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One in five self-employed people ‘expect to be forced out of business’

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Written by: Emma Lunn
26/03/2021
Labour figures predict a mass exodus from the self-employed workforce after millions of workers were excluded from coronavirus support schemes.

According to the party, of the nearly 5 million (4,973,249) people estimated to be self-employed at the start of the crisis, 944,917 – or one in five – now say that they plan to leave the sector as the crisis ends.

The government announced the Self-Employment Income Support Scheme (SEISS) on 26 March 2020. This pays eligible self-employed people a proportion of their pre-crisis profits up to a set limit of £2,500 a month.

But eligibility criteria for the grants mean many people have not received any financial support during the pandemic. Those excluded include company directors who are paid in dividends, freelancers paid by PAYE, and self-employed workers who earn more than £50,000 a year.

Labour says nearly 1.5 million (1,442,242) self-employed people, or 29% of the total, have fallen through the gaps.

Newly self-employed workers were left out of the first three SEISS grants, but will be included in the fourth and fifth grants. However, the application process has been criticised for being ‘complex and flawed’.

Applications for the fourth SEISS grant will open sometime in April.

Labour shadow chancellor Anneliese Dodds has criticised the government for “a year of looking the other way” and warns that the exodus from self-employment risks “damaging the recovery we so desperately need.”

The loss of self-employed workers will also be felt more keenly in some sectors and some parts of the country than others. Process, plant machine operatives, those in elementary occupations and skilled trades have been worst affected by the crisis, and these occupations make up a higher proportion of the self-employed workforce in the North and Midlands (44%) than the national average (40.5%), and a much higher proportion than London (31%).

Labour has consistently called on the government to fix the holes in this scheme, but despite the change in eligibility for the newly self-employed, hundreds of thousands of people remain excluded from support.

Dodds said: “It’s now been a full year that more than a million self-employed people have had to get by while being excluded from Covid support schemes. For government, it’s been a year of looking the other way.

“That’s not just spectacularly unfair on those who have had the courage and entrepreneurial spirit to go it on their own. It also risks damaging the recovery we so desperately need. The government needs to fix the gaps in its support scheme and help self-employed people to get back on their feet and out the other side of this crisis.”

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