According to a report by the think tank, due to be published later this week, more than 400,000 workers claimed support despite not losing any income during the coronavirus crisis. But almost 500,000 people without work have received no support at all.

The report – which includes a survey of 6,000 18 to 65-year-olds across the UK – looks at the changing state of the UK labour market six months into the crisis, what the future holds, and how government policy will need to respond.

It notes that while most of the focus has been on employees, self-employed workers have experienced an even bigger labour market shock.

At the height of the crisis in April, three-in-10 self-employed workers (30%) stopped working altogether.

While work has resumed for many, the pace of recovery for the self-employed has been slow, with about one-in-six (17%) still without work – rising to almost a quarter (24%) of 18 to 34-year-olds who were self-employed pre-crisis.

The foundation calculated that up until the end of August, the government had spent more than twice as much supporting each self-employed worker (£2,518) through the SEISS than it has supporting each employee through the Coronavirus Job Retention Scheme (£1,128).

However, the report warns that this support has been “terribly targeted”.

Of the 42% of self-employed workers surveyed who have claimed the SEISS, one-in-six (17%) did so despite having experienced no loss of income throughout the crisis – at a cost of about £1.3bn.

The report found that four-fifths (78%) of SEISS claimants experienced an income loss, although in many cases it will have been smaller than the amount of SEISS claimed.

By contrast, two-thirds (67%) of self-employed workers who hadn’t been able to claim the SEISS grant experienced a loss of income during the crisis – and therefore needed support.

Close to 500,000 self-employed workers who were still without any work at all in September had received no SEISS support.

This foundation says that the combination of strict eligibility rules – which excluded many new or higher income self-employed workers from any support – and weak assessment rules are the reason the SEISS has been so expensive and poorly targeted.

With a less generous version of the scheme still operating and calls to re-start the scheme in full growing amid tighter lockdown restrictions, the foundation says the government should fundamentally reform it with fewer exclusions and payments more accurately reflecting income falls.

Hannah Slaughter, economist at the Resolution Foundation, said: “The UK’s five million self-employed workers have been at the heart of its jobs crisis. A quarter of young self-employed workers are still without work today.

“The government has provided unprecedented support in response. But it has been terribly targeted – with around £1.3bn going to freelancers and businesses unaffected by the crisis, while others suffering catastrophic income losses have missed out on any support at all.

“This crisis is far from over for the UK’s self-employed workers. Future support should avoid excluding so many groups, while ensuring payments reflect genuine falls in income. And an immediate priority should be to strengthen Universal Credit for the many self-employed workers who will really need it in the months ahead.”