Concerns about govt support blamed for self-employed ‘exodus’

Concerns about govt support blamed for self-employed ‘exodus’

The number of self-employed individuals has fallen by 174,000, which some believe is due to concerns about the level of government support during the pandemic.

Figures from the Office for National Statistics, published today (November 10), found in the three months to September there was a 174,000 fall in self-employment to 4.53m, with a record 99,000 decrease for women, compared with the previous quarter.

The number of people who changed from self-employed to employed in Q2 and Q3 was 277,000, the highest since records began in 2005. 

Laith Khalaf, financial analyst at AJ Bell, said this could be down to the difference in the level of Covid support the self-employed receive.

He said: “Many of these have not changed jobs, but have simply switched their categorisation, presumably concerned about the level of government support for the self-employed through the pandemic.”

Self-employed workers received two grants from the government covering up to 80 per cent and 70 per cent respectively of their average monthly profits for two-three month periods.

Chancellor Rishi Sunak last week (November 2) extended the Self Employed Income Support Scheme (SEISS) grants in line with the extension of the Coronavirus Job Retention Scheme.

As SEISS grants are calculated over three months, the uplift for November to 80 per cent, along with 40 per cent of trading profits for December and January. A further grant is available for the three months to April.

However, the eligibility criteria remained the same, which means many self-employed are missing out.

Derek Cribb, chief executive officer of IPSE (the Association of Independent Professionals and the Self-Employed), said “glaring gaps in support” were leading to a long-term decline in the sector.

He said: “This is deeply concerning not only for the self-employed themselves, but also for the UK’s prospects in the coming recession.

“After the 2008 financial crisis, it was rising self-employed numbers that kept unemployment comparatively low – as uncertain employers looked for more flexible expertise instead of permanent employees. 

“Now, this does not appear to be happening and the self-employed sector is in precipitous decline. Some self-employed are finding their way into full-time roles, but many others are joining the record flow into unemployment.”

He urged the government to increase support to “hold back an even worse unemployment problem later”.

Last week (November 3), the Institute for Fiscal Studies (IFS) criticised the government for leaving out some individuals from its Covid support scheme, warning that a fifth of self-employed people were ineligible to claim.

It estimated that 18 per cent of those for whom self-employment makes up at least half their income were ineligible for the Self Employed Income Support Scheme (SEISS), and 38 per cent of those with any self-employment income.

Soaring redundancies

In the past quarter, redundancies reached a record high of 314,000 and unemployment rose to 4.8 per cent, up 0.7 per cent from the previous quarter.

Chancellor of the Exchequer, Rishi Sunak, said: “Today’s figures underline the scale of the challenge we’re facing. I know that this is a tough time for those who have sadly already lost their jobs, and I want to reassure anyone that is worried about the coming winter months that we will continue to support those affected and protect the lives and livelihoods of people across this country.”