Government support for self-employed people has been extended until the end of the summer but the chancellor is facing fresh criticism over a scheme that critics say will still leave millions of workers without support.
Grants for those whose earnings have been hit by the coronavirus pandemic will last until September, taking the overall cost to more than £32bn.
Rishi Sunak announced two more self-employment income support scheme (SEISS) grants in Wednesday’s budget, to follow the three that have been awarded since the start of the pandemic.
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Applicants for the fourth SEISS grant – covering the period from February to April – will be able to claim 80% of their average trading profits over a three-month period, paid in one lump sum capped at £7,500.
They can claim from the end of April and must have filed a tax return for the 2019-20 tax year to be eligible.
The value of a fifth and final grant, to cover the period from May to September, will be determined by a “turnover test”, the chancellor said, on the basis that support should be offered to those who need it most.
People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. Anyone whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. The final grant can be claimed from late July.
The scheme has cost £19.7bn so far, with the nearly £12.8bn cost of the fourth and fifth grants taking the total to £32.5bn.
The Treasury said 2.7 million people had received help from SEISS, unveiled in March 2020, adding that 600,000 may be newly eligible, including those who became self-employed just before the first lockdown, during the 2019-20 tax year.
Sunak said the scheme was “one of the most generous programmes for self-employed people anywhere in the world”.
But critics have said the policy excludes up to 3 million people who do not qualify for support and that the size of the grant scheduled for this summer has been exaggerated.
The Resolution Foundation thinktank estimates that two-thirds of self-employed people are not eligible under the SEISS criteria.
Mike Clancy, the general secretary of the Prospect trade union, said: “This budget hides yet another sleight of hand for self-employed workers. Despite promising to help freelancers, today’s announcement means that financial help for self-employed workers will run out two months before support to employees.
“Throughout the crisis the self-employed have been treated as second-class citizens and this budget continues that approach with less support, more red tape, and the continued exclusion of many thousands.
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“Fully backing the self-employed is not only a moral imperative, it makes sound economic sense to secure the recovery. Unfortunately in this budget the chancellor has given with one hand and taken away with the other.”
Mubin Haq, the chief executive of the financial wellbeing charity Standard Life Foundation, said: “Whilst it’s welcome more of the self-employed will now be able to claim the SEISS grant […] this still leaves over 3 million people who have experienced a drop in income unsupported by the schemes.”
“Too many excluded for the past year, far too many facing severe hardship.”