New self-employed financial help announced by government has been welcomed, but concerns around cash-flow and covering business costs remain for some.
In the latest step to protect individuals and businesses, which includes thousands of taxi drivers across the UK, the Chancellor of the Exchequer Rishi Sunak, yesterday announced plans that will see the self-employed receive up to £2,500 per month in grants for at least 3 months.
Those eligible will receive a taxable cash grant worth 80% of their average monthly trading profit over the last three years. This covers 95% of people who receive the majority of their income from self-employment.
The move was welcomed by the majority of those working in the taxi and private hire industry, however there were some remaining concerns raised.
Labour MP and Chair of the All-Party Parliamentary Group on Taxis, Wes Streeting, showed concerns over the delay faced by self-employed workers to receive the grant. Taxi drivers and other tradespeople are likely to have to wait until June for the backdated grant payment, which could cause cash flow issues in the interim.
Streeting MP said in a series of Tweets: “The support for the self-employed announced by the Chancellor is less generous than hoped, but more generous than feared. The real concern now is for people who can’t afford to wait for help to arrive. Lots of those on low and middle incomes face an immediate cash-flow crisis.
“There are going to be a lot of self-employed people left in financial hardship even after this announcement: those who don’t have money to last until June, those who became self-employed more recently than the cut-off date and those earning over £50k with little/no savings.
“Already I’m receiving messages from people not covered by this scheme and facing real hardship. I honestly thing a basic income with clawback through the tax system would have been a more efficient way of helping people. The Treasury and DWP are obsessed with complexity.”
Before yesterday’s announcement by Mr Sunak, London’s biggest taxi driver association, spoke of a phone conversation they claim to have had with the government’s Chancellor.
Steve McNamara, General Secretary of Licensed Taxi Drivers’ Association, said: “He (Sunak) advised me that he, and the Prime Minister, were very aware of the dire financial circumstances that many cabbies currently find themselves in. He was able to share some detail of the support package currently being worked on by the Treasury and I was able to answer some questions and provide some information and data on our trade.
“He was amazingly candid about the complexity of designing a single solution for the many different trades and businesses that make up the self employed. He was also keen to share his respect and admiration for our trade, what we do, and all our efforts and offers of help during the current crisis.”
The GMB union were also complimentary of the package put forward by the government, but have now already turned their attentions to the ‘fake self-employment’. The union have also asked government to target employers not offering enough protection to workers, who are being asked to carry on working to provide non-essential services.
Tim Roache, GMB General Secretary, said: “Millions of self-employed workers will sleep easier tonight. Food, rent, utilities aren’t cheaper if you’re self-employed and for many work has dried up, so it’s right and welcome that support will now be put in place.
"When this is all over we will need to ask how many workers classed as ‘self-employed’ genuinely fall into that category – the explosion of fake self-employment has undoubtedly made this much more difficult.
"GMB stands ready to work through the detail with government so people get the clarity and support they need as soon as possible.
“Next the government should take action on businesses who are not providing essential services but refuse to do the responsible thing and use government support to close their doors - or provide adequate protections to keep their workers safe.”
According to the Federation of Small Businesses (FSB), the pledge of financial support “will give hope to many hard-working, self-employed entrepreneurs”.
Mike Cherry, National Chairman of the FSB, said: “This bold support package from the government will give much-needed help to vast numbers of self-employed workers, guaranteeing 80 per cent of income to those affected, with earnings of up to £50,000.
“This is a time of national emergency, and it is very welcome that the Government has listened to FSB and responded with a multi-billion-pound package to support the most financially vulnerable entrepreneurs, and to do so through the self-assessment system.
“This follows help in the Budget and since, that was aimed squarely at small businesses such as a cut in the jobs tax, cover for small employers that cannot pay their employees, business rates holidays, cash grants, mortgage holidays, rent protections, and interest-free, fee-free loans. We hope the raft of support will keep as many small businesses as possible afloat.
“The self-employed, however, remained a glaring gap. They needed more help, and especially those with least resources to prepare for this storm. We have heard despairing stories from hard-working hairdressers, bakers, childcare providers, freelancers, drivers and many others, seeing the businesses they’ve spent years building dry up in a matter of days. It is many of those strivers who today’s package will support.
“The self-employed community underpins the UK economy. They are the individual risk-takers who don’t expect the same benefits as employees. In this moment of a collective national effort to overcome a global pandemic, today’s package is a significant, multi-billion-pound improvement on what was proposed last Friday.
“Many tax-paying self-employed who will be helped by today’s measures will be relieved. Although the deal is not perfect, the Government has moved a very long way today.
“This is an incredibly challenging situation for everyone. While the healthcare response is paramount, overcoming the economic disruption also requires a speedy response in the interests of jobs and future growth. Today’s announcement will give hope to many hard-working, self-employed entrepreneurs, and it is important that the scheme is ready on-time and delivered as soon as possible. As this will be run through self-assessment, it is vital that any late filers submit their 2018-2019 return, right now, or they risk missing out.”