Self-employed forced on to breadline with no government help
Larisa Bucur has been on hold for more than three hours trying to register for state benefit through the universal credit helpline. A London-based interpreter, she usually earns around £1,200 to £1,800 a month, translating between Romanian and English at mental health and social services appointments.
Now, thanks to coronavirus, all this face-to-face work has been cancelled. Her partner, a self-employed construction worker, has also lost his income as building sites close.
“In two weeks time, we will have no money left,” Ms Bucur said — speaking by text message, so as not to lose her place in the universal credit queue. Her partner may — eventually — be able to recover 80 per cent of his lost income from the government’s new support scheme for the self-employed. But because she turned freelance only recently, she will not receive anything.
Ms Bucur is one of almost half a million people who applied for universal credit in the past week as the UK begins to feel the full force of the economic shock resulting from the coronavirus lockdown.
Such a steep week-on-week rise in benefits claims is all but unprecedented, leading economists to warn that unemployment may already be rising far more swiftly than during the 2008 financial crisis — despite the government offering help to employers who furlough staff rather than fire them.
Some large retail chains — including Pret A Manger and Timpson — have sent staff home on full pay, on the strength of the government’s promise to pay 80 per cent of wages for those affected, backdated to the start of March.
Many smaller businesses facing a near total loss of revenue are worried about taking on debt to cover wage payments until government help arrives.
“I don’t like to get a loan. It goes against the grain. But I will if I have to do it to pay the lads,” said Stacey Arron, who runs two removal and storage companies in West Yorkshire. He has largely shut down his business on safety grounds, despite intense pressure from clients to go ahead with house moves, and will need to find £5-6,000 a week to cover wages and insurance.
Some much larger businesses are taking a more startling approach. A mechanical engineer who worked for Wren Kitchens, a manufacturer and retailer based near Hull, told the Financial Times he was one of many staff informed since the lockdown that they had failed their probation and would be let go with a week’s wages in lieu of notice. His redundancy letter, which did not explain his alleged poor performance, did not even spell his name correctly.
Tim Martin, chairman of the pub chain JD Wetherspoon, earned notoriety after sending staff a rambling video message saying they would not be paid until the government scheme was in place (the company has now been forced to backtrack) and advising them to look for work at supermarket Tesco.
With job losses mounting, many people are facing immediate financial hardship.
The charity Citizens Advice has seen a surge in traffic to its website in the last month, with people searching first for advice on flight cancellations, a week later on sick pay, and then on redundancy and benefits. But on Thursday, the most viewed page was: “What to do if you can’t pay your bills because of coronavirus”.
Among those approaching Citizens Advice for help was David, a decorator in Derbyshire who had been unable to work since December owing to back problems. He was already worried about mortgage and credit card payments when the Covid-19 outbreak hit: since then, his wife lost her work as a childminder and his son has come home from college, increasing food bills.
He had borrowed money from one of his sons, used all his savings and was waiting for an overdue response on a benefits claim. In arrears on his mortgage, he is expecting to incur extra charges. “We have enough in our account for this month,” he said. “Next month where are we going to get the money for that? I haven’t a clue.”
The Covid-19 shock has come at a time when many households are ill-equipped to cope with a sudden loss of income.
Data released this week showed that typical household incomes had been stagnant for three years up to 2018-19, with the income of the poorest 10 per cent no higher than in 2013-14. Research last year by the Resolution Foundation, a think-tank, found that more than half of low and middle income households had no savings at all to fall back on in a downturn.
Michele Dillon, a Glasgow-based photographer, is one of many people close to tears at their situation. She usually has next to no income in the early months of the year, but her business — largely producing official stills for Bollywood dramas filmed in Scotland — picks up in spring. Now she is at home applying for a mortgage holiday and wondering whether she can afford to take her dog to the vet.
The government’s support for the self-employed, designed to replace 80 per cent of average earnings over the past three years, is of no help to her, she says, because “2020 would have been the first year my company would have made a profit”.
Lisa Graydon, a dance teacher in Huddersfield, is in the same position. The numbers attending her classes started dropping at the end of January, as people became wary about holding hands with strangers. In early March, she had to cancel a national competition she had organised at a day’s notice, losing £1,500 spent on hotel rooms, food, hall hire and trophies.
“I’ve got no income coming in whatsoever. I’ve had to refund everybody that booked on the event,” she said. But because her business, CurlyWurlyEvents, was only just starting to turn a profit, she said she would not benefit from the government’s support for the self-employed. “Eighty per cent of nothing is still nothing.”
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