The charity, Money Advice Trust, which is behind charities National Debtline and Business Debtline, has written to the Minister for Small Business, Paul Scully, to make the case for a dedicated ‘Covid-19 Self-employment Recovery Strategy’ to help people who are self-employed recover from the impact of the outbreak. Further proposals include introducing a discretionary grant scheme specifically to support the millions of self-employed people excluded from the SEISS.
Extending the suspension of the Minimum Income Floor, which has given self-employed people fairer access to Universal Credit, would also be proposed with a view to reform in the longer term – and extending the £20 a week uplift in Universal Credit.
Increasing the powers of the Small Business Commissioner to act on late payments, including the power to impose penalties for non-compliance with the Prompt Payment Code given the scale of this problem has also been proposed.
Joanna Elson CBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said: “Covid-19 has dealt a huge and sometimes devastating blow to the finances of self-employed people across the country. Government support has helped in the short-term, but any hope of a financial recovery remains a long way off for many – and the millions excluded from support are facing severe challenges.”
She continued, “The impact of this crisis goes far beyond the business, with personal and family finances taking the brunt. Most worryingly, all of these challenges are coming at a severe cost to the mental health of self-employed people.”
Elson is calling for the government to “urgently” set out a Covid-19 Self-employment Recovery Strategy to provide a route out of COVID-19 related hardship. “This needs to include a dedicated grant fund for those so far excluded from support, improvements to the support available through Universal Credit and stronger action on late payments,” she said.
In the meantime, Business Debtline advisers will be supporting the thousands of self-employed people and financial difficulty amongst the self-employed is set to soar, meaning the scale of the challenge cannot be underestimated.
Business Debtline provides free, impartial debt advice to small business owners and self-employed people at www.businessdebtline.org.
The COVID aftermath on the self-employed
The charity’s ‘Back to business: Supporting people in self-employment to bounce back from Covid-19’ report, based on Opinium polling of more than 2,500 self-employed people and insight from its Business Debtline service, highlights the devastating impact of Covid-19 on the financial and mental health of self-employed people, and the long road to recovery that lies ahead for many.
- 37% of self-employed people surveyed expect it to take more than a year for their income to recover – while one in 10 do not expect it to at all
- 61% are expecting a further drop in income due to the Covid-19 outbreak
- Charity calls for dedicated Covid-19 Self-employment Recovery Strategy
Nearly four in ten (37%) self-employed people surveyed expect it to take more than a year before their income returns to pre-Covid levels, while a tenth don’t expect their income to recover at all, said the Money Advice Trust.
The charity behind Business Debtline is calling for the Government to introduce a Covid-19 ‘Self-Employment Recovery Strategy’ to secure the financial and economic recovery of people who are self-employed – a workforce of more than 5 million who contribute an estimated £305 billion to the economy.
Impact of Covid-19
The report highlights how particularly hard hit self-employed people have been by the Coronavirus outbreak – from struggling to cover essential costs, losing sleep due to financial worries, and in some cases ceasing to trade.
- Nearly a third (29%) of the people surveyed have fallen behind on one or more bill or credit commitment as result of Covid-19.
- Personal finances are bearing the brunt – twice as many have fallen behind with household bills than with business bills, as many seek to prop up their business.
- More than half (55%) said Covid financial worries had a negative impact on their mental health, with four in ten (43%) regularly losing sleep.
Access to support
Government support, including the Self-Employment Income Support Scheme (SEISS) has been a lifeline for those eligible, however many continue to struggle – and many others who have not been eligible for support face particular challenges.
- Of those surveyed without access to the SEISS a quarter (25%) had fallen behind on household bills – and of those who are expecting to need debt advice in the next year, three quarters (77%) had not received the SEISS.
- Many who were ineligible for the SEISS or other support are struggling to get by on Universal Credit alone. Almost half (47%) of self-employed people surveyed who were on Universal Credit were behind on at least one household bill or credit commitment.
- Worryingly, three in ten (29%) who have taken out a government-backed loan are not confident they would be able to repay it when required.