Boost in support for freelancers welcome but millions still excluded

Freelancer support groups have cheered a fresh lifeline thrown by Rishi Sunak to the self-employed - but warned the Chancellor is still excluding millions of struggling workers from help.

The latest version of the self-employed income support scheme, due to start in November, will now cover 40pc of freelancers' average earnings instead of 20pc as previously planned.

It comes as freelancers battle to pay their bills, with average earnings down 30pc this year after ministers' lockdown policies wrecked demand and destroyed livelihoods.

The self-employed are also likely to be targeted by future tax hikes to fix the £208bn black hole punched in the nation's finances.

Andrew Chamberlain of the freelancer trade body Ipse said Mr Sunak is at last facing up to the reality that the Government has neglected the self-employed in favour of employed workers, who have benefited from much more generous support through the taxpayer-funded furlough scheme.

Mr Chamberlain said: “The support scheme for the self-employed is now more generous, which is welcome – and something we have been pushing for.

“But the reality is there are still millions of people excluded from this extra help. For them, this announcement will be of no consolation whatsoever.”

Almost three million freelancers have claimed more than £13bn in income grants during the pandemic.

But many more do not qualify for state support. This is either because they previously earned an annual average of more than the £50,000 threshold or because they have fallen through cracks in the scheme’s design.

Company directors, newly self-employed people and freelancers who are paid by their client company through PAYE are not able to claim.

Seb Maley, of contractor consultants Qdos, said: "These measures are good news for many sole traders, but offer very little – if anything – to millions of independent workers who have been all but abandoned by the Government for more than seven months now.

"These entrepreneurial and flexible workers will play an instrumental role in the economic recovery, which is why the support must be tailored to their needs."

Freelancers are thought to contribute around £300bn a year to the economy. However, more than quarter of a million have already returned to employed work since the start of the pandemic, reversing a decade-long trend in growth and raising fears a generation of entrepreneurs have been lost.

The first of the new grants will run from November to January, with support capped at £3,750. The second will run from February to April, with the ceiling yet to be announced.

Earlier versions of the scheme covered 80pc and 70pc of average profits, up to a maximum of £7,500 and £6,570 respectively.

Rishi Sunak said the Government was adapting financial support as restrictions evolved to protect jobs.

The Government has said those who are not able to claim can take advantage of additional measures, including business grants and loans, enhanced Universal Credit, tax deferrals and payment holidays.

Freelancers who use the state support scheme are still allowed to work.