“Step change” in contractor support needed as UK enters third lockdown

Small businesses are the “lifeblood” of the economy and need greater COVID-19 support

As the UK enters a third lockdown, the pressure is mounting on the Government to tailor the support available to millions of freelancers, contractors and self-employed people, with experts calling for a “step change”.

On 4th January, the Prime Minister announced a lockdown across England that will remain in place until mid-February. Earlier that day, Scotland’s First Minister, Nicola Sturgeon, also outlined new lockdown measures for her country. Wales and Northern Ireland face similar restrictions.

New, even stricter social distancing rules, along with the temporary closure of businesses and schools led Boris Johnson to state that the coming weeks will be the “hardest yet.” 

£4.6bn rescue package does not deliver for excluded 

The morning after the Prime Minister’s televised speech, Chancellor Rishi Sunak unveiled a £4.6bn lockdown rescue package to support businesses in retail, hospitality and leisure, that have had no option but to close their doors yet again for the foreseeable future.

Businesses in these industries will be eligible to claim a grant up to £9,000, which the Chancellor has said will help them keep afloat until spring. As part of this package, £594m is to be made available by local authorities to firms outside the retail, hospitality and leisure sectors.

According to the Government website, to receive this support businesses “should apply to their local authorities”. At the time of writing, it’s unclear as to whether freelancers and contractors are able to claim any of this £594m.

As welcome as these measures are for retail, hospitality and leisure businesses, the Government has already faced a huge backlash from experts, who have called for the roll out of schemes that are suitable for the 3m small business owners who continue to fall between the cracks of existing support.

Given the Chancellor promised last year that nobody would be left behind in the pandemic, business groups and lobbying bodies have urged Mr Sunak to deliver for the excluded self-employed, who are facing the prospect of a full year with very little or no financial aid.

Work with us to find a solution, say experts 

Freelancers and contractors were hit hard by the pandemic last year, with more than half (53%) of over 1,400 surveyed by Qdos reporting their business performance as ‘poor’. Unsurprisingly, for most contractors, the biggest contributing factor to poor performance in 2020 was Coronavirus. Meanwhile, 30% said the level their business operated at was ‘consistent’ last year, while only 17% regarded 2020 as ‘successful’.

Due to concerns held over the impact this crisis is having on independent workers, IPSE have encouraged the Government to work with business groups to find a solution. In response to the unveiling of the £4.6bn package, IPSE CEO Derek Cribb said:

“The new support package, aimed at businesses with premises, misses the mark and will do little to mitigate the financial damage to the self-employed sector. After almost a year, there are still drastic gaps in the support available to the self-employed, with over 1.5 million sole directors, newly self-employed people and others still excluded."

“We urge the government to work with business groups to plug these gaps and get support to freelancers in need over the coming months. We are keen to work with government to find a solution and make this right.”

Economic recovery “depends” on small firms

Echoing Cribb’s comments was FSB Chair, Mike Cherry, who pressed the case for a “step change” in support:

“The level of government grants is off the mark by an order of magnitude and has not kept the pace with events.” He then said: “We now need a new hand-up from Government to help us get through what is fast becoming an enforced closure of much of the whole economy."

“Small businesses are the lifeblood of communities and the economy, accounting for 60 per cent of private sector employment in the UK. The future economic recovery depends heavily on their survival in this first quarter of 2021.”

Qdos Contractor provides an award-winning range of business insurance policies, advice and representation to freelancers, contractors and self-employed workers - from IR35 insurance and tax liability cover, to professional indemnity and public liability insurances.