Oral answer (Lords) on Self-employment Income Support Scheme - May 5

Asked by

Baroness Bonham-Carter of Yarnbury

To ask Her Majesty’s Government what steps they are taking to ensure that freelance workers can access adequate funds through the welfare system until payments under the COVID-19 Self-employment Income Support Scheme begin.

The Question was considered in a Virtual Proceeding via video call.

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)

My Lords, we have temporarily relaxed the application of the minimum income floor for all self-employed universal credit claimants affected by Covid-19. A drop in earnings will therefore be directed reflected in a claimant’s award, enabling them to follow the PHE guidance on social distancing. Claimants may also benefit from other changes, including the £20 increase in the universal credit standard allowance and the increases to local housing allowance.

Baroness Bonham-Carter of Yarnbury (LD)

I declare an interest as a trustee of the Lowry and One Dance UK. We are very concerned about the ability of freelancers to access adequate funds until support is made available in June. Our all-important creative industries are a sector hit particularly hard; one-third of people in this sector are freelance and some are ineligible for any of the Government’s schemes. Will the Minister consider a rapid interim fund or grant to bridge the income gap for those affected and, as the Federation of Entertainment Unions suggests, a new freelance worker income support scheme for those falling through the cracks?

Lord Callanan

I apologise to the noble Baroness; she was breaking up so I did not quite catch all of her question. However, I think she was talking about the creative industries. Work in these industries is treated in the same way for universal credit as all other forms of self-employed work. We are aware that many who are self-employed—particularly those whose earnings are seasonal and often fluctuate from month to month—need to budget and plan for this; universal credit takes account of that by varying its payments from month to month.

Lord Empey (UUP)

My noble friend the Minister will be aware of people moving from PAYE employment, perhaps to start a new business or to become self-employed. These people have become caught between two stools. Does the Minister realise that the thresholds for universal credit mean that savings that people may have accumulated to start their new business will in large measure have to be spent before they can qualify for universal credit? Will he be prepared to review the threshold operation in these unique circumstances?

Lord Callanan

I understand the point that my noble friend is making, but a key principle is that universal credit should go only to people who do not have assets available to meet their basic needs. It is important to protect the incentive to save. However, any assets used wholly or mainly for the purpose of a claimant’s trade or profession are disregarded indefinitely while the business is still operating. Any money that may be in their account to be used for business purposes will also not be counted towards the capital allowance.

Baroness Fookes (Con)

Can my noble friend the Minister reassure those who may be concerned about whether universal credit payments made will have to be repaid once the new scheme is up and running?

Lord Callanan

DWP officials are in discussion with those in other government departments about the detail of these varied schemes and grants. However, we expect to treat these SEISS payments as employed earnings, and to take them into account when they are received; therefore we do not expect to adjust previous awards.

Baroness Coussins (CB)

My Lords, will the Government consider setting up a dedicated interim hardship fund to provide immediate cash support to people who could be waiting until June for their payments from the income support scheme and are not eligible to claim universal credit? I declare my interest as president of the Money Advice Trust, the charity that runs Business Debtline. It has heard from many self-employed people in this situation who are struggling to make ends meet; some are not eligible for the income support scheme at all.

Lord Callanan

The Government are focusing on support measures that can be implemented as quickly as possible. Using existing frameworks for those who need additional support is, in our view, the quickest and most effective way to do this during the Covid-19 outbreak. The DWP is continuing to work with the Treasury and other government departments to monitor the evolving economic and labour market situation to identify the most effective way to help people in need as quickly as possible.

Baroness Healy of Primrose Hill (Lab)

Many freelance journalists are ineligible for the government schemes and the requirements exclude those in their first year of being self-employed. Does the Minister agree that it is unfair to penalise those just starting out in their careers or forced into self-employment through redundancy and casualisation?

Lord Callanan

Of course, we want to help as many people as possible under these schemes, and we keep them constantly under review. All these various schemes have been implemented as quickly as possible, so we will certainly reflect closely on what the noble Baroness has said.

Baroness Janke (LD)

What advice would the Minister give to a self-employed decorator who has been out of work since the lockdown started and who applied for universal credit? After being made to feel, in his words, a “scrounging piece of scum”, he and his wife have found that, after rent and council tax, they have just £210 a month to pay for food and all other expenses.

Lord Callanan

It is difficult to comment on the case that the noble Baroness cites without seeing all the details of the claimant responsible, but the SEIS scheme will offer millions of self-employed individuals direct cash grants. It covers 95% of people who receive the majority of their income from self-employment, and we have quickly and effectively introduced over £6.5 billion-worth of measures to benefit those facing the most severe financial disruption.

Lord Farmer (Con)

My Lords, it is pleasing that the Government have relaxed the minimum income floor for the self-employed. Can my noble friend the Minister clarify any further measures that have been made to help self-employed claimants at this time?

Lord Callanan

I thank my noble friend for his question. Yes, as well as relaxing the minimum income floor, we have increased the standard rate of universal credit and working tax credit for this year by around £1,000. We have increased the local housing allowance, which is worth something like £600 in people’s pockets. We have also redeployed staff to the front line and therefore temporarily suspended the recovery of some government debts such as tax credits, benefit overpayments and social fund loans. We stand ready to take additional measures if they are required.

Viscount Colville of Culross (CB)

I declare an interest as a freelance series producer working for Netflix and the Smithsonian Channel. The current SEISS creates considerable concern for large numbers of freelancers who operate under a personal services company and are therefore not covered. Is it not possible for HMRC to distinguish between PSC-derived dividends and other dividend income, which could be verified through an online HMRC portal?

Lord Callanan

The Chancellor has referred to this difficulty a number of times. We are satisfied that the system as it currently operates is the best one at the moment, but as I said in response to an earlier question, we keep all these things constantly under review and will reflect on what the noble Viscount has said.

Lord Hunt of Kings Heath (Lab)

My Lords, does the Minister at least accept that many self-employed and freelance people are falling through the net because of the criteria that the Government have set? Will he reconsider his answer to the noble Baroness, Lady Coussins? The Money Advice Trust is getting so many self-employed people calling in who are desperate because they do not meet the criteria. It is surely an excellent idea to have a hardship fund administered by local authorities to help them out.

Lord Callanan

We already have a number of schemes in place. The SEISS will benefit something like 95% of all claimants, but of course such schemes have been introduced at pace. Officials are still working on it, and I and the department will reflect closely on what the noble Lord has said. We want to ensure that as many people as possible are helped during these difficult times.

Baroness Altmann (Con)

My Lords, I congratulate the Government on their unprecedented rescue schemes for the self-employed and freelancers. I understand that one may be paid out before June—within May. Can my noble friend outline any other measures planned for the employed and the self-employed which are under consideration?

Lord Callanan

I referred to some additional measures in the answer that I gave to my noble friend Lord Empey earlier. We have been taking a number of other measures; I can tell my noble friend that, yesterday, HMRC began contacting customers who are eligible for the SEISS. It remains on target to be delivered in early June but, if we possibly can, we will of course get the payments out earlier because we know that they are urgently required in many situations.