Stuart Gentle Publisher at Onrec

Contractor Umbrella News: One in five self-employed expect to close their business due to pandemic

A recent survey has shown that as many as one in five highly skilled contractors are anticipating having to close their business down because of the Coronavirus crisis.

The research, compiled by the University of Edinburgh Business School and the Association of Independent Professionals and the Self-Employed (IPSE), surveyed 1,400 highly skilled contractors with the aim to assess the impact of the pandemic in the UK to self-employed workers.

The results show that a significant 74% had lost income, with an average income fall of 76%, with 69% saying they now have cashflow issues.

Worryingly, as many as 91% said that they were not eligible for the Self-Employment Income Support Scheme, as most (73%) work through a Limited Company – one of the groups that the IPSE believe has been ‘patently forgotten’ while the government has been offering financial help during the Covid-19 crisis.

Professor Francis Greene, Chair in Entrepreneurship and Head of the Entrepreneurship and Innovation Group at University of Edinburgh Business School, commented, 

“COVID-19 has brought in great economic consequences for the UK and freelance workers have been particularly hit by the pandemic. Not only have they seen work opportunities dry up as the country went into lockdown, but they have also suffered from a lack of financial support from government to ensure their survival. Our research clearly highlights these points and sheds some light into the dire situation this valuable working force is in at the moment, which is much worse that we had originally anticipated.”

Chloé Jepps, Head of Research at IPSE, added, 

“The plight of contractors working through limited companies can make for difficult reading because this group has not just been forgotten, but actually abandoned by the government. This research shows just how heavily this is falling on thousands of hard-working freelancers across the UK.

“It is not only the statistics on highly skilled freelancers that are shocking, but also the stories they tell. One in five of them expects to have to close their business, and this translates to people burning through their savings, having to sell their homes and struggling to feed their families.

“This extremely valuable research – for which we are grateful to the University of Edinburgh – sheds light on a dire problem that has not received enough attention during the Coronavirus crisis.

“The Self-Employment Income Support Scheme offers generous help to many self-employed people, but it is clear from this that there are gaping cracks in it through which thousands are falling – particularly limited companies and the newly self-employed. The government must urgently think again about these groups and get them the support they so badly need.”

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