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.
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 directly 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.
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?
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.
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?
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.
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?
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.
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.
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.
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?
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.
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.
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.
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?