Wednesday 17 February 2021 10:30 pm

Covid: Half a million self employed still excluded from government's SEISS scheme

The Self Employment Income Support Scheme (SEISS) is still failing to directly target the right self employed workers, according to a report by the Resolution Foundation think tank.

500,000 self employed workers who were still without work in the autumn had received no support from the scheme to date.

Currently five million self employed workers are still without any work.

Read more: Proposals to help self-employed and directors backed by cross-party MPs

Some gaps in the coverage of SEISS were glaring: By contrast, two-thirds (67 per cent) of self-employed workers who hadn’t claimed the SEISS have experienced a loss of income during the crisis – and therefore needed support.

The Resolution Foundation said that of those self-employed workers claiming a grant, 17 per cent did so despite not losing any income. At the same time, nearly 80 per cent claimed more than what they had lost out on.

The foundation has estimated the cost of this to be around £1.3bn.

A staggering 78 per cent of claimants experienced an income loss, even though it was often smaller than what was claimed

The SEISS scheme was introduced during the Covid-19 pandemic last year and is worth £12.7bn.

It has been rolled out by HM Treasury and is being used to provide support to the lowest self employed earners, as well as those that rely solely on being self employed for their income.

HM Treasury responded to the foundation’s findings and said:

“We acknowledge that it has not been possible to support everyone in the way they might want, but we continue to keep our schemes under review and will set out the next stage of economic support at Budget.”

According to the Resolution Foundation, a combination of factors could be responsible for the “woeful targeting” of the scheme. These include: strict eligibility rules, which excluded many new or higher income self-employed workers from any support.

Additionally, weak assessment rules, where applicants were not asked to show that they had been hit financially by the crisis.

Economist at the Resolution Foundation Hannah Slaughter added:

“The Government has provided unprecedented support in response. But it has been terribly targeted – with around £1.3bn going to freelancers and businesses unaffected by the crisis, while others suffering catastrophic income losses have missed out on any support at all.

“This crisis is far from over for the UK’s self-employed workers. Future support should avoid excluding so many groups, while ensuring payments reflect genuine falls in income.”

Read more: Millions of Brits still missing out on self-employment grants

With a less generous version of the scheme still operating and growing calls to restart the scheme, the Resolution Foundation says that the government should fundamentally reform it with fewer exclusions and payments more accurately reflecting income falls.

HM Treasury have also made clear that no one will be left behind.

Those workers who do not qualify for the SEISS will be able to access the already standing £280 billion package of support such as furlough.

A Spokesperson for HM Treasury added:

“These figures are misleading because they do not take account of how important an element of income comes from self-employment, nor the level of people’s income. Both are important factors in making sure that taxpayers money is targeted at those who need it most.”

The think tank also made the point that with so many self-employed workers relying on Universal Credit instead, the Government should focus on making the UK’s main safety net work better for these workers.

Suggestions include extending the suspension of the Minimum Income Floor to stop UC penalising low-earning self-employed workers, and suspending the capital rules that prevent self-employed workers with significant savings from being eligible for support.

If you’re self employed you can check here to see if you are eligible for the SEISS.

Read more: Proposals to help self-employed and directors backed by cross-party MPs