Don’t push self-employed towards “financial cliff edge”, Labour urges government

Labour’s Anneliese Dodds has told the government not to push self-employed people towards a “financial cliff edge” this autumn by withdrawing income support before many are able to return to work.

Applications for the final grant provided through the government’s coronavirus crisis self-employment income support scheme (SEISS) open today. This will offer support over the next three months.

After October 17th, self-employed workers whose businesses and income have been hit by the pandemic will receive no more support from the government – despite hardship continuing for many due to Covid-19.

Labour is highlighting that people including caterers, beauticians and those who work in live entertainment are struggling to make their businesses viable when social distancing guidelines are still in place.

And workers such as taxi drivers, plumbers and electricians will only see demand for their services return to normal levels if the UK economy recovers quickly over the next two months.

The UK has officially entered a recession for the first time since the global financial crisis in 2008. Figures published last week showed that UK GDP fell by 20.4% in the second quarter of 2020.

The drop was larger than that of any other European country, as France saw its economy shrink by 13.8%, Italy by 12.4% and Germany by 10.1%. Dodds described the downturn as a “tragedy for the British people”.

The Shadow Chancellor today said: “This second phase of the self-employment income support scheme is too late for the quarter of a million people who left self-employment between April and June.

“The Chancellor now plans to cut off support for every self-employed worker in the country from October – no matter whether they’re back at work or back under local lockdown.

“Just like his one-size-fits-all wind down of the furlough scheme, he’s pulling the plug at the worst possible time.

“Without flexible, targeted support beyond the autumn, hundreds of thousands more self-employed workers will lose out and Johnson’s jobs crisis will get much worse.

“Britain’s entrepreneurs and innovators don’t need a permanent helping hand, just targeted support to see them through the crisis and get back on their feet.

“Instead of pushing them towards a financial cliff edge, the government should empower them to do what they do best: build great British businesses.”

Introduced in March along with the furlough scheme, the SEISS allowed the self-employed to claim a taxable grant worth 80% of their average monthly trading profits, capped at £7,500 over three months.

The scheme was extended in June for those who lost earnings after mid-July. The second and final grant was set at a lower rate of 70% and capped at £6,570 in total for the following three-month period.

The Resolution Foundation found that more than half of all self-employed people reported losing work due to Covid-19, which is more than any other category of worker. 2.7 million applied for the first SEISS grant.

Labour has also pointed towards figures from the Office of National Statistics that show 238,000 fewer self-employed people in the last quarter than the one before – a record fall.

The opposition party has said that this significant drop suggests there are  “fundamental problems” with the design of SEISS and the way that it was targeted, or not targeted.

Dodds, along with Keir Starmer, have called on the government to abandon its “one-size-fits-all” approach, which has led to both furlough and SEISS being withdrawn in October despite ongoing struggles.

At the start of August, Labour launched a new ‘jobs, jobs, jobs’ campaign and described the way that the job retention scheme was being wrapped up as a “historic mistake”. But the government has not changed course.