Millions of Self-Employed British Workers Are Promised Help

Joe Mayes and Alex Morales
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U.K. Virus Aid Package Beats Financial Crisis Stimulus

(Bloomberg) --

Millions of Britons who work for themselves will be promised a rescue package as the coronavirus pandemic threatens their incomes.

U.K. Chancellor of the Exchequer Rishi Sunak will announce assistance to the self-employed on Thursday in what will be his fourth set of emergency measures to cope with the economic fallout from the coronavirus crisis.

It comes as Prime Minister Boris Johnson’s government battles growing criticism of its response to the spread of the virus, which has been slower than some other countries.

The measures will supplement provisions for tax breaks, loans and hardship grants that are already available to the self-employed.

“It’s been tricky to work out a package that will address the needs of as many people as possible,” the prime minister said in a news conference Wednesday. “But that has been done, it’s been done at incredible speed.”

This is the latest set of policies to deal with the U.K.’s virus outbreak in just over two weeks and comes in response to political pressure to give freelancers and the self-employed some relief to match that of workers who were guaranteed 80% of their wages if they can’t work or lose their jobs due to the economic downturn. There are roughly 5 million self-employed in the U.K.

Pressed on the issue of aid at Wednesday’s Prime Minister’s Questions in the House of Commons, Johnson said he shared the “the desire to get parity of support” for the self-employed and “ensure that everybody gets the support they need.”

The Resolution Foundation said in a report that the government should widen wage subsidies to self-employed workers and those who have already lost their jobs, rather than limiting the program to people put on temporary leave by their employers. Such a promise would cost around 3.6 billion pounds ($4.3 billion) for three months if 1 million people claimed it.

The Institute for Fiscal studies said almost a million self-employed workers are in sectors now experiencing a collapse in demand and those working for themselves were already much more likely to be living in poverty than employees.

“Many low-income self-employed workers will see their incomes bolstered by the temporary benefit increases, but they are currently getting a lot less protection than employees,” said IFS Deputy Director Helen Miller. “It is right that the government look at what more can be done for this group.”

In Germany, there’s a 50 billion-euro liquidity pot for the country’s 3 million self-employed and tiny businesses, while France has created a “solidarity fund” and the government has pledged to pay out 1,500 euros ($1,630) to self-employed workers who meet certain criteria.

Sunak has warned it will take time for any help to actually reach the self-employed. On March 11, he unveiled 12 billion pounds of measures to mitigate the effects of the outbreak on the economy, as part of his first budget. As evidence mounted that the crisis was snowballing, he followed up with a 350-billion pound stimulus package comprising government-backed loans, grants and tax cuts for struggling companies.

Then, last Friday, he said the government would pay a portion of citizens’ wages for the first time in the nation’s history, as he announced a package that also included 7 billion pounds of extra welfare spending.

(Adds comment from the Institute for Fiscal Studies)

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