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Gaps in coronavirus support criticised by MPs

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Written by: Emma Lunn
15/02/2021
The Treasury Committee says the government has failed to tackle the "hard edges" in support for the self-employed during the coronavirus pandemic.

The committee has published the third report of its inquiry into the economic impact of coronavirus: ‘Gaps in Support and Economic Analysis’.

The report recommends that the government set out how and when it will lift lockdown restrictions with economic and epidemiological modelling to support it.

Who has been excluded from support?

The Self Employment Income Support Scheme (SEISS) provides grants of up to 80% of a self-employed worker’s income up to a maximum of £2,500 a month. But many people are not covered by the scheme.

Excluded groups include:

  • The owners of small owner-managed businesses who pay themselves via dividends rather than salary.
  • Those with jobs which involve moving from freelance contract to freelance contract on a short-term, basis. This includes many people who work in TV, theatre and other creative industries.
  • Those who have been working as full-time landlords.
  • Those who began being self-employed in the 2019/20 tax year.
  • Freelancers earning more than £50,000 a year.

The committee’s recommendations

The committee says HM Treasury should use 2019/20 tax returns to help the newly self-employed as well as extending support to self-employed people who have missed out so far. These include limited company directors and freelancers.

The report says there is ‘scant justification’ for the government to not have addressed the ‘hard edges’ of SEISS, which have meant that some people have lost out.

The committee says it’s ‘disappointing’ that the government has shown no inclination to expand or provide alternatives to the SEISS. It says ministers should look at other models of support for people who need it but do not currently qualify, including those developed by the devolved administrations.

It also said that HM Treasury should investigate ways to support limited company directors, in part to ensure that it is not sending out the message that it does not support entrepreneurs and employers who have suffered significantly from a lack of support.

The committee suggests that to help some freelancers who have missed out on support, the government should reconsider the 50% limit in the eligibility criteria for the fourth tranche of the SEISS grant, so those who derive less than half of their income through self-employment can receive some level of support.

The fourth SEISS grant will cover the period between February and April 2021, with applications expected to open sometime in March.

Mel Stride MP, chair of the Treasury Committee, said: “Nearly a year on from when the government first introduced coronavirus support schemes, those who have been excluded must not be forgotten.

“New data from the 19-20 tax returns should be used to help the newly self-employed for the fourth tranche of the SEISS grant.

“We have also made recommendations for how the Treasury should help those limited company directors and freelancers that have fallen through the gaps in support.”

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