How grassroots campaigners came to the aid of Britain’s excluded workers
Local politicians and citizens have come together to lobby government – will their efforts pay off?
It was Lucy Baker’s accountant who told her that she’d be receiving less money because she’d had a baby. Baker, 45, who runs a coaching business, was entitled to a government grant for self-employed workers in the UK who'd been impacted by the coronavirus pandemic. But the amount she ended up getting was reduced – not because she didn't need the support, but because she’d taken six months off the previous year to care for her newborn son.
“My accountant made a table for me,” she says over the phone from her home in Kent. “Looking at it, I realised I was going to get a lesser payment because I’d taken maternity leave.”
Prior to giving birth to Rocky, her third child, in January 2019, she'd been working for herself for 15 years, and was finally in a position to take a more comfortable amount of time off. Just over a year later, when she applied for the Self-Employed Income Support Scheme (SEISS) – part of the UK's £12bn bailout package – she discovered that her time away from work was effectively considered to be a sabbatical and would count against her claim.
“All I knew was that being a self-employed woman who took maternity leave, I was penalised,” she says. At first, Baker thought she was an outlier. But as she saw more and more women in her network posting similar stories online, she realised she had been impacted by an oversight that was affecting scores of self-employed women.
In early January 2021, the size of the problem became clear when the maternity rights campaigning group, Pregnant Then Screwed, took the UK chancellor Rishi Sunak to the high court for indirect discrimination. The group had found that an estimated 75,000 women had received reduced SEISS grants because they took parental leave between 2016 and 2019. This had caused the amount of assistance they qualified for to go down, because SEISS payments are calculated based on average profits.
With the support of Doughty Street Chambers and law firm Leigh Day, the group began legal proceedings after the chancellor was asked why he had not exempted periods of maternity leave from the self-employed grant calculations. “For all sorts of reasons, people have ups and downs and variations in their earnings, whether through maternity, ill-health or others," he said. If their suit is successful, women like Baker could be entitled to rebates.
The legal action by Pregnant Then Screwed is part of a wave of grassroots activism and cross-party lobbying efforts demanding that the government address glaring gaps in the country's coronavirus relief package – oversights which have left an estimated 3 million taxpayers locked out of support. The majority of these workers are self-employed, and many of them have since fallen into poverty.
According to the latest data from the Association of Independent Professionals and the Self-Employed (IPSE), since the start of the pandemic, and for the first time in 11 years, the self-employed sector has shrunk, with a 5% decrease in the number of solo self-employed workers compared to the previous year. Derek Cribb, CEO of IPSE, says the numbers reflect how the pandemic has left the self-employed landscape “pockmarked and scarred”, with “hundreds of thousands dropping out of self-employment and into the benefits system.”
LANCE is publishing a three-part investigation this month on the UK's ballooning work crisis, reporting on how the government left its freelance and flexible workforce behind. This week’s instalment, part two, looks at the grassroots campaign groups that are putting forward workable, immediate solutions for plugging the gaps in support – will their efforts pay off?
How 3 million taxpayers ended up disqualified – either in full or in part – from a bailout scheme in the middle of a pandemic is a complicated question to answer. That the majority of those affected work for themselves, often for low pay, is a crucial datapoint. The chancellor, who says the figure of 3 million is “not a number [he] recognises,” cites logistical issues as the reason why some have been unable to access support, as administering an emergency spending programme of this scale presents a fraud risk. However, campaigners believe that the UK government is willfully neglecting a vital part of its workforce.
“The government has had plenty of time and opportunity to rectify the disparity,” says Rachel Flowers from ExcludedUK, a campaign group representing workers denied support. She adds that its failure to do so after 10 months amounts to discrimination and has resulted in an unequal application of the schemes and funds. “For many people affected, this has led to extreme financial hardship and unjust debt and poverty, as well as a widespread and serious mental health impact,” she says.
Emily Scurrah, a researcher at the New Economics Foundation who specialises in the gig economy, says that undocumented migrants, people of colour, and criminalised people have been disproportionally affected by the holes in coverage. “When we look at the sharpest edge of the sector that’s been left behind, it’s the people in society with the least social and political power," she says. “It’s very easy to demonise people who are on very low pay, and particularly when there’s no actual workplace." She continues: "The government doesn't fear the consequences of treating that sector of the workforce badly, because they don’t have the political power to push back against it.”
Nonetheless, when the government announced its suite of bailout programs, freelancers from across multiple industries sounded the alarm, first on social media and then by forming pressure groups. In addition to ExcludedUK, which campaigns for all those excluded, issue-specific groups have formed. These include Forgotten Ltd (for incorporated business owners), Forgotten PAYE (zero-hours workers), New Starter Justice (job changers) and Denied Furlough, for workers who were refused furlough by their employers for discriminatory or otherwise unjustified reasons.
Sector-specific groups have also emerged. One of them is Freelancers Make Theatre Work, which campaigns for the performing arts sector, where 72% of workers are self-employed. According to FMTW, only 65% of the theatre industry’s freelancers have received any government support through SEISS or furlough. “We have been left out of the conversation,” says Paule Constable, a freelance lighting designer and FMTW member. “We are both unheard and unseen.”
The culture of fear pervading certain industries that rely heavily on freelancers has been a challenge for some grassroots campaigning efforts. In July, the National Union of Journalists submitted a legal challenge to the government, claiming that SEISS exclusions amount to discrimination. However, the union's efforts were stalled when it was unable to get its members to put their name on the action, as they feared speaking out. Campaigners representing workers in other industries shared similar stories of freelancers not wanting to threaten their already precarious work arrangements by sticking their heads above the parapet. (A spokesperson for the NUJ says the union is continuing to lobby the Chancellor about the problems with SEISS.)
