Self-employed to have 80% of average earnings paid for by the government to help with impact of coronavirus
Video report by ITV News Political Correspondent Paul Brand
Self-employed workers will have 80% their average earnings paid for by the government as it aims to support workers through the coronavirus crisis.
The new package means self-employed people will now be supported in a similar way to workers who are having their wages paid for by the government for 80% of their salary, or up to £2,500 a month.
The government had been under increasing pressure to extend financial protection to the self-employed sector after it was seemingly left out of a package of support provided to most other workers.
The chancellor says 95% of all self-employed workers will be covered by the scheme, which is expected to be "up and running" by the beginning of June.
He added that self-employed people can now access Universal Credit in full and will be able to claim before the new scheme comes into play.
He said that it is open to anyone with trading profits of up to £50,000 and will be only available to those who make the majority of their income from self-employment so only the “genuinely self-employed” benefit.
“To minimise fraud, only those who are already in self-employment who have a tax return for 2019 will be able to apply,” he said.
“95% of people who are majority self-employed will benefit from this scheme."
But he warned the government "will not be able to protect every single job or save every single business".
Mr Sunak said the average earnings of those not covered by the state aid were those earning more than £200,000 per year.
“Of the people it does not cover, those last 5%, those above the income threshold we set, their average incomes are about £200,000,” said the Chancellor.
Those who became self-employed since April 2019 are not eligible for the scheme.
The new package received immediate criticism for its three month time scale.
Shadow Chancellor John McDonnell said waiting until June will "simply be too late for millions".
He said: "Asking people to rely on Universal Credit when more than 130,000 people are queuing online will be worrying to many people, so there is a real risk that without support until June the self-employed will feel they have to keep working, putting their own and others' health at risk.”
MP Amy Callaghan said it was "simply not good enough" that self-employed workers would have to wait until June for support.
The SNP MP tweeted: “Waiting until June for self-employed people to get support is unfathomable. My constituents are struggling now. Simply not good enough.”
Several other opposition MPs expressed dismay that self-employed workers would have to wait until June to claim.
Labour MP David Lammy tweeted: “Leaving the five million self-employed Brits without any support until June is a slap in the face.
"Many will be bankrupt by then. And why is there an eligibility cap for the self-employed but not the employed? This is not what I call fair.”
Liberal Democrat MP and leadership candidate Layla Moran posted: “80% grant for the self-employed is welcome. But waiting until June does not give self-employed parity with those in employment.”
She added that it was a “huge missed opportunity” to implement a universal basic income.
The government will calculate a self-employed workers' average earnings over three years.
Mr Sunak said those eligible will be contacted by HMRC and the money will be paid into their bank accounts.
And he said anyone who missed January’s filing deadline will have four weeks to submit their tax return so no-one misses out on support.
As he announced the package in a digital Downing Street press conference, he revealed details of the package on his Twitter page.
The press conference was held in a digital format to help ensure journalists are able to follow the strict rules of social distancing.
The move comes after Prime Minister Boris Johnson told Parliament he wanted to achieve “parity of support” so the self-employed could have similar levels of protection to waged workers.
Last week, the Government set out plans for 80% wage subsidies or up to £2,500 per month for staff kept on by employers, as part of "unprecedented" measures to prevent workers being laid off due to the virus crisis.
The Chancellor later said drawing up plans to help self-employed people had proved to be "incredibly complicated".
It comes amid a day of good news for the government's battle against Covid-19, with life-saving ventilators going into mass production and the UK becoming the world's biggest donor to efforts for a vaccine.
Speaking on Wednesday, the Prime Minister promised the Government would do "whatever we can to support the self-employed, just as we are putting our arms around every single employed person in this country".
As the Commons shut down early for Easter due to the escalating epidemic, Mr Johnson told MPs: “There are particular difficulties with those who are not on PAYE schemes as… I think the whole House understands.
“We are bringing forward a package to ensure that everybody gets the support that they need.”
But cautioned: “I cannot, in all candour, promise the House that we will be able to get through this crisis without any kind of hardship at all.