Comment

Sunak’s war on the self-employed makes no sense whatsoever

The millions who work for themselves are natural Conservatives - and deserve far better from a party they helped elect

Sunak’s war on the self-employed makes no sense whatsoever

Staff could be furloughed, and now they can get their wages covered on the job retention scheme. Entrepreneurs and start-ups have been helped through the Future Fund. Businesses that are forced to close their doors are being offered cash grants, and many others can get soft loans through the Bounce Back scheme.

Even restaurants were able to offer half-price pizza through August. Over the last six months, Chancellor Rishi Sunak has offered round after round of support to just about every sector of the economy. Except for one, that is: the self-employed. 

People who work for themselves have been offered little but penny-pinching complex schemes, poorly designed, delivered late, and excluding many of the people who need help the most.

Even worse, the Treasury seems intent on increasing their taxes to force the few of them who make it through this crisis with any money left in the bank to pay for cleaning up the whole mess. And yet, that is surely a grave mistake.

The self-employed are natural Conservatives, and deserve better support than this from a Tory Chancellor.

More importantly, up until this year, they were one of the fastest-growing sectors of the economy - and they remain the one group likely to create the new jobs that will be needed when Covid is finally defeated.

We should stop punishing them - and try offering some help instead. 

It is hard for even his most diligent followers to keep track of how many emergency “support” packages Sunak has now launched. I make it 12, but it would be easy to miss a couple. This week, he was back in the House of Commons unveiling yet more support for sectors and regions of the economy now facing restrictions on their ability to do businesses.

There was, in fairness, some help for the self-employed. The problem was, it was fiddly, complex, and not nearly generous enough.

With VAT, self-assessment, and blizzards of different rules and regulations, most people who work for themselves are already pretty good at forms and paperwork. Even so, many of them will have trouble following the latest set of proposals.

On Thursday the Chancellor doubled the amount of financial assistance, but it still only covers 40pc of lost earnings. That is an improvement on the 20pc originally planned, but it hardly explains what happened to the other 60pc, or why it is so much less generous than the support offered to salaried employees.

No support at all has been offered for lost earnings in September or October, nor has any explanation been offered for why that is.

The latest scheme will only run from October until January, with another round promised for February to March, but with no guidance yet on what it might be. I am just taking a wild guess here, but I’d be happy to bet any money you like that it will turn out to be less.

Anyone who chooses to employ themselves through a limited company - which just happens to be just about all the more successful self-employed people - will be excluded from the scheme. And so will anyone who switched to working for themselves after the end of the 2018/2019 tax year, which takes out all those who are probably still struggling to establish themselves and need the help most

Seriously? Is this for real? Imagine the outcry if teachers were only offered 40pc of their salaries if they were unable to work during tier 2 or 3 restrictions, heads of department were excluded, and a couple of months of pay were left out entirely? Or anyone else who worked in the public sector for that matter. The unions would be in meltdown.

Or think about the apocalyptic reaction on Twitter if Tesco or JD Wetherspoon or any other major company offered to cover less than half the wages of staff put on hold because of the impact of the epidemic. And yet somehow because it is the self-employed, it is seen as okay.

It gets worse. The Treasury was slow to offer any kind of help to people who worked for themselves when the country first went into lockdown. And it has threatened to change the rules on National Insurance contributions for the self-employed, which will, in practice, amount to a major tax increase.

The one positive feature of the bailout has been that support is tapered, so a claim can be made for a partial loss of earnings (unlike most employees, who are either furloughed or not). Other than that, it has been stingy, late, and complex

Surely we should be treating the self-employed better than this. They are natural Conservatives, and deserve better from a party they helped elect. More importantly, they are one of the most dynamic parts of the economy. The number of people working for themselves in the UK rose from 12pc of the total labour force in 2000 to 15.3pc by 2019.

It was close to overtaking the public sector in importance. That translated into 1.8m additional jobs.

There are now ominous signs it is starting to fall (heck, I wonder why that could possibly be?), with 238,000 people - equivalent to a town the size of Swindon - disappearing from the statistics in the latest quarter.

And yet those people were among the hardest working people in the country (surveys show the average person working for themselves does 14 more hours a week than the average employee). They were also the most self-reliant.

Increasingly they were in the growth sectors, such as IT, design, consultancy and professional services. And perhaps most importantly they were the foundations for new businesses. Most entrepreneurs start out by working for themselves.

We are going to need those skills more than ever if we are to create the new jobs that will be needed to replace the millions that will be lost once this crisis has ended. Sunak needs to start getting on their side - and do so before it is too late. 

Do you think that the Government needs to do more to help the self-employed? Let us know in the comments section below.