Boris Johnson announces extra support for self-employed during second lockdown

Boris Johnson has announced a multi-billion pound boost to help the the self-employed  survive the second lockdown, but faced calls to plug gaps that have left millions without access to additional support.

The Prime Minister confirmed on Monday that the three-month cash grants for the self-employed would be increased from 40 per cent to 55 per cent of average monthly trading profits, capped at £5,160.

The window for claiming the grants has been brought forward by a fortnight, to November 30, in order to help firms with cash flow problems.

It comes after business leaders complained of a mismatch between the support for the self-employed and other workers who, under the revived furlough scheme, are able to receive 80 per cent of their wages heading into the second lockdown. 

Mr Johnson also confirmed that business loan schemes due to finish at the end of this month have been extended to the end of January, with small firms able to "top up" existing loans should they need additional funds. 

However, the Association of Independent Professionals and the Self-Employed (IPSE) warned that the package still failed to plug "devastating gaps" in the scheme which, from the outset, has failed to cover an estimated 2.9 million freelancers, contractors and the newly-self-employed.

Meanwhile, Dame Carolyn Fairbairn, the outgoing director general of the Confederation of British Industry (CBI), warned that businesses were heading into a "bleak, bleak midwinter" and that additional support would be needed if lockdown dragged on into December. 

She added that while furlough would help meet fixed costs, it would not offset the huge hit to hospitality firms which, on average, rely on the Christmas trading period for a third of their takings.

Dame Carolyn urged the Government to set out an exit strategy and warned against the spectre of rolling lockdowns, with "lockdown three, four and five" delivering even more "devastating" blows to the economy. 

It came just hours after Rishi Sunak, the Chancellor, attempted to reassure business that the lockdown would not stretch into 2021, adding that the "firm hope and expectation" was that the country would return to a regional tiered system of restrictions on December 2.

Writing in The Telegraph, Mr Sunak acknowledged that the latest restrictions are "frustrating and difficult" but insisted the Government is "on your side".

"We will come through this crisis because there is a future worth fighting for," he said. "We have helped millions of people to continue to provide for their families. This week, the IMF called our response to the pandemic one of the best examples of coordinated action globally.

"The spread of the virus is accelerating faster than we hoped. We will meet this new challenge in the same spirit that has driven our responses from the start – whatever it takes."

Updating MPs on the latest restrictions, Mr Johnson said he was "truly sorry for the anguish" they would cause for businesses which had just "got back on their feet".

"The Government will continue to do everything possible to support jobs and livelihoods in the next four weeks as we have throughout," he added. "We protected almost 10 million jobs with furlough and we're now extending the scheme throughout November.

"We've already paid out £13.7 billion to help the self-employed and I can announce today that for November we will double our support from 40 to 80 per cent of trading profits."

Mr Johnson also hinted that the Government would not reinstate rules that would cut benefit payments to self-employed people whose wages are topped up through Universal Credit. Ministers have been preparing to reinstate a so-called minimum income floor (MIF) this month which would cut their entitlements to the level of minimum wage employees. 

Research by the Institute of Fiscal Studies warned the MIF affects about 450,000 households, who lose an average of £3,200 a year from the assumption that they earn as much as full-time employees on the minimum wage.

Asked about the issue, Mr Johnson told MPs it was something that the "Government well understands and we are looking at actively at the moment".

Under the original self-employment income support scheme (SEISS), applicants were given a three-month cash grant worth 80 per cent of their average monthly trading profit, capped at £7,500, followed by a second installment set at 70 per cent worth up to £6,570. 

However, the latest grant was originally set at 40 per cent of monthly profits, capped at £3,750, creating a potential mismatch between the scheme and furlough, which has been increased again to 80 per cent of workers’ wages.

The changes will see the grants hiked to 80 per cent of profits for November – or 55 per cent over the three-month period – bringing it in line with a month’s worth of furlough and two months of the less generous Job Support Scheme, which will resume after lockdown. 

The increase means that the self-employed will receive £4.5 billion over the next three months. 

Welcoming the announcement, Adam Marshall, the director general of the British Chambers of Commerce, said it would "provide relief to many" but argued that it should have been announced at the same time as the furlough extension. 

He also urged Mr Sunak to consider extending the support beyond November due to the "difficult winter ahead".