Gaping holes in COVID-19 support is the reason why half a million self-employed people have left the sector, says trade body

Figures published by the Office for National Statistics (ONS) revealed that from July to September, the number of self-employed people in the UK fell by 174,000 compared to the previous quarter. 

Included in this group, a record 99,000 women stopped working for themselves. Meanwhile, while the number of people who switched from being self-employed to employed in Q2 and Q3 of this year soared to 277,000 – the highest since records began in 2005.

This data puts the number of self-employed people in the UK at 4.53million, down by around half a million from 5.1million at the end of 2019.

The Association of Independent Professionals and the Self-employed (IPSE) has said the decline in self-employment is down to the “glaring gaps” in emergency Coronavirus support, which could have a devastating long-term impact on the independent workforce. 

UK self-employment in “precipitous decline”

Derek Cribb, CEO at IPSE, said: “The continuing drop in the number of self-employed in the UK shows that the glaring gaps in support are leading to a long-term, avoidable decline in the sector. This is deeply concerning not only for the self-employed themselves, but also for the UK’s prospects in the coming recession.

“After the 2008 financial crisis, it was rising self-employed numbers that kept unemployment comparatively low – as uncertain employers looked for more flexible expertise instead of permanent employees. 

“Now, this does not appear to be happening and the self-employed sector is in precipitous decline. Some self-employed are finding their way into full-time roles, but many others are joining the record flow into unemployment.”

Earlier this month, Chancellor Rishi Sunak extended the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS) until March 2021.

He increased the SEISS grant from 40 per cent to 80 per cent, however, the eligibility criteria has remained the same, with 3million said to fall between the cracks of the support. 

Excluded could be left without support for entire year

In response to the extra support granted by the government, Joanne Harris, technical commercial manager at contractor accountancy firm SJD Accountancy, said: 

“The Chancellor has said that the extension of the CJRS and SEISS until March 2021 will provide “immense comfort” for people and businesses across the UK.

“[…] However, freelancers and contractors operating through a limited company structure in the UK have once again been overlooked. 

“It’s disappointing that the UK’s flexible workforce continue to fall between the cracks and with the extension of these schemes until March 2021, we are now looking at an entire year where appropriate government support has not been made available to them.

IPSE’s Cribb added: “Government must work quickly to stem this flow by urgently getting support to the left-behind self-employed groups. Extending support would be a cost now, yes, but it would be a temporary cost during the pandemic, to hold back an even worse unemployment problem later.”