Lesley Riddoch: The self-employed are being left out in the cold

Chancellor must show them same consideration as the employed as coronavirus crisis bites, writes Lesley Riddoch.

Which workers are most worthy of public praise and special treatment?

Weekend headlines reported the strange case of Ayrshire café owners, who were criticised on social media for offering free, ready-meals to local nurses and doctors, because other key workers want recognition as well.

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Now no question, health workers are by definition, at greatest risk in this Covid-19 pandemic. But cleaners, delivery workers and care staff also deal with vulnerable people, often without advocacy, union representation, media attention or personal protective equipment. And today that cohort of frontline workers will be supplemented by teaching staff who must decide whose children can be accepted into emergency education centres, who must be turned away and how those ‘rejected’ parents can best be handled. Not a job for the faint-hearted.

Kris Hitchen in the film Sorry We Missed You about the downward spiral faced by a self-employed couple. Picture: ContributedKris Hitchen in the film Sorry We Missed You about the downward spiral faced by a self-employed couple. Picture: Contributed
Kris Hitchen in the film Sorry We Missed You about the downward spiral faced by a self-employed couple. Picture: Contributed

It’s awkward, but probably not surprising that hard-pressed, under-recognised workers find it hard to stay silent when a pecking order of worth is suggested.

But in truth, they are only following Rishi Sunak’s lead.

Undoubtedly, the Chancellor’s announcement of income protection for employed people was a bold and timely masterstroke. But what was the rationale for excluding Britain’s five million self-employed?

Harder to help? Less likely to lose income? Somehow less worthy?

No explanation was given, so the employed majority will draw their own conclusions, based perhaps on the mistaken belief that self-employed people are either chaotic gig workers with hard to validate, fluctuating incomes or tax-avoiding fat cats.

Yes, some folk chose self-employment because the risk of cutting your own furrow is offset by lower taxes; some want the freedom to craft their own lives and others have been “let go” by employers who’ve substituted older workers for younger, cheaper recruits.

A Resolution Foundation analysis found 60 per cent of the growth in self employment since 2009 has been in ‘privileged’ sectors like advertising, public administration and banking. But they still account for just 40 per cent of all self-employed people.

The average self-employed woman earns around half the average employed female wage – with self-employed men earning two-thirds the average employed male pay packet, according to the Office for National Statistics. Self-employed folk get no statutory sick maternity, pension, holiday pay or protection against unfair dismissal. Private income protection insurance against redundancy is hard to get without a steady salaried income – likewise a mortgage. Life inside the gig economy can be particularly grim. If anyone doubts that, try watching the latest Ken Loach film Sorry We Missed You. The terrifying, downward spiral faced by a self-employed couple in the care and delivery sectors was hard to watch when the film was released last year. Now, when precisely these key workers will be depended upon day and night, in the coronavirus emergency, it’s obscene.

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Five chief executives constitute the most highly paid employees in Britain with a combined pay packet of £148 million, but the high pay of the few doesn’t weaken the case for state intervention to help the many. Why then have the self-employed been treated so very differently?

Essentially Rishi Sunak’s jobs deal means an employee on £30k a year will get a non-means-tested £24k salary from the government during the present crisis, while a similarly paid self-employed person will get just £4,800 a year – but only if they can navigate our unfit-for-purpose benefits system and have symptoms of the coronavirus. That’s a massive kick in the face for all sorts of people; shopkeepers, hairdressers, cleaners, beauticians, bricklayers, plumbers, brickies, musicians, writers, artists, journalists and tens of thousands in the gig economy.

Last night, opposition politicians and an online petition were building pressure on the Chancellor to follow Norway’s example and pay self-employed workers 80 per cent of last year’s declared income.

Hopefully, Rishi Sunak will act. But why were the self-employed excluded from his plans in the first place?

Perhaps the answer lies in behind-the-scenes chaos at the HMRC. Hardly the easiest people to deal with at the best of times, they are apparently swamped. An accountant friend spent 45 minutes on the phone trying to sort a fairly straightforward tax claim last week:

“I never thought I would say this, but I feel sorry for the HMRC. The guy I spoke to was in a department normally staffed by 40 people – now they’re down to just ten.” Could this be why Rishi Sunak abandoned the self-employed? Are their non-PAYE, non-standard lives and finances simply too complex for an overstretched service to deal with?

If so, the Chancellor could encourage another breathtaking departure from tradition, and establish a portal – outside the government’s own networks for speed – to which accountants and “unrepresented” self-employed people could upload three years of income data and thus calculate levels of government payout.

Yes, I know.

Accountants and the HMRC are normally at polite daggers drawn, and are perhaps the least sympathetic actors in the public domain.

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But if the self-employed are being hung out to dry because payment looks too hard, Rishi Sunak can take another bold step away from convention and enlist help from accountants. Why not? Retired nurses are back in the NHS, distillers are producing hand gel and manufacturers are making ventilator components. If it’s all hands to the pumps, accountants should be ready to serve the public good as well. Unquestionably, some big firms charge exorbitant fees – but the government could enforce decency by introducing a flat rate fee of £50 to produce proper, validated accounts for folk managing their own books.

It would also be fairer to use a three-year average of previous earnings, since new recruits to self-employment often make a loss for the first few years, while pregnant workers and part-time students can show next to no income for a time.

Of course, the fairest alternative is a basic income for all – but the UK Government shows no sign of wanting to be quite that avant garde. So, the solution is obvious.

Rishi Sunak must pay self-employed people 80 per cent of their last three years’ average earnings, with an £2,500 monthly upper payment cap to show employed and self-employed workers they are valued equally by this government.

And accountants can redeem their professional reputation by getting in first to volunteer their help.

Might that happen?

Prepare to ring the calendar.