Sunak's £12bn scheme for self-employed was 'terribly targeted', says analysis

Rishi Sunak’s flagship scheme to help the self-employed through the pandemic has handed £1.3bn to workers who saw no loss of income while giving nothing to 500,000 people left without work, new analysis has revealed.

In a sign of major flaws in the £12.7bn self-employment income support scheme (SEISS), more than 400,000 workers were able to claim support despite losing no income in the crisis.

The analysis by the Resolution Foundation thinktank, to be published later this week, concluded that the scheme had been “terribly targeted”. The findings are part of its review of the labour market six months into the crisis. It finds that the self-employed have suffered “an even bigger labour market shock” than employees.

Three in 10 self-employed workers stopped working altogether at the peak of the crisis. Many have returned to work but their recovery has been slow. Around one in six (17%) are still without work, rising to almost a quarter (24%) of 18- to 34-year-olds who were self-employed pre-crisis.

The SEISS has been an expensive scheme to run for the Treasury and apparently more generous than the job retention scheme for employees. Some £2,518 was spent supporting each self-employed worker through the scheme, twice as much as the £1,128 spent per employee.

However, the new analysis raises major doubts over how the money has been directed. While 78% of SEISS claimants lost income, in many cases that loss was smaller than the amount claimed. Meanwhile, 67% of self-employed workers who had not claimed under the scheme did lose income during the crisis.

The thinktank blamed strict eligibility rules and weak assessment rules for the issues with the scheme. Applicants were not asked to prove they had been hit financially by the crisis. Hannah Slaughter, economist at the foundation, said: “The UK’s five million self-employed workers have been at the heart of its jobs crisis. A quarter of young self-employed workers are still without work today. This crisis is far from over for the UK’s self-employed workers. Future support should avoid excluding so many groups, while ensuring payments reflect genuine falls in income. And an immediate priority should be to strengthen universal credit for the many self-employed workers who will really need it in the months ahead.”

It comes with the government under increasing pressure to increase its help for the self-employed further as Covid restrictions increase again. A slimmed-down version of the scheme is now in operation, though Sunak last week doubled the value of the grants the self-employed can access from 20% to 40% of average monthly profits. This is half the level available during the spring’s lockdown.

Andy Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed, said: “Two-fifths of income simply will not be enough for many of the UK’s creative freelancers, who are the backbone of our vital cultural, entertainment and hospitality sectors. It’s also crucial to remember how many freelancers in these industries have been entirely excluded from claiming even 40% of their income – because they work through limited companies or are newly self-employed.

“Government must take note and drive more and better targeted support to self-employed people in need – especially our forgotten freelancers and those working in badly struggling sectors.”

The Treasury disputed the Resolution Foundation’s findings, arguing that there were safeguards designed to ensure the help only reached those who needed it. “As the report states, we were right to introduce the self-employment scheme – which has helped protect the livelihoods of 2.7 million people and is just one part of our £200bn package of unprecedented support.”

“The scheme is targeted to help those most in need. All those who apply must confirm they have been adversely affected by the pandemic and the vast majority of those who do not qualify either earn more than half their income from another source or have trading profits of over £50,000.”