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Financial support for the self-employed during COVID-19

Volume 685: debated on Monday 7 December 2020

The petition of residents of the constituency of Glasgow East,

Declares that the economic consequences of the Coronavirus pandemic has had a particularly harsh impact on those individuals who are self-employed or run small businesses; expresses concern that the Chancellor’s recent Winter Economic Plan means the Self Employment Income Support Scheme is to be wound down; and further expresses concern over the many gaps already existing in the previous scheme, which was inadequate for millions of people who considered themselves excluded from Government support.

The petitioners therefore request that the House of Commons urge the Government to bring forward additional measures to support those self-employed and freelance workers.

And the petitioners remain, etc.—[Presented by David Linden, Official Report, 6 October 2020; Vol. 681, c. 875 .]


Petitions in the same terms were presented by the hon. Member for Kilmarnock and Loudoun (Alan Brown) [P002608] and by the hon. Member for Linlithgow and East Falkirk (Martyn Day) [P002626].

Observations from the Financial Secretary to the Treasury (Jesse Norman):

Throughout the crisis, the Government’s priority has been to protect lives and livelihoods. This is why, on 5 November, the Government announced an increase in the third self-employment income support scheme (SEISS) grant to 80% of average trading profits covering November 2020 to January 2021.

The third SEISS grant will cover the three-month period from November 2020 until January 2021. This will be a taxable grant calculated at 80% of three months’ average monthly trading profits, paid out in a single instalment and capped at £7,500 in total. This provides equivalent support to the self-employed as is being provided for employees through the Government contribution in the coronavirus job retention scheme.

The new grant, combined with up to £14,070 worth of support for each individual from the first and second grants, places the SEISS among the most generous schemes for the self-employed in the world. Overall, it will provide an estimated £7.3 billion of support to the self-employed through the period of November 2020 to January 2021. There will also be a fourth grant covering February to April 2021. The Government will set out further details, including the level of the fourth grant, in due course.

In designing and delivering the SEISS, the Government have prioritised delivering support to as many people as possible as quickly as possible, while guarding against the risk of fraud or abuse. This meant making difficult decisions, and the Chancellor has acknowledged that it has not been possible to support everyone as they might want. However, as the National Audit Office report recognises, the Government were right to introduce SEISS—which has helped protect the livelihoods of almost 2.7 million people and is just one part of a comprehensive £280 billion package of unprecedented support. The scheme was targeted to help those most in need. All those who applied had to confirm they had been adversely affected by the pandemic, and the vast majority of those who did not qualify either earned more than half their income from another source or had trading profits of over £50,000.

Those ineligible for the SEISS grant extension may still be eligible for other elements of the wider support package available. The Government have announced support for the self-employed through the enhancement to HMRC’s Time to Pay “self-service” facility. This scheme will enable the self-employed and other self-assessment taxpayers more time to pay taxes due in January 2021, building on the self-assessment deferral provided in July 2020. Businesses may also be able to benefit from other support such as VAT reductions and rental support.

Announcements made at the spending review build on this support, confirming £519 million of funding in 2021-22 to support the continued delivery of covid-19 loans, including paying for the 12-months interest free period on the BBLS and CBILS. In addition, the application deadline for all loan schemes has been extended to end of January 2021. On business rates, the Government have frozen the business rates multiplier in 2021-22, saving businesses in England £575 million in the next five years. It is are also considering options for future business rates relief and, to ensure that any reliefs best meet the evolving challenges presented by covid-19, will outline plans for 2021-22 in the New Year.

The Government have introduced a package of additional welfare measures to provide further support to those who are relying on the welfare system. This is worth £7.4 billion to claimants this year. The temporary £20 per week increase to the universal credit standard allowance and working tax credit basic element remains in place until April 2021. In addition, the suspension of the universal credit minimum income floor has been extended to the end of April 2021, so that where self-employed claimants earnings have fallen significantly, their universal credit awards will continue to reflect their lower earnings.

The Government have also increased the local housing allowance rates for universal credit and housing benefit claimants so that they cover the lowest 30th percentile of local rents. This increase will mean nearly £1 billion of additional support for private renters claiming universal credit or housing benefit in 2020-21, and means over 1.5 million households will gain an average of £600, including those in work. The Government have confirmed that local housing allowance rates will be maintained at the same cash level in 2021-22 to ensure that claimants continue to benefit from this increase.

Individuals may also be eligible for further support in the form of a mortgage payment holiday. The application window for which has been extended until 31 March 2021. The Government have extended statutory sick pay to those self-isolating due to covid-19 and made it payable from day one. They have has also introduced £500 self-isolation support payments to help those on low incomes to self-isolate.

Notably, while much of their coronavirus response is UK-wide, the Government are also providing £2.6 billion in 2021-22 to support the devolved administrations in Scotland, Wales and Northern Ireland. This is on top of at least £16 billion in upfront funding guaranteed in 2020-21.

During this difficult time the Treasury will continue to work closely with employers, industry groups, key stakeholders and other Government Departments in order to address the long-term effects of covid-19 and the challenges it poses to the wider economy.