Treasury Committee highlights gaps in coronavirus help
The report notes that 2.3 million people have been able to benefit for the Self-Employed Income Support Scheme for us freelances, while some 8.9 million have enjoyed support via the Coronavirus Job Retention Scheme for employees. However, the report identifies significant groups who fall through the gaps in the various safety nets.
These include "those newly in employment or newly self-employed". The reports quotes data showing "that there are typically more than half a million people starting a new job every month, and there are likely to be hundreds of thousands of people who have set themselves up in business since April 2019 who do not meet the eligibility criteria for either scheme. "
Then there are directors of limited companies who earn a large part of their income in dividends. There are an estimated 710,000 of these. These don't qualify for SEISS. They can furlough themselves, but the CJRS covers only the part of their income they have paud themselves through PAYE.
There are also "freelancers or those on short-term contracts who are unlikely to be eligible for either scheme". The Committee "received a large number of written submissions from people in this group".
There are many "new starters" as well, including people who became self-employed in tax year 2019-20, who don't qualify for SEISS. The Committee recommends that "the Government needs to quickly find a way of supporting the many people who have started a new business, or built their business up in the last year, but are unable to qualify for support because they cannot fulfil the eligibility criteria required by SEISS."
Finally, there are also "those self-employed with annual trading profits in excess of £50,000" - it is estimated that there are 225,000 such people, many of whom have annual profits that "fall just over the cap set by the Government".
The report later notes than an estimated 675,000 will be ineligible for SEISS as they earned more in PAYE than in self-employment (often only very slightly more) in the last tax year.
The Committee notes that both SEISS and CJRS have been extended, and expressed bewilderment at the Government's comment that it remains "not possible or desirable" to help those who have fallen through the gaps. The Committee "have also engaged in extensive correspondence to press the Government to improve its response" to coronavirus and its economic impact. It further notes that the extension to the SEISS scheme should give the Government time to iron out any problems with it.
Also included in the report are some examples of how the self-employed do badly from having their "profit" used as the basis for calculating their income for the purposes of SEISS, rather than their revenue (their turnover.)
The Committee has issued a call for more evidence for its next report, with a deadline of 26 June. The focus of this next stage of the Committee's work includes discovering what problems individuals face when making a claim for SEISS, looking for any remaining gaps in the provision and asking swhether the provision is generous enough.