Chancellor Rishi Sunak is coming under growing pressure to fix the eligibility criteria for more than 3 million workers excluded from government financial support during the pandemic.
With less than a month to go before the Budget on 3rd March, how likely is Rishi to buckle under this pressure and provide further support? Will he also use his Budget statement to extend the furlough scheme, again?
I know how important this subject is, because each time I make a video about it, I get comments and emails from you, sharing your stories about how you’ve been entirely excluded from government financial support during this pandemic.
The support schemes introduced since last March have, where they work, been incredible. But they have also left significant gaps – and these gaps create serious financial difficulties for those left behind.
Millions of self-employed people, contractors, limited company directors and others are excluded from the various support schemes, and had to face this crisis on their own, while navigating the local and national lockdown restrictions.
There is a large amount of support for your plight, both in the House of Commons, and from various business groups. One of those groups fighting for the excluded from within parliament is the Gaps in Support parliamentary group, co-chaired by Green Party leader Caroline Lucas.
Lucas told The Guardian it was “completely unacceptable” that more than 3 million people have been excluded from government financial support. She said: “While it was understandable at the beginning of the pandemic, when the Treasury had to act fast, that some new support schemes didn’t work as well as they should, it’s a scandal that over 10 months later, so many are still falling through the gaps,”
Lucas continued: “The chancellor must now accept that there are genuine and problematic gaps in the schemes he designed, and make support for excluded groups a centrepiece of his budget announcement next month.”
We know that the various government schemes have covered a huge number of people, with the furlough scheme covering almost 10 million people’s wages since it was launched last March, and around 2.7 million self-employed people claiming self employment income support scheme grants. But it’s these millions of people who need financial support and have found themselves entirely excluded from the schemes that Rishi Sunak is now under considerable pressure to address.
Also placing the pressure on Rishi is shadow chancellor Anneliese Dodds, who told the Guardian that the government needs to take action in the Budget next month. Dodds said: “Self-employed people are the backbone of the British economy, which is why Labour has called repeatedly for the chancellor to plug the gaps in his support schemes.”
Some context for this in the Guardian today as well, and we must keep in mind that this is a left-leaning newspaper, so their editorial is always going to be critical of a Tory government. But they have shared some charts highlighting the UK’s Covid-19 unemployment crisis. To briefly summarise those, they include UK unemployment rising to 5% for the first time since 2016; employment levels have fallen for most younger workers in the UK; the number of workers on furlough has reached almost 4m; the hospitality, leisure and arts sectors have furloughed the most workers of any sector; the UK’s benefit claimant count has increased by 113.2% since March 2020; and job vacancies are almost a third below pre-pandemic levels.
It’s clearly a dire situation out there, from an unemployment and economic perspective. And it’s against this backdrop that Rishi Sunak needs to make his decisions for the Budget, balancing of course the massive level of public debt we’ve accumulated since last year, albeit benefiting from ultra low interest rates.
Will Sunak extend the furlough scheme, again, at the Budget? There’s a pretty good chance he will.
Pressure to announce a furlough extension is coming from the TUC, British Chambers of Commerce, and the CBI.
Frances O’Grady, TUC general secretary, doesn’t want Sunak to wait until the Budget to announce a furlough extension, instead saying it should come immediately. O’Grady said: “It would be a dereliction of duty of any government [not to extend furlough]. Nobody should think it is responsible or acceptable for any government to consign people to the dole queues. The government must understand we need to work our way back to growth, and for that we need people in jobs. Otherwise we are going to end up with real, deep economic and social problems.”
And then Adam Marshall, who is director general of the British Chambers of Commerce, wants to see a furlough extension through until July, pointing out that any relaxation of lockdown measures, when they come, does not mean an end to the challenges faced by businesses.
Marshall said: “What one can’t do is say that once the vaccine rollout has happened, everything will be OK. That is not the case. You’ve got businesses in deep trouble, and still the possibility of flare ups in the virus. It’s not a case of just vaccinate and forget about it.”
And the CBI wants an extension of furlough too, as part of a wider economic recovery plan. Rain Newton-Smith, chief economist at the CBI, said of furlough: “If the government brought it to a sudden stop, that would almost certainly impact job decisions, just as we see hope on the horizon.”
I worry a little about these calls to extend the furlough scheme. Until we’ve got a roadmap, with planned dates, for an exit from the lockdown restrictions, it’s impossible for any business to plan effectively for the future.
Continuing furlough schemes delays the inevitability of unemployment, but furloughed employees cannot contribute to the financial viability of a business. Just as shut down businesses cannot survive on government grants alone. The only way out of this crisis is to reopen businesses, get staff back to work (in a safe way, of course), and generate revenues.
But that’s taking us away from the current plight of the 3 million or so excluded from government financial support schemes, who are going to need support before the economy reopens, or they simply won’t have a business to bring back to the party.
The Association of Independent Professionals and Self-Employed has put some numbers of the issue, with about 700,000 limited company directors and 200,000 newly self-employed people included within the 3 million excluded. The Federation of Small Businesses found that one in five small businesses they surveyed had received no financial support at all from the government.
To be candid for a moment; Rishi Sunak isn’t going to help all 3 million of the excluded. It’s just not going to happen, I’m sorry, but that’s the reality here. But he might be able to use his Budget on the 3rd of March to fill a few of the gaps, especially for newer starters and those falling foul of the 50/50 rule, earning less than half of their total income from self-employment.
It’s not a perfect outcome, if that happens, but it’s better than nothing.
As things stand, one option for excluded self-employed people is to claim state benefits. According to the Guardian, Universal Credit claims from self-employed people have risen by more than 300% since the start of the pandemic, now exceeding more than 200,000.
They quote Rachel Flower, a spokesperson for the ExcludedUK campaign group, which represents workers who have missed out on support, who said: “A year on from the start of the pandemic the government is well aware the exclusions exist, but has not been minded to fix them. And that is a social injustice. It has pushed a whole sector of society into debt and poverty, in direct contrast to those who have been fairly supported.”
And responding to this growing pressure, a Treasury spokesperson said the government had done all it can to help as many people as possible during the pandemic, saying. “Funding is designed to target those who need it most and protect the taxpayer against fraud and abuse. For those who are not eligible for our support schemes, they can still benefit from help like our strengthened welfare safety net, and our plan for jobs provides programmes like Kickstart alongside record investment in skills so that people can find their first job, their next job or a new job if needed.”
3 million plus excluded from government financial support, high and rising unemployment, a Budget coming up and the expectation of a roadmap out of lockdown restrictions. I can’t tell you what’s going to happen next, but I can see the significant pressure being exerted on the Chancellor to fill some of the gaps.
I still maintain that the only economic recovery from this pandemic is based on reopening society, and that can happen when enough of the most vulnerable are vaccinated, so that businesses and the self-employed can get back to work. Because no government grant, whether that’s furlough, the self-employment income support scheme, or closure grants for rate-paying businesses, no government financial support can replace the ability to trade.
I would love to hear your views on this. Should the furlough scheme be extended until July? Can Rishi Sunak help any of the 3 million people excluded from government financial support?