More than a million people fell through the cracks of the government’s coronavirus support schemes for employees and the self-employed.
This was the headline finding of a Treasury select committee’s interim report into the economic impact of the coronavirus, published this weekend.
The committee of MPs, chair by Mel Stride, Conservative member for Central Devon, is now calling on chancellor Rishi Sunak to fulfil his promise to “do whatever it takes” to protect workers and businesses from financial hardship due to the pandemic.
Government support schemes
The report singles out four groups of people who were not sufficiently protected by the Coronavirus Job Retention Scheme or the Self-Employment Support Scheme, introduced in April after lockdown took effect:
- Those new to employment or newly self employed – the committee said there could be hundreds of thousands of people who had either set up in business since April 2019 and who therefore did not meet the eligibility criteria for the self-employment scheme; and many who will have started jobs after the cut off date for eligibility for furlough.
- Self-employed people with annual profits in excess of £50,000 – estimates suggest there are around 225,000 individuals in this group, who are ineligible for support as profits exceed the cap set by the government.
- Directors of limited companies – where directors take a large part of their income in dividends, they would only be entitled to CJRS support on their small salary component. This affected around 710,000 people, according to estimates.
- Freelancers and those on short-term contracts – the committee said it received a large number of written submissions from this group, which would not be eligible for either of the flagship support schemes.
“The government needs to do something for these people if it is to completely fulfil its promise of protecting incomes and jobs,” the report urges.
There are a number of ways the government could address the concerns of these groups, it adds. One is to remove the £50,000 cap, giving those with profits just over the cap some financial support up to a similar level to salaried employees.
The committee also calls for the government to find a “practical solution” to support limited company directors who have missed out because they pay themselves in dividends. The Association of Independent Professionals and the Self Employed (IPSE) has presented the Treasury with a suggested solution and the committee recommends the government follows it up.
Further recommendations include giving the freelancers who aren’t eligible or who are new to self-employment the same access to financial support as salaried employees (currently 80% of income), or makes a flat rate of support available.
It adds that the government should undertake an “urgent review to see how it can extend support to those newly self-employed”, while recognising the challenges of managing the scheme and minimising the risk of fraudulent claims.
Stride said: “The chancellor has said that he will do whatever it takes to support people and businesses from the economic impact of the pandemic.
“Overall, he has acted at impressive scale and pace. However, the committee has identified well over a million people who – through no fault of their own – have lost livelihoods while being locked down and locked out of the main support programmes.
“If it is to be fair and completely fulfil its promise of doing whatever it takes, the government should urgently enact our recommendations to help those who have fallen through the gaps.”