Sat, Mar 28, 2020 page10

• UK offers self-employed US$11bn

  • Bloomberg
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  The UK government offered to pay self-employed workers cash grants of as much as ￡2,500 (US$3,047) a month to stem the economic fallout from the coronavirus.

  British Chancellor of the Exchequer Rishi Sunak announced the three-month plan, which the UK Treasury expects would cost about ￡9 billion, after his offer last week to pay a portion of citizens’ wages for the first time was widely criticized for omitting millions of self-employed workers ranging from cleaners to hairdressers.

  About 3.8 million workers, or about 95 percent of self-employed workers earning less than ￡50,000 a year, would be eligible for the grants, Sunak said.

  “You have not been forgotten,” Sunak said in a televised briefing from Downing Street on Thursday. “We will not leave you behind. We will all stand together.”

  He is racing to protect businesses and workers as the pandemic brings normal economic activity to a halt. The package is the fourth set of emergency measures he has announced in a little more than two weeks.

  In that time, the government has pledged more than ￡60 billion of direct aid. At about 3 percent of gross domestic product, that is a significantly bigger stimulus than the one the government deployed in the financial crisis a decade ago.

  The key points of the latest plan are:

  Self-employed workers earning less than ￡50,000 a year would be eligible for a taxable grant worth 80 percent of their average earnings over the past three years, up to a maximum of ￡2,500 a month. Payments would be in lump sums, covering three months, and would start to be paid in early June.

  The measures would benefit 95 percent of the self-employed, Sunak said.

  There is “really nothing” the government can do for those who entered into self-employment in the past year, Sunak said, directing them to the welfare system.

  The self-employed would be able to access a business interruption loan program, delay their tax payments and access universal credit benefits.

  Although Sunak initially said the measure would cost tens of billions of pounds, the Treasury later clarified it would cost about ￡3 billion a month for three months.

  “By providing support to the self-employed, Sunak has plugged another gap in government’s economic response to the coronavirus. Like all the other programs that have been announced in recent weeks, it will be costly — the Treasury’s estimate of ￡3 billion a month looks in the right ballpark — but it’ll be money well spent if it succeeds in preventing a recession becoming a depression,” Bloomberg Economics senior UK economist Dan Hanson said.

  Self-employed workers would not be able to access the cash until the start of June.

  “This will leave many of the self-employed, whose business has diminished as a result of COVID-19, with little money to live on over the next two months,” EY personal tax head Tom Evennett said.

  There was another setback for the self-employed, with Sunak suggesting that once the coronavirus crisis is over, he may re-examine taxation rules that mean the self-employed currently pay less than employees.

  “There is an observation that there is currently an inconsistency in contributions by self-employed and employed,” Sunak said.

  By treating them the same when doling out coronavirus assistance, “it does just throw into light that question of inconsistency and whether that is fair to everyone going forward,” he said.

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