IFS: More than a million self-employed missing out on Covid support

More than a million self-employed workers are missing out on financial support from the Government because they have another source of income leaving many facing ‘serious hardship’, warns the IFS

  • Government set up Self-Employment Income Support Scheme during pandemic
  • It provides payments once a quarter worth 80 per cent of pre-pandemic profits
  • But Institute for Fiscal Studies said some groups of workers have been excluded
  • Workers who earn less than half of money from self-employment do not qualify 

More than one million self-employed workers are missing out on Covid financial support from the Government because they have another source of income, resulting in many facing ‘serious hardship’, an influential think tank has warned. 

The Government introduced the Self-Employment Income Support Scheme (SEISS) to help workers stay afloat during the coronavirus crisis. 

But the Institute for Fiscal Studies said the way in which the scheme has been set up means 1.5million workers are currently excluded from claiming support. 

Some 1.3million people who get less than 50 per cent of their income from self-employment and 225,000 who have profits in excess of £50,000 are not eligible.  

The IFS said those people ‘could easily be supported’ by the Government at a ‘modest cost’ of less than £1billion per quarter if ministers chose to extend the scheme. 

The Institute for Fiscal Studies said ‘important groups’ of workers had been excluded from Rishi Sunak’s Self-Employment Income Support Scheme

Paul Johnson, director of the IFS, said some people are facing ‘serious hardship’ because of the eligibility criteria

The SEISS scheme provides payments once per quarter worth 80 per cent of pre-pandemic profits up to a cap of £7,500 per quarter for eligible self-employed workers who have been adversely affected by the pandemic.

But the IFS said ‘important groups’ of self-employed workers have been excluded amid growing calls for the Government to change the eligibility criteria.

Paul Johnson, the director of the IFS, told the BBC Radio 4 Today programme: ‘The 50 per cent rule rules out about 1.3million people who have got some income from self-employment last year but less than half of their total income.

‘For some of those obviously their self-employment income was very small indeed and this doesn’t make very much difference to them. But for some it was still quite an important part of their income. 

‘There is a hard cut-off here: If you have got 51 per cent of your income from self-employment you can get the maximum amount, if you got 49 per cent you can get nothing at all. 

‘That is just a policy decision by government and certainly for some that is creating serious hardship.’  

Mr Johnson said extending the scheme would cost ‘considerably less than £1billion per quarter’.

He said such a sum would represent approximately one per cent of the overall combined cost of the SEISS scheme and the furlough scheme.   

Mr Johnson said Chancellor Rishi Sunak and the Treasury needed to draw a line somewhere in terms of eligibility for the scheme. 

But he added: ‘The Treasury have drawn the line in a sense very generously for most and then just put a complete cut-off for other groups and you could have put that cut off at 50 per cent, 40 per cent, 30 per cent, or you could have tapered the support.’ 

Estimates suggest the furlough scheme could cost £62billion in 2020/21 while SEISS is forecast to cost £21billion up to January 2021 and a further £7billion to cover the period from February to April.        

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