Phillip InmanSun, 14 February 2021, 7:00 am
The number of self-employed people who have stopped working during the current lockdown is already 50% higher than the number without work during the first lockdown, and 41% have experienced a significant drop in earnings, according to a study by the Resolution Foundation.
Revealing the toll on self-employed workers, many in the hardest hit parts of the economy, the study shows around 700,000 have stop
ped working entirely during the current restrictions, up from 460,000 last May. Hairdressers, cleaners and people who became self-employed before the pandemic hit are among those who have missed out on support after government reforms failed to cover 1.5 million of the UK’s previously 5 million-strong army of self-employed workers.
The study shows a steeper fall in the number of actively working self-employed people than official figures suggest and will pile pressure on the chancellor, Rishi Sunak, ahead of the budget next month. He is expected to report the largest peacetime public spending deficit. Many MPs have lobbied the Treasury to provide more support for the worst affected, whom previous studies have shown are also mostly young and low-paid workers.
Mel Stride, the Tory chair of the all-party Treasury select committee, has criticised officials for the limited scope of protection for the self-employed, many of whom have been forced to claim universal credit.
Britain narrowly avoided a double dip recession according to figures last week that showed the economy grew in the final quarter of 2020. However, the modest expansion of 1% between October and December failed to prevent the UK’s national income falling by 9.9% over the year – the worst annual rate since the Great Frost of 1709.
Forecasts show the UK recovering in the second half of 2021 as Covid vaccination and easing of restrictions allows the hospitality and leisure industries to reopen.
But the UK’s main forecasters are at odds about the pace of the recovery and the Office for Budget Responsibility, which provides the Treasury with independent forecasts, is likely to take a cautious stance, limiting the projections for growth and tax receipts, forcing the chancellor to borrow more to support the economy.
Sunak is still likely to extend most of the support for businesses and households when he lays out his plans for the year ahead, though it is understood he has resisted widening the scope of his rescue programme for self employed people.
Hannah Slaughter, an economist at the thinktank, said the government should extend the eligibility criteria for support to help those who are missing out, and offset the cost by clawing back money from workers who received grants during 2020 “well in excess of the losses they’ve incurred during the pandemic”.
The thinktank said 41% of self-employed workers have experienced a fall in earnings of 25% or more during the current lockdown.
“This is only slightly lower than the proportion of workers who experienced a severe income shock in the first national lockdown in May (45%),” the report said.
A Treasury spokesperson said almost £20bn had been used to support the self employed.
“That said, we acknowledge it has not been possible to support everyone in the way they might want, but we keep our schemes under review and will set out the next stage of economic support at budget.”