The government has made the third instalment of the Self-Employment Income Support Scheme more generous for November but business groups are warning that many freelancers are still falling through the cracks.
As the UK enters a second national lockdown, the government has announced that the UK-wide Self-Employment Income Support Scheme (SEISS) will be made more generous - with eligible self-employed individuals receiving 80% of their average trading profits for November. Payments will also be made more quickly, with the claims window being brought forward from 14 December to 30 November.
Chancellor of the exchequer Rishi Sunak said: "The rapidly changing health picture has meant we have had to act in order to protect people's lives and I know this is an incredibly worrying time for the self-employed. That is why we have increased the generosity of the third grant, ensuring those who cannot trade or are facing decreased demand are able to get through the months ahead."
As SEISS grants are calculated over three months, the uplift for November to 80%, along with the 40% level of trading profits for December and January, increases the total level of the third grant to 55% of trading profits. The maximum grant will increase to £5,160.
The SEISS continues to be just one element of a package of support for the self-employed. In addition to the SEISS, self-employed workers can also access Bounce Back Loans, tax deferrals, rental support, mortgage holidays and other business support grants.
The Association of Independent Professionals and the Self-Employed (IPSE) has described the new support as "vital" but it says there are still "devastating gaps" in the package.
Derek Cribb, ceo of IPSE, said: "While the increase in SEISS is welcome, however, it is deeply troubling that the government has still not fixed the devastating gaps in SEISS, despite urgent recommendations from the Treasury Select Committee. After so many calls to resolve the problems, it now looks as if the government is wilfully ignoring a third of the self-employed."
Mike Cherry, national chairman of the Federation of Small Businesses (FSB), said: "The uprating of the Self-Employment Income Scheme to 80% for November is generous and will likely help around two million self-employed people.
"However, many of our self-employed are still not included in the initiative. This is a five-million strong community that drives our economy forward, but the government has insisted that large swathes of it do not warrant any help where income is concerned. We have sadly already seen 250,000 self-employed people stop working and become economically inactive, a figure which is set to continue rising."
The FSB has also joined forces with the TUC to call on the government to halt a planned cut in Universal Credit support payments to thousands of struggling self-employed workers.
The Department for Work and Pensions (DWP) is on course to reinstate from Friday 13 November what the TUC and FSB are calling "a flawed formula which overstates the income of many low-earners in self-employment", and so unfairly cuts their Universal Credit payments.
The formula - known as the Minimum Income Floor - assumes claimants are earning the equivalent of the National Minimum Wage or National Living Wage. In reality, the FSB and TUC say that "many striving entrepreneurs are earning significantly less, particularly in sectors where the COVID-19 pandemic has hit the hardest".
The government suspended the Minimum Income Floor in March as the first wave of COVID-19 hit, recognising the loss of income and hardship many self-employed were facing.
The Institute for Fiscal Studies (IFS) has estimated that around 450,000 self-employed workers are negatively impacted by the Minimum Income Floor, losing an average of £3,200 a year each.
Mike Cherry said: "Universal Credit was never designed around the self-employed, who often feel like square pegs forced into round holes … The reintroduction of this flawed formula will turn Friday 13 November into a real-life nightmare for hundreds of thousands of talented but struggling entrepreneurs doing their best to get through this crisis so they can play their part in rebuilding the UK economy out the other side."
Written by Rachel Miller.