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Two million self-employed people thrown a lifeline but gaps in support remain

Maxine Wilson  - AKP Branding Stories 
Maxine Wilson - AKP Branding Stories

The two million self-employed people currently relying on a government grant have been saved from a cliff-edge income drop at the end of May, as Chancellor Rishi Sunak has promised to extend the support.

In August they will be able to apply for a second grant that will cover them for income lost in the intervening three months. However it will be less generous than the first round of funding and only compensate people for 70pc of their typical profits, up to a total of £6,570 for the three months.

Mr Sunak said there would be no further extensions to the scheme.

Freelancers and contractors who are eligible for the funding have until now been receiving a grant covering 80pc of their profits, up to a maximum of £2,500 a month. The scheme was due to close at the end of May, which risked leaving self-employed people who have no work with no other income.

This could have been disastrous for the three-quarters of people receiving the grant who, research has shown, are completely reliant on it.

Mike Cherry, of trade body the Federation of Small Businesses, said: “Our self-employed community will be greatly relieved to know that the income cliff-edge they were facing in two days’ time has now been removed.”

Small companies and the self-employed | Numbers to call
Small companies and the self-employed | Numbers to call

However he added that more should now be done to help those who are not eligible for a grant, such as the newly self-employed and directors of limited companies.

Adrian Beadnell, who has been receiving a government grant, said the news was a huge relief. The 64-year-old self-employed first aid trainer from North Yorkshire has been completely reliant on the £1,000 a month he has received from the scheme, as he has had no other income since he ran his last course in mid-March.

Mr Beadnell said he did not expect companies to start booking first aid courses until October and was not sure how he’d have got by until then otherwise. “The mortgage is paid off but I would have probably had to sell some of the guitars I’ve collected over the years,” he added. “It will definitely save a lot of small companies from going under.”

For other freelancers, the news has not been so much of a comfort. Maxine Wilson, 34 from north Oxfordshire, is a former solicitor who now runs a business doing hair and make-up for weddings. She has been receiving a government grant but, because she stopped work for nine months during her maternity leave in 2018, she was awarded just £300 to compensate her for three months of lost income.

“Just before lockdown I was making £3,500 a month and was due to make around £7,000 in June,” Ms Wilson said. “I’m glad to hear the grant has been extended but for me £100 a month barely covers one weekly food shop for our family.”

She said that more needed to be done to fix the flaws with the scheme that have meant many freelancers, particularly mothers who have taken a career break, are having to live hand-to-mouth.

“I won't be able to work for a long time as it is impossible to maintain a two-metre gap between myself and my clients. I could wear a face mask while doing make-up but the client couldn't,” she said. “I don’t think my business will restart until we’ve found a vaccine and it will be almost impossible to live off £100 a month until then – although it’s better than a kick in the teeth.”

The Government was under huge pressure to extend the scheme as more than 100 MPs wrote to the Chancellor calling on him to do so.