I’ve been doing some ‘back of the envelope’ calculations today. In fact, I’ve been doing back of the envelope calculations fairly consistently throughout the days for the past week now — so much so that I’ve actually run out of backs of envelopes and have moved onto using paper from the craft drawer.
Anyway, the government has announced some funding for self-employed people but check this out – they are actually screwing a large percentage of self-employed workers while telling us they’re helping (except the few who will inevitably lose out). Because, you know, if you warn people that a few are going to lose out and they are the ones losing out then they have no choice but to suck it up, in the National Interest.
Self employed people are being offered 80% of an average of our last three years tax returns. Now, with the introduction of Universal Credit, people have been positively pushed towards self-employment over the past three years. Despite the minimum income floor (DON’T get me started), record numbers of people have entered into self-employment in the past three years but their incomes (especially in the early years of nurturing their fledgling enterprises) are, on the whole, very low. (I’m not going to bore you with facts and statistics, but if you’d like to see them for yourself just read this.)
This very low income in the startup period is reflected in the average weekly wage of a self employed person – about £240 – versus an employee – about £400. There’s also all of the women who were on maternity leave during one of those three years who may well have taken an income hit while their partner carried on working but who is now making a success of a new business.
However, as we all know, we live to our means. So, if a person was making £100 a month three years ago, but is now making £1000 a month, you can bet your bottom dollar they’re not living like someone earning £100 a month anymore. But if they are going to be given an average of their three years of earnings, they’re going to get 80% of something like £500. You don’t need to be an economist to work out that’s not going to pay the rent.
Now. This is where it gets fun. So you only get the self-employed grant if the majority of your income comes from self-employment. So a person who earns approximately as much doing some self-employed work as they do from a PAYE job won’t get anything. Well, they’ll get 80% of their PAYE earnings, if their employer furloughs them instead of just cutting their hours.
Pretend this is the back of an envelope: person X earns £150 a week from self-employed work and £151 from their job; they will be entitled to £120 a week; that’s a third of their normal income. You don’t need to be an economist to work out that’s not going to pay the rent.
And if that’s not enough fun for you, try this on for size. The self-employed are going to get a grant sometime in June. (Don’t get me stared on people who live month to month and who can’t wait till June to buy their kids some cheerios…but I digress.) That grant is going to be the equivalent of 3 months of earnings (don’t forget how low that figure will actually be compared to their most recent monthly earnings). But because all of the self-employed have been told to get themselves onto Universal Credit (don’t worry, there’s no MIF!) they are going to have to report that grant as income. And guess what that means? It means they won’t get any Universal Credit the next month.
Oh. And self-employed people have expenses. Expenses that are not on hold just because they’re not earning any money. I have been told by the people from whom I rent my forest that I am not allowed to work there right now. But I’m also not getting a refund on the rent that I’m paying them. But I also don’t qualify for the Rate Relief Grant because they pay the rates, not me. So they get the rate relief grant of £10000, they get my rent and I keep paying even though the money that I bring in that goes to pay my expenses is not being considered part of my income. Did that make sense?
There’s also the mega-issue that a lot of self-employed people aren’t really self-employed, they’re paid through PAYE as directors of their own limited company, taking dividends rather than a bigger salary. They won’t be able to access this grant even though they file self-assessment – and they won’t be able to get the PAYE emergency funding because, as sole directors, they can’t furlough themselves. So they will get nothing. (The majority of businesses of the 4 million registered with Companies House are owner-managed companies with one director)
You don’t need to be an economist to work out that’s not going to pay the rent.
I know it’s probably not showing solidarity or failing to express national pride or togetherness or a wartime spirit or whatever. Whatever. But I truly cannot help but think that Boris and his Tory cronies are rubbing their hands with glee at the clever little trick they’ve managed to pull. They know the average income for the vast majority of self-employed people (95% they said yesterday) hovers right around a subsistence income. DON’T BLOODY TELL ME THOSE FIGURES ARE HARD TO FIND.
They know that there has been a huge growth in self-employment over the past few years – mainly because austerity has pushed so many people into it when no other options are available. Oh, and because the job centre is forcing everyone to work no matter how low the pay.
They know that they just last week told everyone to get onto Universal Credit. And they know that when they give us all this Great Big Lump Sum Grant-thingymawhatsit, none of us will get a UC payment that month – which means they won’t be spending anything extra at all. And if those payments continue into subsequent months then they will give it with one hand and take 63p on the pound back with the other. Tbh, the one thing that will impress me is whether they’ll be able to continue rubbing their hands in glee whilst those hands are doing so much giving and taking.
And, just like every pompous narcissist has ever done, they’re all sitting around patting themselves on the back for coming up with this clever plan that makes it look like they’re helping (because, you know, poor people are thick) when in actual fact they are doing no such thing.