Fix gaps in furlough for self-employed workers, government urged

The government is under mounting pressure to plug gaps in its emergency coronavirus wage subsidy schemes at the March budget to support millions of self-employed people and other workers excluded from furlough.

MPs and campaign groups said the chancellor, Rishi Sunak, had repeatedly ducked opportunities to fix gaps in furlough and the self-employed income support scheme (SEISS) for almost a year since the Covid-19 pandemic began.

Caroline Lucas, the Green party co-chair of the all-party parliamentary group Gaps in Support, said it was “completely unacceptable” that more than 3 million people had been completely left out.

“While it was understandable at the beginning of the pandemic, when the Treasury had to act fast, that some new support schemes didn’t work as well as they should, it’s a scandal that over 10 months later, so many are still falling through the gaps,” she told the Guardian.

“The chancellor must now accept that there are genuine and problematic gaps in the schemes he designed, and make support for excluded groups a centrepiece of his budget announcement next month.”

The government’s flagship furlough scheme has topped up the wages of almost 10m jobs since its launch in March last year, while as many as 2.7m claims have been made to SEISS, the Treasury’s similar provision for self-employed people. However, experts have warned millions of people have missed out because they fail to meet eligibility criteria.

Anneliese Dodds, the shadow chancellor, said the government needed to take action at the budget. “Self-employed people are the backbone of the British economy, which is why Labour has called repeatedly for the chancellor to plug the gaps in his support schemes.”

The interventions come as the Guardian profiles the impact of the Covid-19 pandemic on employment as the British economy grapples with the worst recession for 300 years. Sunak is also coming under pressure to extend the furlough scheme, amid warnings from business and unions of widespread unemployment without further financial assistance.

Official figures show full-time work has risen during the pandemic to the highest levels on record despite the impact of Covid on the labour market. However, part-time jobs and self-employment has plunged, as freelancers and those in precarious work bear the brunt of the crisis.

At the start of the pandemic there were 5.1 million self-employed people in the UK. This has now fallen to below 4.6 million.

About 3 million people have been excluded from the government’s support schemes, according to the Association of Independent Professionals and the Self-Employed (IPSE), including about 700,000 limited company directors and 200,000 people who had recently set out working for themselves and lacked documentation to receive wage subsidies.

As many as one-in-five small-company bosses surveyed by the Federation of Small Business (FSB) have said they received no financial support at all from the government. Mike Cherry, national chairman of the FSB, said this meant as many as one million small business owners had been “left out in the cold”.

Urging rapid action before the budget, he added: “There are some extremely concerning gaps and misguided criteria. We need action to address these glaring omissions now. Budget announcements in March, with actual changes taking effect after that, will prove too late.”

The number of self-employed workers on universal credit benefits has risen by more than 300% since the start of the crisis to reach more than 200,000. IPSE said the chancellor urgently needed to reform the SEISS to extend it to people who could now prove their income using 2019-20 tax returns, as well as to help company directors and those earning over the £50,000 threshold for support.

Rachel Flower, a spokesperson for the ExcludedUK campaign group, which represents workers who have missed out on support, said: “A year on from the start of the pandemic the government is well aware the exclusions exist, but has not been minded to fix them. And that is a social injustice.”

“It has pushed a whole sector of society into debt and poverty, in direct contrast to those who have been fairly supported.”

A spokesperson for the Treasury said the government had done all it can to help as many people as possible during the pandemic. “Funding is designed to target those who need it most and protect the taxpayer against fraud and abuse.

“For those who are not eligible for our support schemes, they can still benefit from help like our strengthened welfare safety net, and our plan for jobs provides programmes like Kickstart alongside record investment in skills so that people can find their first job, their next job or a new job if needed.”