Blog: Self-employed excluded, again – Colin Crooks

Self-employed excluded, again: Mark Whittaker speaks for us all: How can we make do on zero income?

  • Sunak’s scheme turns its back on 3m self-employed once more

by Colin Crooks, CEO, Tree Shepherd

Another day, another announcement from Rishi Sunak, another devastating blow to the self-employed. Once again, a set of positive new measures from the Chancellor for some, and a big cavernous hole for millions of self-employed up and down the country who are on the brink of financial, and emotional catastrophe. For many COVID is the latest, and worst, in a long line of mistreatment from the Government and funders.

Mark Whittaker, a self-employed curtain fitter spoke for millions on BBC Breakfast: “My work fell off a cliff. We have been utterly let down. It’s like we don’t matter. How can the Chancellor leave a huge group of the population out to drown, to sink? How does he expect anyone to survive on zero income? And the mental health aspect is horrendous. I don’t want handouts. I want parity.”

We work with hundreds of people like Mark Whittaker. We know how much determination and reserves of self-belief it takes for anyone to start a business. COVID has decimated thousands of these micro businesses, and there is still no lifeline from the Government.

In 2012 I started Tree Shepherd to help those furthest from the jobs market to unleash their creative energies and start their own business. I believe that when people can express themselves and follow their dreams, they harness an energy and passion which can overcome tremendous challenges and unleashes enormous creativity.

Yet COVID aside, those wishing to enter self-employment face hidden discrimination on all fronts. Here are a few examples:

Having benefits stopped – with no income 

Many of our clients are on benefits when they join us, in particular housing benefit. As soon as they start to earn income, they must advise the benefit office of their change of circumstances. What happens next? In many cases their housing benefit is stopped immediately because officers – without any evidence – choose not to believe that start-ups initially achieve a very low income. Faced with potential eviction, the stress-filled choice is – keep my business and lose my house, or give up the dream and go back on benefits?

We have fortunately always managed to get the benefit reinstated by supporting our clients through a painful appeal process. But why should we need to? And what about those who can’t get that support?

Ingrained lack of trust by Government 

At a policy level the Government does not fully appreciate the onerous amount of risk that the self-employed, and especially the low paid self-employed, take to secure an income.

When announcing the SEISS fund the Chancellor implied that that self-employed don’t pay their fair share of tax. He said “I must be honest and point out that in devising this [self-employed furlough] scheme – in response to many calls for support – it is now much harder to justify the inconsistent contributions between people of different employment statuses”.

I think that people who take a risk should be rewarded for that by the tax system but as Dave Chaplin, CEO of IR35 tax consultancy ContractorCalculator made clear recently, it’s not even the self-employed that are culpable in tax avoidance:

“Once again, the government claims the self-employed are not paying a fair level of tax,” he told Computer Weekly. “…secondary class 1 NICs [employer’s NI], []is a tax that corporations avoid paying when they hire contractors. Yet the Chancellor used this forum to once again scapegoat contractors as paying less tax.”

Charity funders  

Many funders, including the Lottery will not fund projects that support “private gain” and they interpret that to include helping someone start to a business. That leaves us in the ludicrous position of being unable to help someone who dreams of starting a sewing business that may earn them £15,000 but totally able to help someone else apply for a job that pays them £50,000. Surely getting a job is “private gain”?

Other funders won’t support self-employment as they deem it “low paid and insecure”. They don’t seem to have noticed the creeping growth of zero hours and short-term contracts!

I think that of all organisations funders should be helping people to realise their ambitions.

and lets remind ourselves of just two of the anomalies in the COVID help packages that I posted about last week.

Up to 650,000 people who started a business in 2019/20 are excluded from Covid support when people who were employed at the end of last year are being furloughed?

Another 675,000 self-employed people who earn more from a part-time job get completely excluded when another person can claim furlough for 2 or even 3 jobs – all up to the limit of £2500 per month?

Emerging from COVID fairer and more entrepreneurial

Mr Sunak warned the UK was “entering one of the most severe recessions this country has ever seen” with unemployment at a “significant scale”. For millions of self-employed, that has been a lived reality for months. We know, that, as  I wrote in my book, one of the best way to create jobs, locally and fast  is to encourage business start-up and self-employment, so why does the system discriminate so badly against them?

Post-COVID we need a radical re-think of how we treat those who are willing to take a risk and start a new business, but while COVID rages, we need the Chancellor to live up to his promise that he would do “whatever it took to protect people and businesses from the effects of the pandemic”.

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