1.5 million people who are currently excluded from claiming SEISS could easily be supported by government at modest cost, says IFS

New briefing finds that extending SEISS to those with less than 50 per cent of income from self-employment, and some of those with incomes of more than £50,000, would cost just 5 per cent of current spending on scheme

1.5 million of the people who are currently excluded from claiming from the Self-Employment Income Support Scheme (SEISS) could easily be supported by government at a modest cost, the Institute for Fiscal Studies (IFS) has said.

In a new briefing, the IFS highlights that while the SEISS has been paid to at least 2.6 million people, at a cost of £21 billion up to January 2021, around 1.8 million self-employed people and around 700,000 company owner-managers are not eligible for support through the scheme.

The IFS adds that, although it is technically very difficult for the government to provide targeted support for owner-managers and newly self-employed people, this is not the case for the 1.3 million people self-employed people who have less than 50 per cent of their income from self-employment, or the 225,000 people who have profits in excess of £50,000.

For example, the IFS finds that -

'More than half of people with less than 50 per of their income from self-employment have total personal incomes of under £25,000, meaning that targeting support at this group would affect many people with low or moderate personal incomes. They also have relatively low levels of self-employment profits (more than half have profits under £5,000 per year). 45 per cent of people in this situation are women compared with just 35 per cent of those supported by SEISS. We estimate that extending SEISS to them would be relatively cheap in comparison to other spending on government support schemes (between £500 million and £800 million per quarter, with average quarterly payments of between £600 and £1000 per person).'

In addition, in relation to those with profits in excess of £50,000, the IFS calculates that, while extending the SEISS to everyone in that group would cost £1.3 billion per quarter, providing a tapered form of support to those with profits between £50,000 and £90,000 would cost much less - around £325 million per quarter.

Commenting on the findings, IFS Senior Research Economist Jonathan Cribb said today -

'The government has designed and provided incredibly generous support to many self-employed people during the pandemic. However, millions of people are not eligible for support for a variety of reasons, leading to widespread frustration and many cases of hardship. In particular, the government has arbitrarily excluded two groups from self-employed support (those with incomes of more than £50,000 and those with less than 50 per cent of their income from self-employment). At relatively low cost the government could choose to extend the support scheme to both groups, particularly if they created a tapered support scheme for higher earners.'

For more information, see 1.5 million currently excluded from claiming SEISS could easily be supported by government at modest cost from ifs.org.uk