One in five highly skilled freelancers expect to have to close their business because of the COVID-19 crisis, according to new research by University of Edinburgh Business School in association with IPSE (the Association of Independent Professionals and the Self-Employed).
The study, which surveyed over 1,400 highly skilled freelancers (Standard Occupational Groups 1 and 2), found that three quarters of them (74%) had lost income, with an average income fall of 76 per cent. As a result, over two thirds (69%) say they now have cashflow problems.
The overwhelming majority (91%) said they could not access the government’s Self-Employment Income Support Scheme (SEISS), mostly (73%) because they work through a limited company. Unsurprisingly, average stress levels in this group have increased by 80 per cent because of the Coronavirus crisis.
The research was led by Prof Francis Greene and Dr Alessandro Rosiello from University of Edinburgh Business School and aimed at assessing the impact of the COVID-19 pandemic in the UK to freelance workers.
Anonymised quotes from respondents:
1: “I have fallen through every single crack in this supposed raft of financial support measures. I cannot pay my bills. My income has gone from £4k a month to zero overnight. Despite paying taxes in this country for over 12 years, I am not eligible for any safety net from government […] There is nothing I can do to work and pay my bills.”
2: “I was made redundant in January. I went freelance until I found another job. I’m an art director. Now all work is cancelled. I have no income at all. I’m not entitled to UC as I have savings. I’m now expected to live on savings which is unfair. I have a family and we have no income at all.”
3: “Overnight [I lost] £50,000 of work. [The] TV industry disappeared. Despite being a high earner tax contributor for 20 years, when I needed help, I was excluded from the SEISS. I have now [decided] to sell my house,[…] and work no more than three months a year. I will never again earn more than £50,000 as I have been disincentivised by the government. Just incredible.”
4: “I’m genuinely frightened about my future. I’m secretly in tears most days. I feel like a failure. Why can’t I get help? Over 25 years I’ve given hundreds of thousands of pounds to the exchequer.”
Professor Francis Greene, Chair in Entrepreneurship and Head of the Entrepreneurship and Innovation Group at University of Edinburgh Business School said: “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 (the Association of Independent Professionals and the Self-Employed), said: “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.”