WIREDGOV

In the latest wave of action to protect the economy against COVID-19: a wage guarantee scheme and further mitigating measures for business.

On Friday 20 March the Chancellor of Exchequer announced a wave of new measures to support workers, business and the economy through the COVID-19 pandemic. 

For business and employees:  

• A furloughed worker scheme, providing grants for employers who retain their staff, covering up to 80% of their wages for at least three months – the scheme will be extended if necessary. This covers all UK employers with a PAYE scheme, including charities 
• Deferring VAT payments for March, April and May, and giving businesses until the end of the financial year to pay those bills 
• Extending the interest free period for the Business Interruption Loan Scheme to twelve months, following the announcement on 17 March that the maximum amount that could be borrowed would increase from £1.2 million to £5 million 

For self-employed people: 

• Suspending the minimum income floor for 12 months so all self-employed people can access Universal Credit in full at the same rate as statutory sick pay 
• Deferring self-assessment payments for July, August and September until the end of the financial year 

To help people stay in their homes: 

• Increasing housing benefit and Universal Credit so that the Local Housing Allowance will cover at least 30 per cent of market rents in local areas 
• Following discussions with industry, mortgage lenders will offer mortgage holidays of 3 months for those in difficulty due to coronavirus 

Further information on these support packages can be found here, including instructions on how to access these new measures and information on the relevant authority responsible for delivery.  

The Government has also updated its guidance on social distancing which can be found here.  

For many businesses and employees in the tech sector these announcements will be welcome as the full scale of the economic challenge presented by COVID-19 presents itself.  

Over 80% of Digital Sector workers as measured by DCMS are employed, and therefore likely covered by the pay guarantee scheme. Employers will be able to designate affected employees as ‘furloughed workers’. HMRC will then be able to reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.   

Whilst this is welcome, around 270,000 workers in the digital sector are self-employed, as measured by DCMS, equating to 17.6% of the total workforce in the sector. The largest share of these workers are in computer programming, consulting, and related activities where there were around 136,000 workers who were self-employed in 2018.  

Workers in this sector will likely be able to work remotely, however these individuals are particularly exposed to a drop-in business activity with clients/customers postponing or cancelling projects deemed to be not business-critical. The package announced by the Chancellor for the self-employed fails to measure up to the robust package for employees and could cause lasting damage to this crucial segment of the workforce. 

The figures above provided by DCMS, also do not take account of those who work for digital platforms as casual workers, so called gig economy workers. A study by BEIS estimated in 2018 that around 2.8 million UK adults had worked in the gig economy in the last 12 months, with some relying on this work for the whole incomes.  

A survey, conducted for the RSA, found only 16% of all workers agree statutory sick pay, equivalent to the £95 offered so far, would meet their basic needs. Unless this is addressed head-on those working in the gig economy may feel that their only choice is to continue working perhaps in contravention of Government advice. 

The scale of the economic impact of COVID-19 is enormous and the Government will need to continue to look for mechanisms to support those in self-employment or those who work in the gig economy. techUK’s survey of members on the impacts of COVID-19 have shown that sector has responded quickly to the early stages of this crisis, with many workers able to continue their roles at home.  

However there remain large parts of the tech sector workforce such as the self-employed and those in the gig-economy who will require further support packages to be announced in the coming days.