Coronavirus: MPs warn over a million workers 'locked out' of job schemes

Tom BelgerFinance and policy reporter
Yahoo Finance UK
PAYE freelancer Tim Pravda helping set up the RHS Chatsworth Flower Show. (Tim Pravda)
PAYE freelancer Tim Pravda helping set up the RHS Chatsworth Flower Show. (Tim Pravda)

Events worker Tim Pravda was supposed to be at the Isle of Wight festival on Monday, packing up the pop-up bars as bleary-eyed crowds headed home.

The work is physically exhausting, and logistics crews work long hours. But Pravda loves the thrill of live events, and the camaraderie among the army of freelancers who make many happen.

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Now the 43-year-old doesn’t expect to work until next year. He would have made around £600 at the festival, but mass event cancellations since the coronavirus struck mean he now lives on £95.25 a week in universal credit.

He has had to swap his flat for his mum’s sofa, use all his savings, and stomach one rejected job application after another from major supermarkets.“I can’t afford to do anything, and I’ve lost my whole year. It’s absolutely devastating.”

READ MORE: UK workers ‘left with nothing’ by small print of support schemes

A new report suggests Pravda is one of more than a million workers hit hard by the crisis, but “locked out” of the UK government’s income support schemes.

Ministers have been praised for stepping in to subsidise pay for at least 11 million workers, but face a growing backlash over workers excluded for what critics say are arbitrary reasons.

Workers ‘falling through the gaps’

A cross-party group of MPs published a report on Monday urging the government to “help those who have fallen through the gaps.” The Treasury select committee warns many workers face hardship while others receive six months of grants far more generous than Britain’s benefit system.

The “forgotten” include many workers in new jobs, the newly or partially self-employed, company directors paid mainly via dividends, and anyone earning over £50,000 in recent years regardless of current income.

The MPs also want support for hundreds of thousands of freelancers like Pravda, who do not fall neatly into either of the government’s schemes for the salaried and the self-employed.

The self-employed income support scheme (SEISS) defines the self-employed as those who mostly invoice for their work. But many so-called ‘PAYE freelancers’ instead hop between short-term contracts, paid via company payrolls.

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They are disqualified. The government’s advice is to ask former clients to furlough them as employees instead. But Pravda has had no luck. “I’ve had everyone say we’d love to, but we can’t.”

Several freelancers have told Yahoo Finance UK about firms’ reluctance to furlough them, given initial delays securing grants, administrative costs and the fact contracts may have lasted just a week.

For some firms in Pravda’s industry, the small print makes supporting PAYE freelancers impossible even if they want to. Workers need to have been paid in March, but many crews’ work is seasonal at major events between May and December. “Creative industries have been completely looked over,” he added.

Pravda has become a dogged social media campaigner from his mum’s home in Worthing, south-east England, writing to MPs and petitioning for a dedicated scheme for creative industry freelancers. PAYE freelancing is common in TV, theatre and events, with the report noting as many as 90% of freelancers in advertising are ineligible for support.

He resents being left out, having paid taxes all his life. “We’re being discriminated against. It’s a lot of sleepless nights. And you can imagine how boring it is watching committee meetings on my phone every day to see if there’s a glimmer of hope.”

Fears over mental health, diversity and domestic abuse

Presenter and entertainment journalist Ellie Phillips is among those ineligible for government crisis support.(Dave Henshaw/@dave_shot_me)
Presenter and entertainment journalist Ellie Phillips is among those ineligible for government crisis support.(Dave Henshaw/@dave_shot_me)

Some campaigners say such despair is widespread, and only deepening as months pass without work. Ellie Phillips, a freelance presenter and journalist, said she had been inundated with over 1,000 emails since she helped launch a pressure group called ‘Forgotten PAYE’ last month.

“People’s mental health’s through the floor,” she said. “They feel desperate and worthless.”

Phillips also fears wider knock-on effects. Ineligible herself, she considers herself lucky to still have some work and an employed partner. She worries other excluded women could end up penniless, or dangerously reliant on abusive partners. If one person in even an unmarried co-habiting couple has a job, the other cannot claim universal credit either.

Social mobility and diversity in industries like media could also take a hit if freelancers from poorer backgrounds abandon the sector for good. “Only rich people are going to ride out the wave,” she said.

The chances of reform

Reform is not unimaginable. Ministers do acknowledge gaps in support, and highlight difficulties creating new schemes from scratch rather than defending exclusions.

The MPs’ report notes the schemes themselves followed political pressure as the lockdown hit livelihoods. Further lobbying has helped spark changes, from a second round of grants to letting those on parental leave be furloughed after the deadline. Phillips said the latter had “given hope” to campaigners.

Committee chair Mel Stride also notes the chancellor’s promise to do “whatever it takes” to help the economy, and urged him to fulfil it by fixing the gaps.

Yet the committee and others have made similar appeals before, and the government has not budged for months. The Treasury’s focus appears increasingly on how to wind costly schemes down, rather than widen them.

A Treasury spokesperson told Yahoo Finance UK its swift rollout of existing schemes had protected millions of jobs, and been welcomed by the committee.

“Our wide-ranging support package is one of the most comprehensive in the world,” they added, highlighting a £6.5bn welfare spending boost and lending and grant support for firms on top of the job schemes.

“All our support is targeted to make sure we use public funds responsibly, helping those who need it most as quickly as possible, while minimising fraud risk.” 

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