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Excluded self-employed ‘plunged into debt and poverty’

Treasury warned self-employed face financial hardship after falling through the cracks in government support

Campaign group ExcludedUK, which was formed in the wake of the pandemic after an estimated three million self-employed people were excluded from emergency support, has written to financial secretary to the Treasury, Jesse Norman, warning that if the government does not rectify the situation, it will hamper the UK’s economic recovery.

The open letter addresses issues with the Coronavirus Job Retention Scheme (CJRS), the Self-Employment Income Support Scheme (SEISS) and universal credit and how the government have failed to support millions working for themselves.

The letter, which was written in response to a previous letter from the MP for Hereford and South Hereford to ExcludedUK, states that Norman “merely reiterated many of the same assertions we have heard from government through this crisis”.

It goes on to say: “We therefore feel it is vital to refocus your attention on those for whom the hardship and impacts felt are only becoming more acute month by month as this matter is simply not going to go away”.

Schemes create ‘significant disparity’ in employment status

The lobbying group highlight that the CJRS and SEISS have created a “significant disparity” between employment statuses. It says many small limited company directors have been “forced to furlough themselves”, receiving minimal income and “at the cost of their business by not being able to work, unlike the criteria for the self-employed”.

It also draws attention to the fact that a person doing the same job in PAYE employment who earns over £50,000 can receive a capped amount of £2,500 a month under CJRS, but if they are self-employed, they receive nothing. 

Support to newly self-employed not ‘meaningful’

The Chancellor recently confirmed that around 600,000 newly self-employed people, who submitted their taxes for 2019/20 in January, will now be eligible for SEISS. However, ExcludedUK “categorically dispute” this figure.

The letter states that according to data from the Office for National Statistics (ONS), 151,000 individuals became self-employed between April to December 2019, and therefore it is “logical to estimate” that 200,000 people started working for themselves over the course of the year.

It also pointed to a Treasury Committee report published in June 2020, which acknowledged that in the early stages of a business there are likely to be higher overheads. The group said because the SEISS calculations are based on trading profits, the scheme further discriminates against the newly self-employed and despite now being eligible, the support is not “meaningful”.

ExcludedUK say that around 60 per cent were unable to access universal credit because they either had a partner who is working or they had savings “typically set aside for tax bills” or something else such as housing deposit, wedding or education.

“Universal credit is not the answer, nor can it be deemed meaningful support”, the group wrote as it warned about a spiralling debt crisis.

“We have heard time and again that the schemes were intended to reach those who needed support most. What has resulted is a huge swathe of society, people who were largely self-sufficient yet not necessarily well-off, plunged into debt and poverty and who will remain a burden on the state and who will face a personal debt crisis for years to come. 

“We all want to see the economy reopened, but the damage that has been caused by over a year of little to no support for so many is so far-reaching with severe consequences. 

Three quarters expected to need debt advice

“We feel that the Treasury must take note and acknowledge these devastating effects on individuals, households, businesses and communities – spiralling debt, careers destroyed, an ever-growing mental health crisis, inequalities for the young, older workers, new parents, exacerbation of precarious working conditions, and the uncertainty that still hangs over so many, particularly those working in the hardest-hit sectors.”

Jane Tully, Director of External Affairs and Partnerships at the Money Advice Trust, the charity that runs Business Debtline, echoed ExcludedUK’s concerns, saying that many self-employed people “face a long road to recovery”.

According to a recent study by the trust, of those who were not eligible for SEISS, a quarter (25%) had fallen behind on one or more bills and more than three quarters (77%) are expected to need debt advice in the next year.

Tully said: “Urgent action is needed to provide a route out of this situation. The government needs to set out a COVID-19 Self-employment Recovery Strategy. This needs to include a dedicated grant fund for those so far excluded from support, including owner/directors.”

Contractor Weekly did approach the Treasury for a comment.

By Contractor Weekly


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6 thoughts on “Excluded self-employed ‘plunged into debt and poverty’”

  1. Gareth

    I haven’t had a penny for a year now. Just a huge debt hanging over me.

    • Bradley

      Same. I had a bit put away ready for an IR35 lean spell but that’s long gone, and they take care of others, the party faithful. All I have now is debt. Should have been a crook.

    • Honest John

      Why have you not had any support? Is it a case of your partner earning over the threshold?
      If so, you could lose your job anytime and not be entitled to any kind of benefits, its wrong but thats the way the system has always worked.

      • Bradley

        There are 3 million reasons why people have been unsupported. Me personally, savings, assets and company director. I only have the last reason now, others have been protected.

  2. ColinC

    I was living in Spain when COVID hit after living in Europe for the past 10 years. Part of the reason for leaving the UK was IR35 even though I worked from home and on a project by project basis.

    Because I had good savings set aside from 14 years of freelancing, the Spanish government gave me no support.

    I had only moved to Spain in September 2019 but I had registered as an Autonomo and was paying my social security despite having very little work.

    As my savings dwindled, I made the decision to return to the UK and made the dash between lockdowns in July 2020.

    It took me a month to find work as an employee.

    I miss the freedom to choose the projects I work on and the ability to walk out the door and get some fresh air when I am least productive.

    Whilst I think it is important to protect the exploited and vulnerable, it’s about time the government sorted out this mess and allow people to work the way they choose to work.

    • Bradley

      I could get work tomorrow if Sunak hadn’t IR35 banned my clients from contracting me. I have good, in demand skills, a long list of clients and some really unique experience, but proving too old to get a staff job. The debt is killing me.

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