When Bayo heard about the coronavirus, she started to worry. In February, her friend, who owned a fashion business, had had their entire supply chain destroyed. The next month, companies began to pare back, and Bayo lost five of her biggest clients. The freelancer had gone from being backed by the Bill and Melinda Gates Foundation as an exemplary member of her field to wondering whether she should claim Universal Credit.
“I’m a diversity and inclusion consultant, so most companies, when put under the knife, cut the non-essential items, and my work is typically deemed non-essential when push comes to shove,” the 30-year-old CEO of a racial equity non-profit, Do it Now Now, said. “I was completely financially done for.”
Bayo is one of the 3.5 million self-employed people who have been caught adrift in the coronavirus crisis, and have claimed financial support through the Government’s self employment income support scheme (SEISS). Four different pots of funding have been allocated to cover four three month periods, with the second phase of the grant still open. Successful claimants can expect the funds to be dropped into their bank account in six working days.
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Between 13 May and 30 June 2020, HMRC received 2,553,000 claims for the Self-Employment Income Support Scheme (SEISS). The landmark scheme allocated funds totalling £7.4bn, with an average award of £2,900 per claimant. But some snags in the system have left freelancers with a modest approximation of their usual earnings. The calculation is based on a person’s profits, and their average earnings over the last three years, but those who became freelance in the last financial year are not eligible for assistance.
Bayo expected to receive £6,000, but instead she was offered two payments of £1,750 across the first two phases of the scheme, each covering a three-month period. “The whole ‘profit’ criteria is such a terrible calculation because it determines that the money you used to run your sole trader business is not counted as part of the calculation of your income. Its like saying money spent on work clothes, travel, work lunches and online courses should be deducted from the calculation of the amount of money furloughed staff received.
“During the outbreak, I spent a month negotiating postponements vs cancellations. It was meant to be a bumper year. There were some really exciting opportunities that are now just gone which is really sad to me,” she added.
An impossible recovery
While Bayo’s work has begun to recover, some industries have failed to rally since since March.
Lauren Mooney, 29, works in the hard-hit performing arts industry, but received “a minimal grant” through the SEISS scheme. If theatres do not recover by 2021, the writer and producer for the Kandinsky theatre will have to apply for the final phase of funding, which will account for just 20 per cent of her average monthly profits.
“When the pandemic started, I’d been freelance for a year and a half,” she told i. As the grant isn’t calculated on your last year freelancing, I was reliant on the first year I made the jump in 2018. My full-time work accounted for 55 per cent of my income so it took precedent and I was awarded significantly less than I expected,” she said. “I’ve been freelance two years, and it still doesn’t count as being freelance enough.”
For Christopher, life-changing decisions have had to be made. With no return date in sight, the award-winning lighting designer swapped the theatre for the railways to retrain as a signaller.
“I didn’t realise I’d be out of work for so long at first,” he said. “I had already designed the lighting for three small tours in January and February, and I had no work planned until the very end of March for my debut for the RSC, which wasn’t due to open until June.
“It was on the morning of 4 May that I woke up with the sudden realization that I was going to have to apply for a different career in order to keep myself above water (both financially and mentally) until the theatre industry recovered,” he added.
While the applications was “mercifully straightforward and efficient,” Christopher said it is “nothing short of an insult” to offer 20 per cent of a freelancer’s profits in the fourth round of funding. “I think that offering just 20 per cent of your usual profit – not even earnings, bear in mind – is nothing short of an insult to those freelancers whose livelihoods have been destroyed, with no sign of normality on the horizon,” he added.
For more than 1.5 million people who are ineligible, this could mean a year without a wage. Some 3 per cent of all self-employed people in the UK have become continuously self-employed since April 2019, according to the Office of National Statistics, meaning they have not provided enough self-assessments to be eligible for help.
“From our in-depth research, backed by Martin Lewis and Standard Life Foundation, we estimate 1.6 million people have been excluded/ineligible for the SEISS grants specifically,” Anneka Hicks, the Founder of Excluded UK, a campaign group for workers not eligible for any Government financial assistance said.
“The disparity in the scheme means that a self employed tradesman, for example, who has been self employed for four years and paid himself under £50,000 will have been able to claim up to the full amount of £14,070 to date, and been able to remain working and earning [lockdown/social distancing dependent],” she said. “Comparably, a self employed tradesman who started a business three years ago and paid himself the same, would have been unable to claim any of the SEISS grant due to having set up outside of the eligibility criteria/dates,” she added.
A generous lifeline
For some, like PR consultant Kerri Watt, the grant was an added bonus. The 35-year-old parent is considered to be worse off this year as a single mother, but said she has benefitted from being a freelancer for six years, and from generating a steady income and savings.
“I thought the amount I was given was very generous,” said Kerri, who lives in New Forest. “I know, there’s been a lot of talk about it not being enough. But for me, I feel so fortunate to have been eligible for anything.”
Ms Watt said while she “feels for” freelancers who have struggled to find work since the virus struck, she believes the scheme has to end at some point, and a reduction is a reasonable step.
“The reason I went self-employed so many years ago was to have that independence and create my own income,” she said. “I never expected for anyone to substitute that income should it go down for any reason. At some point, the Government can’t keep paying us. I think we could potentially become reliant upon that, rather than using our skills to go out and find more work,” she added.
Regardless of where the freelancers stand, they have all backed one measure: reforming the SEISS grant criteria to help as many people as possible.
“The Government has encouraged people to work hard and take initiatives,” said Lauren. “It seems bizarre that they’re punishing people for doing the thing they’ve always encouraged”.
Bayo said “the pandemic has brought even more insecurity to a group of people that are already typically financially insecure.
“The schemes the Government produced were seemingly designed to ensure the continued stability of stable people rather than to ensure that the people who were already experiencing instability were not jettisoned from the lifeboat because of these circumstances,” she added.
A spokesperson from the Treasury told i: “As the Chancellor has said, throughout this crisis we have sought parity between employees and the self-employed providing more than £13bn to over 2.6 million self-employed small businesses.
“This support for the self-employed has been among the most generous in the world.
“We recognise the continued challenge facing self-employed people, which is why we’ve extended our Self-Employment Income Support Grant Scheme to support millions of self-employed right through to April next year.”