Close to half a million self-employed people face taking home only two-fifths of their regular income under the Chancellor’s new support scheme, new research has found.
Freelancers will be able to apply for a grant worth just 40 per cent of their usual average monthly trading profits, half of what was offered during the first lockdown.
It means the average freelancer in the arts or hospitality will receive just £450 a month if their industry is shut, or affected by Tier-2 or 3 restrictions.
The Labour Party, that commissioned the research, has accused the Government of leaving the self-employed “in the lurch”.
Shadow business secretary Ed Miliband said: "Almost half a million self-employed people work in industries either partially or fully closed. They're in desperately choppy waters with many deeply worried about their future.
"Yet ministers are taking away their life raft and leaving them to sink or swim. That's not just callous, but economically wrong. These are our country's artists and performers, and people in our vibrant tourism, sports, cultural and hospitality sectors."
Philippa Childs, head of the Broadcasting, Entertainment, Communications and Theatre Union (Bectu), said: "Self-employed and freelance workers have been hit incredibly hard by the pandemic, especially in sectors such as the creative industries where work has been slow to return and workers are still struggling to earn.
"Asking people to live on 40 per cent of their income is incredibly tough, and it is even worse for the tens of thousands of workers who have been deliberately excluded from any support by the Government.
"A blanket policy of 40 per cent for the self-employed will not work for these industries and will have a devastating impact on the skilled workforce that are the backbone of this £100 billion sector."
Chancellor Rishi Sunak announced the new measures on Thursday, as he pledged £13 billion of extra support to save thousands of firms as he said Covid restrictions had left businesses facing "profound uncertainty".
The Chancellor announced more Government support to top up pay and additional grants for companies in Tier 2 that had little or no Government help.
The third round of funding for the self-employed was thought to be going to cover only 20 per cent of average monthly profits over a three-month period, capped at £1,875 in total. However, Thursday’s announcement brings the actual grant available to 40 per cent, or £3,750.
The changes come after the support provided for the self-employed in the face of the ongoing coronavirus crisis was branded “woefully inadequate”. Mr Sunak told the Commons: “So far through this crisis we have provided over £13 billion to self-employed workers.
“Sole traders, small businesses and self-employed people are the dynamic entrepreneurial heart of our economy and this Government is on their side.”