Coronavirus: UK government warned self-employed face 'total income cliff-edge'

Chancellor of the Exchequer Rishi Sunak arrives in Downing Street, London, as the UK remains in lockdown to prevent the spread of the coronavirus.
Chancellor Rishi Sunak as the Treasury weighs up whether to maintain support for the self-employed. (PA)

Business leaders are warning the self-employed face a “total income cliff-edge,” with just a few days until a government support scheme is due to expire.

Fears are mounting among struggling freelance workers in part that the UK government’s income grant scheme could be wound down. Around 2.3 million self-employed workers and 8.4 million employees have now received coronavirus crisis funding, new figures on Wednesday showed.

Schemes were created in March to tide hard-hit workers through the downturn sparked by COVID-19 and the lockdown. The support was due to last three months amid early hopes of a swift economic recovery, but such hopes have receded and unemployment could spike if support were suddenly withdrawn.

Chancellor Rishi Sunak recently extended the employee furlough programme to keep staff on paid leave until October, but nothing has been announced for the self-employed income support scheme (SEISS).

READ MORE: UK coronavirus support schemes ‘leave some workers with nothing’

With the grants for those who work for themselves only due to last o the end of May, Sunak now faces significant pressure to extend the lifeline. Officially any extension is still under review, and Sunak is said to have been “mulling options over the bank holiday weekend.”

Speaking exclusively to Yahoo Finance UK, Mike Cherry, national chairman of the Federal of Small Businesses (FSB), warned hairdressers, personal trainers, caterers, B&B owners and others could not return to work for many more weeks.

“A big proportion of our five million-strong self-employed community now faces a total income cliff-edge in a matter of days,” he said. “ They must not be forgotten. An extension to the self-employment income support scheme should be announced before the week is out.”

He also urged the government to give firms’ enough notice as they start picking up some furlough costs, and to offer support for many company directors not eligible for help.

Labour MP Tracy Brabin also criticised the chancellor for not making clear if the scheme would be extended with just days left. She took issue too with his recent suggestion that unlike furloughed staff, the self-employed could keep working. “How can a self-employed person in theatre keep working if the theatres are closing?” she asked on Twitter.

Meanwhile more than 90,000 people have signed a petition calling for an extension, with its creators warning many workers “won’t be able to survive” without the support.

Darren Bell, a freelance theatre and arts photographer, said workers in the arts with no work to go back to “desperately need urgent help, answers and an extension of SEISS.”

The self-employed support scheme offers workers who meet certain conditions 80% of their average earnings in recent years, up to a cap of £2,500 a month for three months.

It has already faced criticism for leaving out many workers, including both the newly and partly self-employed, and anyone who has earned more than £50,000 in recent years regardless of current circumstances.

READ MORE: UK government gives newly hired workers ‘false hope’ over furlough scheme

The Treasury is reported to be concerned more generally about the UK’s public finances however, with crisis spending and borrowing soaring as tax receipts have nosedived during the lockdown. But one source told the Telegraph it still had “more headroom and more money to play with,” as take-up so far had been lower than expected.

A Treasury spokesperson told Yahoo Finance UK: “The chancellor indicated the SEISS would be a temporary scheme when he announced it at the end of March, but it could be extended if necessary. The government is keeping this under review.”

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