Articles - 17th April 2020

Unlocking the grants: The Problem with the Freelance Scheme

Words by Tom Whyman
Illustration by Jon McCormack

Ah, to be a freelancer in Germany! In order to help shield the self-employed from the effects of the coronavirus-induced recession, the German state is offering a programme of emergency grants for freelancers as well as small businesses with the state of Berlin particularly quick to act on delivering €5000 into applicants’ bank accounts.

By all accounts, the administration of the grants seems largely free from the problems (e.g. ‘taking forever’) traditionally associated with German bureaucracy, and in Berlin at least they appear to be genuinely universal – available even to foreign nationals, without compromising their work visas.

The money the German state is offering freelancers might be called “generous”, but it is perhaps better to call it “essential.” In order to navigate the current situation, what governments really need to be able to offer their citizens is security: the knowledge that everything is being done to prevent them getting sick; the knowledge that if they do get sick, they will receive the best possible care; the knowledge that if they lose their means of supporting themselves, whether permanently or temporarily, the state will provide a safety net.

(These, of course, are all things the state should be providing in ordinary times as well – it’s just that the current situation makes the need for security seem all that more urgent). Lack of security means stress, means anxiety, means the threat of destitution – and it also means that people will feel motivated to do riskier and riskier things to release that stress; to stave off that threat. Lack of security thus threatens the health of individuals – and in pandemic conditions, we see emphasised the point that this also threatens the health of the population overall.

Any responsible state, then, needs to be doing something to offset the loss of income that self-employed people are going to suffer as a result of the pandemic – it is no exaggeration to say that this ought to be seen as national security issue. Of course – you might be thinking, reading this – why am I even talking about this? In the UK, after all, the government has announced measures to help freelancers.

After initially being criticised for having no plans for freelancers analogous to earlier protections for employees (despite the self-employed making up around 15% of the UK workforce), chancellor Rishi Sunak announced a scheme under which self-employed people will receive a grant – starting at the beginning of June – representing 80% of their average monthly trading profit over the tax years 2016-17, 2017-18 and 2018-19, up to £2500.

But the first point to make here is that clearly this money is not arriving soon enough. If the point is to provide security – which it should be – then I’m not really sure what’s going on here. What are self-employed people living month-to-month meant to do until June? The effects of the recession have not been delayed until then – they are already here.

If some given freelancer owns their own home, they might be able to apply for a mortgage holiday – but if they rent, their situation will be much more ambiguous. The scheme implicitly assumes that all self-employed people will have access to some sort of ‘rainy day fund’. Much has been made over how much of a break with Tory policy these emergency measures are – but in a way, this is just Tory business as usual: measures which reflect the financial realities of the more-comfortable-than-average, those somewhat or entirely shielded from reality; not those who need it most.

And the second point is that these measures are by no means universal. Sunak has been keen to design the scheme such that only those who ‘really need it’. So if you’ve made an average profit of more than £50,000 a year over the last three tax years, you won’t get any money. And if you’ve made more money from employments than self-employments, you also won’t get anything. The first caveat is maybe fair enough, although I do think it should be emphasised that while most well-off people can afford their own security, their will be some outlier cases who can’t – and I lean more towards risking letting some guilty people off, than punishing the innocent by mistake. The second, however, is where the scheme really fails to reflect the realities of self-employment.

This is personal for me because the second point is why I personally will not be eligible for anything. For the past three years, I’ve worked across two sectors: self-employed as a writer, and employed, usually part-time, teaching in universities. From 2017-18, I had a full-time job at a university, from which I made more than all my self-employed work between April 2016 and April 2019 put together.

But – since September 2018, I have worked almost exclusively as a writer. This, however, is not reflected in any tax documents that will be examined for this grant – and so, despite the website I was making most of my money writing for closing as a direct result of the coronavirus-induced recession  – I will be ineligible for any help. And this is not just a ‘me’ problem – it is a problem for all sorts of people, in all sorts of different sectors, including the very recently self-employed.

The question of long term security is also crucial here. Already, the chancellor has indicated that this scheme will need to be paid for by self-employed people themselves – with the self-employed now set to lose (for instance) certain exemptions from national insurance payments. This will likely be part of a more general post-pandemic entrenchment of austerity, with the chancellor generally indicating that he expects the emergency money he’s releasing will in some sense need to be ‘paid back’ (by contrast, the grants German freelancers are getting will not incur any future obligations).

For those not receiving any money, we are simply being punished for benefits other people received; for those who are – who, yes, almost certainly need the money but have really just been given it automatically – the experience must be felt a bit like being told by your parents that they expect you to refund them for the food you consumed as a child.

Frankly, if governments really are interested in providing people with security – which they should be – then there is only one way forward. For the period of the pandemic and the recession – at least – we need to be given some form of Universal Basic Income.

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