Mervyn King presses Rishi Sunak over pay for self-employed
Pressure is mounting on the government to boost its financial support package for Britain’s 5 million self-employed people, after the former governor of the Bank of England, Mervyn King, called on ministers to take rapid action.
Warning that the escalating crisis was a far more serious threat to the economy than the 2008 financial crash, when he led the response at Threadneedle Street, King said the government should give self-employed workers the same level of support as company employees as a minimum first step.
“It’s a good starting point because it would be equivalent to the support that’s being given for paying wages. Whether we will need to go higher than that is something that’s impossible to judge today,” he told BBC Radio 4’s Today programme.
“This is much more serious and much more difficult to cope with [than 2008].”
On Friday, the chancellor Rishi Sunak outlined plans to pay employees 80% of their salaries, capped at £2,500 per month, in an attempt to avoid mass unemployment. Self-employed workers can access a much-less generous £94.25 a week in universal credit benefits and are being allowed to defer self-assessed tax payments until next year.
King said further loans and tax breaks for the self-employed were required and told ministers to ignore the dramatic rise in public borrowing needed to pay for such steps.
Saying a recession was inevitable as large parts of the economy are locked down to prevent the spread of the virus, he added: “You cannot blame the government for creating this contraction in activity, it is absolutely necessary. The question is how we help businesses and self employed people survive through to the end of the epidemic.”
King’s intervention comes as almost 100 leading economists, including former advisers to the Labour leadership and heads of thinktanks and campaign groups including the New Economics Foundation, Autonomy and Tax Justice UK, signed a letter to the government urging faster and more far-reaching action. More than 50,000 freelancers and self-employed workers have also signed a petition to ministers calling for urgent help, warning that work is drying up and money is running short.
Gig economy workers in the Independent Workers of Great Britain union are threatening legal action against the chancellor’s current “discriminatory” policy, while a survey of its members suggested half would keep working if they had symptoms.
After a sharp rise in the decade since the financial crisis, about 15% of the UK workforce is self-employed, with large concentrations in particular sectors and regions, including construction and the creative arts.
Speculation is mounting that the government could take further steps. The communities secretary Robert Jenrick said on Sunday the government was looking at extending its scheme to pay 80% of workers’ wages to the self-employed, but that doing so was “logistically and operationally” difficult.
A spokesman for the Treasury said the government had taken unprecedented action to support jobs and the economy, and added: “We have always said we will go further where we can and are actively considering further steps.”
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