Over the past week, the economic impact of Covid-19 has been felt by millions of workers across the country. The government has taken significant and necessary measures to support employees, but has so far failed to deliver for the millions of freelancers and self-employed.
This failure means that many in a significant and growing part of the economy are having to choose between following government recommendations on social distancing and being able to put food on the table.
This is because, as it stands, the majority of these five million workers have no safety net to fall back on to protect their incomes if they are out of work. Some of these workers will struggle to get by, and although they now won’t be forced out of their rented accommodation, they will still find it difficult to pay their rent each month.
Others, including ones vulnerable to Covid-19, will be forced to continue working, putting themselves and the wider population at risk. So far, these workers have been offered quicker and easier access to benefits, along with other measures such as delayed self-assessment tax returns — but they are still not entitled to Statutory Sick Pay (SSP) and have no other wider income protections.
Many of the self-employed simply cannot rely on benefits to get them through the next few weeks or months. For those suddenly cut off from their only source of income, the £376 a month offered by Universal Credit (now the same rate as SSP for employees) is often nowhere near enough to live on and may not even arrive for five weeks.
The situation is even tougher for the large proportion of the self-employed who are also renters, and who therefore won’t benefit from the government’s mortgage holiday of three months. These renters must instead hope their landlord passes the saving on to them. For those self-employed who are already struggling to make ends meet, trying to pay normal rent whilst on Universal Credit may prove impossible.
“Countries across Europe have already taken significant measures to support their self-employed workforce.”
The self-employed need a real safety net, and they need it now. It has long been the case that they’ve had little support in the welfare system, and we have continuously called for a self-employed benefits package to include support such as better access to maternity pay, shared parental leave and adoption leave and pay.
A significant stride towards this for example would be rolling out Statutory Sick Pay to the self-employed, and increasing it from £94.25 a week to match the Real Living Wage. All workers need cover if they are self-isolating because they are vulnerable or showing symptoms of Covid-19. However, even the healthy self-employed are threatened by the wider economic impacts of the virus and the coming recession: for this we will need more than sick pay.
Countries across Europe have already taken significant measures to support their self-employed workforce. As is often the case, Scandinavia is leading the way. Norway is paying the self-employed 80% of their average income over the past three years, and Denmark’s government is offering compensation worth 75% of the self-employed’s normal monthly income, up to £23,000 a month, for those who have seen their revenues fall more than 30%.
These are powerful remedies but not the only ones. Italy and Greece are giving grants out to the self-employed, Spain and Portugal are offering financial support as well as deferring social security contributions, and France has offered their self-employed €1,500 in compensation if they experience a decline in income or lockdown. With so many options, why are the UK’s self-employed being left behind?
Over the past few days, trade unions and organisations across the country have united in calling for further action from the government.
Trade unions Prospect and Bectu are calling for something akin to the 80% of salary support for the self-employed whilst the Musicians’ Union has suggested Universal Basic Income of £400 per week. The Association of Independent Professionals and the Self-Employed has called for a temporary income protection fund for the self-employed, while the Royal Society for the encouragement of Arts, Manufactures and Commerce has suggested a £1500 cash payment with regular top ups — and the Federation of Small Businesses is lobbying the government to expand its support.
We all face an uncertain future regarding the economic impact of Covid-19. But what we do know is that without necessary support to prevent hardship, thousands of the self-employed face being plunged into poverty.
We need immediate government action to support the self-employed. At least five million workers are watching and waiting for the government to expand the safety net to a vital chunk of our economy.
These people needed support yesterday and they needed it last week: they cannot wait any longer. It’s time for the government to decide if it will really do whatever it takes.
Kate Dearden is head of research, policy and external relations at Community Union