Labour has accused the government of “leaving self-employed people in the lurch” as changes to the self-employment income support scheme (SEISS) will leave almost half a million of those most in need with reduced support.
New analysis released by Labour today has revealed that half a million self-employed people work in industries that are being hit hard by coronavirus restrictions, including hospitality, the arts and sports.
The Chancellor announced on Thursday that the SEISS will now provide just 40% of a self-employed worker’s average monthly trading profits if they are badly affected or unable to work, compared to first Covid grant of 80%.
The new Labour research suggests that, as a result, the average self-employed person working in the arts or hospitality industry will receive just £450 a month via the government support scheme this winter.
Commenting on the difficulties facing many self-employed people in the coming months, Shadow Business Secretary Ed Miliband said: “The promise of doing ‘whatever it takes’ to protect workers is a distant memory.
“Despite public health restrictions tightening and many sectors being shut, ministers are leaving self-employed people in the lurch. Almost half a million self-employed people work in industries either partially or fully closed.
“They’re in desperately choppy waters with many deeply worried about their future. Yet ministers are taking away their life raft and leaving them to sink or swim. That’s not just callous, but economically wrong.
“These are our country’s artists and performers, and people in our vibrant tourism, sports, cultural and hospitality sectors. The Business Secretary must stand up for them and ensure they are given a fair deal.”
The SEISS was launched by the government in March. It allowed some self-employed people to claim a taxable grant worth 80% of their average monthly trading profits, capped at £7,500 over three months.
Despite many industries with self-employed workers experiencing reduced footfall or closures due to Covid rules, earlier this month the Chancellor announced plans to cut the amount that the self-employed can claim to 20% of monthly income.
Rishi Sunak increased the figure this week, when he announced it would be doubled to 40%, but the opposition has argued this will still leave many self-employed people with heavily slashed incomes.
Labour is emphasising that half a million self-employed workers are in industries hit hard by the pandemic and government restrictions, including 177,000 in the arts sector and 52,000 people working in accommodation and hotels.
The half a million figure also includes a further 83,000 self-employed staff working in food and beverage businesses such as restaurants and bars, 97,000 people in the sports industry and 41,000 in film and television.
Many others are excluded from the scheme altogether and left without any income support from the government, including the newly self-employed and those who usually made over £50,000 in profit a year.
The new analysis has also highlighted that the average amount paid to a self-employed person in both the arts and hospitality sector under the first set of SEISS grants was £2,700 – roughly £900 a month.
The new adjustments to the scheme mean self-employed workers receive only half what they were getting in that original tranche of funding, meaning many are now set to receive just £450 each month in support.
The government has maintained that Universal Credit will help resolve the income gap, but under the welfare programme every £1 a self-employed person receives through SEISS, their Universal Credit payment reduces by 63p.
Ministers have also ignored Labour’s calls for Universal Credit to be reformed during the pandemic in a way that would make those with savings eligible for the benefit, and that would see the five-week wait removed.
The new changes to the SEISS were announced as part of the Chancellor’s third economic update in a month, alongside new measures to boost support for businesses badly hit by the coronavirus pandemic.
Shadow Chancellor Anneliese Dodds criticised Sunak for “always running to keep up” during the crisis and asked the Chancellor to explain why the new support was coming months after many regions first faced tighter local restrictions.