Another issue is activist burnout: the Forgotten PAYE group is made up primarily of volunteers who have been excluded from support themselves, and who fit campaigning work in around their already precarious work situations. “I’ve had two breakdowns from the toll it's taken on me,” says Ellie Phillips, a broadcast presenter and spokesperson for Forgotten PAYE. “It's mind-boggling that nothing has been done yet, that no attempt has been made to fix these gaps. And when I say ‘gaps’, I’m talking about people’s lives.”
Where the central government has largely turned its back on the plight of the UK’s self-employed, local officials have stepped forward. To tackle the crisis, in July 2020, 262 local MPs, from all political persuasions, formed the largest cross-party lobbying group in UK history, working in partnership with several of the smaller grassroots groups. In January, The Gaps in Support All-Party Parliamentary Group proposed a plan to provide excluded self-employed workers with a one-off targeted grant worth between £3,500 and £7,500. Titled The Targeted Income Grant Scheme (TIGS), the plan seeks to cover four groups of taxpayers, including the newly self-employed, PAYE freelancers, limited company directors and those affected by the 50/50 rule. (For more on how these workers were excluded from support, read part one of LANCE’s investigation)
The proposal was drafted by Rebecca Seeley Harris, former senior policy advisor to the Treasury’s Office of Tax Simplification. “The government have been extremely generous to a lot of people, but unfortunately, some people have had nothing, and that's not right,” Harris says. The TIGS scheme will cost £10.5 bn, but Harris says that if the government doesn't act now, the economic ripple effects will be “catastrophic”. “It’s peanuts compared to the effect of all these businesses going under,” she says. “Coming out of a recession, we're going to rely heavily on small businesses, who make up 99% of the business population.”
Jamie Stone, the Scottish Liberal Democrat MP and chair of the APPG, sees the TIGS proposal as a matter of urgency. "It is a small first step, a bare minimum, that we hope the Treasury cannot refuse,” Stone says. He adds that “a one-off grant isn’t enough,” and that TIGS needs to be part of a comprehensive policy that includes backdating support. Additionally, he says he supports a further proposal, also drafted by Harris, called The Director Income Support Scheme (DISS). Created with the support of the Federation of Small Business, Forgotten Ltd and the Association of Chartered Certified Accountants, the scheme aims to provide relief to self-employed workers who operate as incorporated businesses.
This group, comprising an estimated 700,000 tax-payers, has proven to be "technically very difficult to help," according to the Institute of Fiscal Studies. This is due to how this group processes its profits. In the UK, if you work for yourself, you can either operate as an incorporated business (i.e., the director of your own limited company), or you can be unincorporated (i.e., a sole trader). The former is a standard accounting set-up used by 2 million self-employed workers in the UK, who pay themselves via dividends. According to the Treasury, when it comes to collecting pandemic relief, this configuration can pose a fraud risk, as it’s not possible to distinguish whether dividends are from money earned through a business or from other sources, such as shares or property investments.
In truth, financial experts will often encourage self-employed workers to structure their business in this way. Joanne Harris (no relation to Rebecca Seeley Harris), a technical commercial manager at SJD Accountancy, says that she typically advises business owners to consider incorporating once their turnover has reached a certain threshold – and lists limiting liability and the ability to apply for business loans as two of the reasons why an entrepreneur might want to structure a small business in this way. Harris adds that in many cases, workers are effectively required to operate as incorporated entities, because large organisations and companies in certain industries, such as IT, may only work with these types of suppliers.
“Tax efficiencies aside, many people would have been advised to set up a limited company for very sensible reasons,” she says. “That has meant that we've got this discrepancy between the support that's offered for self-employed individuals – sole traders – and what's offered to limited company directors.”
In Harris’ analysis, undertaken exclusively for LANCE, she found a discrepancy of over £20,000 between the support available to sole traders, versus limited company directors. Under SEISS, an eligible self-employed worker previously earning up to £50,000 in profit could be entitled to £29,070 over the grant period. (This is calculated assuming that the fourth instalment of the grant is worth the same amount as the third). By contrast, the director of a limited company who typically earns the same amount would have to apply for the job retention scheme (these workers do not qualify for SEISS), effectively furloughing themself. But they would only qualify for £7,393.20 in relief in total. “That’s just 25% of the support received by a sole trader,” Harris says.
But there's another caveat in the system that makes the situation for limited company directors even more dire: “There is no requirement to cease trading when accessing SEISS, whereas our company director would need to furlough themselves, so [they] could not complete any work for the business other than statutory duties,” she says.
Currently, everything hinges on the government’s spring Budget on March 3, when Sunak will announce his spending plans for the rest of the year. If any changes are made, they’re expected to come then, despite calls from pressure groups to act sooner. The Treasury has already confirmed that the details of the fourth SEISS grant will be announced then and that it’s reviewing the TIGS and DISS proposals. Whether those who were previously excluded will become eligible in March, however, remains unknown.
In the meantime, the campaigners are continuing to fight for those left behind. If Pregnant Then Screwed’s legal action for self-employed mothers is successful, then Lucy Baker, the mother of three, will finally receive the support she's been waiting for. Baker tells me, if it wouldn’t have been for Pregnant Then Screwed, she wouldn’t have the energy to fight this herself. “Here I am, sitting in Kent, at my laptop, knowing that an organisation of women are fighting for my rights,” she says. “It feels special to be considered and counted in this way when the government have very clearly missed the point.”
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