People operating small businesses and the self-employed, like so many people, have been affected by Covid 19. The Government put together a large package of support at the beginning of lockdown, including grants for hospitality businesses and rate exemptions for small shops.

However for every lucky shop owner there were several people who were entitled to no support at all. Families where one or both partners are self-employed suddenly found there was no money coming into their homes. They still had to pay rent, buy food, pay for utilities and clothe themselves and their children.

Anyone who set up a home-based business in the last 18 months did not receive any Government support. Instead they were directed toward the benefits system and Universal Credit. The usual wait for initial payments of Universal Credit is five weeks, but this has risen to approximately nine weeks because of the vast numbers now claiming. At the beginning of May the number of new claimants applying for Universal Credit grew to nearly two million, six times the normal rate.

There has been a concerted effort over two or three decades, by successive governments, to encourage people to become self-employed. In many cases this was a cynical attempt to change the status of individuals from “unemployed” to “self-employed”. Now many have been left high and dry, with businesses unable to continue, leading to an inevitable slide into debt.

So what happens next? The furlough scheme is coming to an end and the signs are that large numbers of furloughed staff will end up claiming benefits as new job opportunities decrease. The Government brought in a number of useful, short-term measures but left too many people without a safety net.

At the same time, Amazon boss Jeff Bezos increased his personal fortune by $13 billion in a single day. Apart from the obvious question about whether anyone needs that much money, we must remember that Amazon does not pay what most people would consider adequate taxes in the UK on the money earned here.

The Chancellor talks about how we are going to have to “pay” for this crisis in the future. One solution would be to close tax loopholes that allow companies to make substantial profits in the UK but pay little to no tax here – instead of targeting small business owners with increased tax or National Insurance payments.

By Debbie Mynott, first published in The Cornish Times 31/07/2020.

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