On Friday the UK was given its third Budget in nine days. Reacting to the ever-developing coronavirus crisis, chancellor Rishi Sunak announced a string of new measures to again try and safeguard the country’s businesses against the global pandemic.
The initiatives revealed by Sunak, which include both new promises and amendments to previous ones, will provide the UK’s design businesses with at least some stability during this uncertain time.
However, as pointed out by a number of industry bodies and advocacy groups, they once again fail to give peace of mind to the country’s freelance and self-employed workers.
Perhaps the biggest announcement made by Sunak on Friday was the coronavirus job retention scheme, which will offer all employees of private companies, not-for-profits and charities access to a grant covering up to 80% of the average wage, worth up to £2,500 a month per employee.
For design businesses that have or are predicting a drop off in client work as a result of coronavirus, this could be an important lifeline for ensuring employee welfare.
The grant will be backdated to 1 March, meaning those who have been put out of work, but remain on the payroll of a company, will be able be to receive a wage paid by the government.
This scheme is being made available initially for three months, though Sunak said it would be extended beyond this if necessary, and the grant should be made available by the end of April.
Creating a “worrying inequity”
But while this is a decent step toward financial stability for some, it again leaves self-employed and freelance workers in the lurch.
In a statement, Creative Industries Federation CEO Caroline Norbury said the lack of consideration for the country’s five million self-employed and freelance workers could create “worrying inequity” between those who have a secured income and those who don’t.
As Design Week outlined in our freelance and self-employed worker coronavirus financial guide last week, the government line continues to be that workers should access Universal Credit (UC) in times of financial hardship.
In an attempt to make this appear more appealing, Sunak announced on Friday that self-employed applicants to UC would be able to access the equivalent of statutory sick pay, £94.25 a week through the welfare system. This was not widely welcomed.
“The £94.25 per week offered in Universal Credit does not come anywhere near to compensating them for their income loss, nor is it close to the amount they can reasonably be expected to live off,” said Norbury.
A temporary income protection fund
The discrepancy between living on £94.25 a month through UC and up to £2,500 a month paid by the government to company employees losing earnings is huge. The Association of Independent Professionals and the Self Employed (IPSE) has called for the chancellor to offer self-employed workers a similar income protection assurance.
The organisation has said this could be calculated through the self-assessment tax system, a service that millions of freelancers already use every year.
IPSE policy director Andy Chamberlain said in a statement that the government should “match the steps they have taken for employees and create a temporary income protection fund for the self-employed.”
“This should give a temporary, targeted cash injection to the freelance businesses that are struggling most – a financial boost to make up for lost income and keep them afloat,” he continued.
This morning on the BBC’s Radio 4 Today programme, former Bank of England governor Mervyn King put further pressure on the situation, calling for the government to take rapid action to help the self-employed.
The government says it is still working on a strategy for the self-employed.
Also in among the new announcements was a deferral for VAT payments.
In a conversation with Design Week last week, the Design Business Association’s (DBA) head of services Adam Fennelow said a delay in VAT deadlines would be a welcome announcement for design businesses.
“Often a business will have money tied up in savings, ready to pay VAT,” he said. “If HMRC could move payments back, this would obviously give some companies a bit more of a buffer.”
As announced by Sunak on Friday, no VAT payments will be paid until the end of June, giving businesses until the end of the year to pay what VAT is actually owed. It is a measure supposedly costing £30 billion.
Additionally, Sunak launched the coronavirus business interruption scheme which had previously been spoken about in his statement last Tuesday.
Initially, it was proposed the loan scheme would be interest-free for six months. This was extended on Friday to 12 months – meaning SME’s with a turnover of less than £45 million which are experiencing “lost or deferred revenues” will be able to apply for government-backed finance of up to £5 million.
Design businesses looking for more information on this scheme can find it on the British Business Bank website.