On the 1 April I wrote to the to the Chancellor concerning gaps in the protections afforded by the Self-employment Income Support Scheme (SEISS) and the Coronavirus Job Retention Scheme.
Please find the full text below:
I was grateful for your announcement, on the 26 March, of a scheme to protect self-employed and freelance workers. This will provide crucial support to some of my most vulnerable constituents and I thank you for this.
I understand there are some groups of self-employed and freelance workers who do not currently stand to benefit from this scheme, and are not adequately covered by the Job Retention Scheme either. These groups include:
- Those who earn under 50% of their income from self-employment
- Those who made a trading profit of more than £50,000 in 2018-2019
- Those who made an average trading profit of more than £50,000 in the last three financial years.
- Those who only became self-employed in the last year and have therefore not filed a 2018-19 tax return.
- Those who work freelance and are paid via PAYE, but whose contracts occur irregularly and for short periods, as a feature of the sector they work within.
- Those company owner-managers, including the owners of one-employee micro-companies, who take their income mostly through dividends.
These last two categories are a particular issue for many in the creative industries who work freelance but trade via independent production companies or micro-companies. I understand the concern and indeed fear that this has caused, with many uncertain as to how they will cope over the next few months. You will know that many within this sector have unpredictable incomes at the best of times, so if the present crisis happens to follow upon a relatively fallow period for them, their finances may be coming under very great strain.
Another problem with this scheme as it stands is that recipients must wait until June to access it. The prospect of numerous months without income – especially in an area like Newham with the highest rate of statutory homelessness and the second highest rate of child poverty in the country – is a source of great anxiety for many of my constituents. This is represented in the desperate emails I have received from many constituents since your announcement on the 26th.
I urge you to look again at all of the issues listed above, and most urgently at the length of time until payments can be accessed, and the situations of those who have switched to full-time self-employment too recently to be covered under the scheme as designed.
My final issue to raise on the self-employment scheme relates to the £50,000 threshold. I believe it would be wise to consider the option of replacing the £50,000 cliff edges with a more gradual taper so that those on higher incomes, who may have high unavoidable bills to pay, can access some support without public money being used in a way that increases inequality and social injustice.
I would also like to take this opportunity to raise three remaining issues with the Coronavirus Job Retention Scheme. Firstly, I would like to add my voice to those who are calling for the February 28th cut-off date to be reconsidered. Workers who have just started a new job are often the most vulnerable to being laid off, and their finances may well have been damaged by a lengthy period on a very low income before they secured their role. Excluding these workers from having their jobs and incomes protected is unfair and I believe it will be counterproductive.
Secondly, an issue which I believe will become more and more pressing as the crisis progresses is the current inability for workers who have been furloughed to come back to work for at least 3 weeks, or for workers to reduce their hours while still receiving proportionate support within the scheme. This will clearly impact beneficial forms of flexible working that would otherwise be available to workers and their employers.
I understand that people accessing support under the scheme for the self-employed are permitted to continue working if they can do so safely. So, at present, the blanket ban on undertaking paid work while furloughed under the Job Retention Scheme appears to be unfair. It could also prevent some necessary work in essential industries from continuing to occur. As you will know, many of these essential industries are beginning to report shortages of available workers, even if they did not already have shortages before the crisis began.
Thirdly and finally, I believe that the Coronavirus Job Retention Scheme must be very urgently expanded to cover parents and other carers who have to take a furlough from work, or significantly reduce their working hours, to care for children, especially those with SEND, or disabled or frail relatives. As we know, access to statutory educational and social care services is already limited and I am concerned that this will only grow worse as the crisis progresses. I would urge you to consider the recommendations contained in the IPPR’s new report ‘Children of the Pandemic’ in this regard.
I would be grateful if you could inform me of any steps you plan to take with regards to the above described issues, and what advice I can offer to my constituents who find themselves ineligible for support because they fall into the above described categories.
I look forward to your response. I would be grateful if you could hear these representations that I am making on behalf of my constituents and take them seriously and urgently. You will know that very similar cases are being raised by colleagues daily. I understand that when a scheme is necessarily so hurriedly designed there are bound to be some omissions and oversights, but I urge you to make amendments to both the schemes to ensure they work well for everyone in our communities who needs protection at this terrible time. Please do take care and stay safe.
Member of Parliament for West Ham