Labour Market

Steps to help self-employed “unlikely to be the last” Chancellor has to take


In the Media

Julian Jessop quoted by NewsWeek

Commenting on Chancellor Rishi Sunak’s plans to support the self-employed during the Covid-19 pandemic Julian Jessop, Economics Fellow at the Institute of Economic Affairs, said:

“The Chancellor has done a good job in drawing up a sensible package to support the self-employed, which is a relatively diverse group of people with different needs and different levels of engagement with the existing tax and benefit system. But this ‘next step’ is unlikely to be the last he has to take.

“As the Chancellor himself admitted, there will be gaps in the new scheme, notably those who have only recently become self-employed. No-one is likely to benefit from this scheme until early June. In the meantime, there is a danger that any system of means-tested benefits will be overwhelmed by a surge in applications. There may still be the need for some additional top-up payments to tide people over.

“Another sting in the tail is that the Chancellor has said he will look at again at the relatively favourable tax treatment of income from self-employment. There is a strong case for levelling the playing field, but this could be done by lowering taxes for those in standard employment. Raising taxes for the self-employed would also be hard to square with the manifesto commitments not to raise the rates of income tax, National Insurance or VAT.”

Andy Mayer, Chief Operating Officer at the Institute of Economic Affairs, added:

“The proposals for contract workers are welcome and more flexible than those for payroll workers. Contractors, it is clear, can keep working while claiming. Payroll workers cannot, but can volunteer to help charities.”

Notes to editors

For media enquiries please contact Emily Carver, Media Manager: 07715 942 731.

For further IEA reading on the government’s coronavirus job support announcements, click here.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

The IEA is a registered educational charity and independent of all political parties.