labour.
Every weekday morning.

By clicking ‘subscribe’ you confirm you have read and agree to our privacy policy

More from LabourList