Three in four self-employed would be better off under 'emergency basic income'

By agency reporter
March 29, 2020

An 'emergency basic income' for the self-employed would leave three in four better-off – especially those on low incomes – compared to the government's proposals, and get cash into their hands immediately, new analysis shows.

Cash now for the self-employed from the RSA models the RSA's preferred payment of a temporary basic income as an alternative to Government proposals (80 per cent of wages up to £30k).

Almost three-quarters (74 per cent) would be better off under the RSA's model of a basic income of £4250 over three months, the briefing shows, compared to government proposals. This 74 per cent includes the lowest earning, and reflects the fact the self-employed on average earn much less than many think: median earnings are £17,000, according to the ONS.

It would also address the key issue of helping self-employed people whose work has partly dried-up but could still work on one or two projects: under the government's scheme, the self-employed may need to be 'forloughed' or be completely unable to work. Under the RSA scheme, if healthy, they could work.

Under the RSA's proposals, self-employed people would be paid £1500 initially to help manage immediate cash-flow, followed by a weekly payment of £100 per week.

For people earning £17,000 – the average earnings for a self-employed person, according to the ONS – they would be better off under the scheme. This would therefore cover people in vulnerable roles like Deliveroo riders and Uber drivers.
For people earning more than £21,000, the benefits of this proposal compared to the government programme would taper off progressively.
If a self-employed worker's income fell to zero or to a very low level under the RSA scheme they would still be able to claim Universal Credit including help with housing costs.

The calculations here are modelled on a lone person household without children. For families, the RSA scheme is even more generous as they can claim the child element of Universal Credit and benefit from £50 per week child benefit as also proposed as part of the RSA scheme.
Read the RSA's modelling of today's announcement here.

Anthony Painter, chief research and impact officer at the RSA, said: "The self-employed need help now.

"Our worry is that basing grants on 80 per cent of average earnings over three years, or even one, will throw up too many anomalies given the changeable nature of year-to-year earnings of this segment of the workforce leaving some with very low incomes short It may also prove to be too slow and bureaucratic. It will also mean that some who are fit and healthy to work would be discouraged from doing so.

"Under the RSA's proposals, which contain many of the key elements of a basic income, in the first month a single self-employed person would see a one-off payment of £1,500 plus £450, followed by £450 in months two and three, on top of Universal Credit and housing costs. Their main source of income would have to be from self-employed work, so this doesn't include landlords. Families would receive more through Universal Credit and our proposed increase of child benefit to £50 per week.

"This would throw a much-needed lifeline to the self-employed suffering right now, with economic security working hand-in-hand with universal healthcare to protect our vital public services.

"This approach would get money to the self-employed and gig workers fast so they could stop work if they had to. It would benefit more than 80 per cent of the lowest earning self-employed now at a level at least as generous as the employment protection scheme that PAYE workers can benefit from. All self-employed would receive the emergency Basic Income element and these means self-employed earning below the median wage enjoy as much protection as the Government's employment protection scheme for PAYE workers. They would also still be able to work and receive top-up income if they were healthy and able to do so."

* More information on the emergency basic income scheme here

* Royal Society for the encouragement of the Arts


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