UK shadow chancellor, Anneliese Dodds has warned that self-employed UK homeowners face a “perfect storm” this winter, as scaled down COVID-19 support could leave some workers to survive on only a third of their pre-coronavirus income.
Dodds said the decision to jointly withdraw the self-employment income support scheme (SEISS) and the end of the mortgage holiday means self-employed could face a double whammy.
She also called on ministers to extend the application window for mortgage payment holidays and elongate the ban on repossessions for another three months in a bid to limit potential hardship.
Dodds said: “Self-employed homeowners are facing a perfect storm because the government has decided to abandon them just as we head into the winter.
“There’s still time for the government to stop a bleak winter for Britain’s self-employed workers.
“It must remove the mortgage cliff edge, fix the gaps in its income support schemes and help people defer the cost of interest payments.”
According to Labour analysis, a self-employed single homeowner who earned profits equivalent to the national minimum wage with an income of £1,254 ($1,623) before the crisis hit and, after mortgage costs and council tax were taken into account, had £854 left for other spending.
That means that the same homeowner will now only get £654 before mortgage costs, according to the party.
Labour said that, when mortgage payments are factored in, earners could be left with just £254 — 30% of their pre-pandemic income — to get through the month.
The Treasury did not come back with a comment at the time of publishing.
Chancellor Rishi Sunak announced the planned SEISS changes as part of his third economic update, alongside new and revised measures to boost support for businesses badly hit by the coronavirus pandemic.
As of Saturday, the government will stop offering the mortgage holiday scheme introduced at the outset of the coronavirus crisis. On Sunday the original furlough scheme will be replaced and a new grant process for the self-employed is due to come in.
The self-employed will be able to apply for a third grant under the SEISS from November, to cover the next three months. This is worth 40% of their pre-coronavirus trading profits. But, that figure is down from the 80% offered during the first grant and 70% during the second application period.
Earlier this month, the Resolution Foundation estimated that 17% of the 760,000 self-employed workers in the country had no earnings in September.
Last week, the Labour Party accused the government of leaving almost half a million self-employed staff working in closed or struggling sectors of the economy “in the lurch.”
The SEISS was launched by the government in late March. It allowed some self-employed people during COVID-19 to claim a taxable grant worth 80% of their average monthly trading profits, capped at £7,500 over three months.
Watch: What is the Job Support Scheme and how has it changed?