From the Lobby / Jan 2017

From the Lobby / Jan 2017

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Freelance journalist Natasha Clark lets us know where self-employment sits on the political agenda

In January there’s the usual shudder from freelancers across the UK at the TV adverts, letters and email reminders that can only mean one thing - tax returns are due. Once you’ve reset your 63-digit password from last year and actually logged in to your online account, locating your P60 from the pile of invoices, expenses receipts and payslips becomes a very real struggle.

But despite levels of self-employment hitting their highest since records began, the Government is still struggling to adapt to the changes which have hit the workplace. The growth in freelance workers has helped the economy get back on its feet after the recession, but our changing workplace practises aren’t yet reflected in Whitehall thinking.

On the bright side, the Government appear to be in what they like to call “listening mode”. We can see this in at least six reviews taking place this year which will consider the rights of the self-employed, the process of how they pay tax and one specific inquiry from the Department for Work and Pensions (DWP) on self-employment and the gig economy, which at the time of writing is soon to close (Monday 16 Jan). The Taylor review on modern employment practises will also feature a regional tour to discuss the labour market - a review commissioned by the Prime Minister.

Budget

This focus is welcome in the light of concerning comments from the Government which were ill-received by some freelancers. In last year’s Autumn Statement, the Chancellor described plans to “consider how we can ensure that the taxation of different ways of working is fair between different individuals, and sustains the tax-base as the economy undergoes rapid change”. So far, so fair?

But he went on to launch a thinly-veiled attack on those who were self-employed, blaming “rapidly rising incorporation” for lower tax receipts which “further erodes revenues”. Bit of a slap in the face to 15 per cent of the workforce, some might say.

He continued, announcing that the Government was “committed to tackling tax evasion, avoidance and aggressive tax planning”, before declaring he would commit to removing the tax benefits of “disguised earnings for… the self-employed” to raise £630 million.

The differing tax rates between a company employee and someone who is self-employed have been described as a perk for freelancers. But it seems Mr Hammond wants to plug a hole in his budget by removing some of those.

Quite a difference from the DWP minister Damian Green who insisted last week that the Government was keen to “support those who aspire to be their own boss.” He cited the “good work” of the 2011 Enterprise Allowance which aims to help the self-employed to kickstart their new businesses. He claimed that 80% of those who started a business last year benefitted from funding, access to a loan or a business mentor.

The silver lining of last year’s budget was the promise to improve broadband access, which the self-employed are dependent on as many work from home. Rural areas have long complained at the inadequate speeds they face in remote parts of the country, and ministers promised £400m to speed up broadband.

Illustration by Gary Barker

Opposition

But aside from that nugget, Labour MPs say it’s been left to them to make the case for supporting the self-employed in Parliament. Earlier this month during DWP questions a string of MPs lined up to chip away at the Government over their help for freelancers.

Peter Dowd, the MP for Bootle, said that “exploitative companies” were “forcing staff down the self-employment route”. The Shadow Work and Pensions Secretary Debbie Abrahams then claimed that millions of self-employed workers were still earning less than the national minimum wage. Last year she set out plans to give greater social security rights to self-employed workers - which could include sickness or disability pay, and maternity cover.

And changes to the state pension are set to come into force in April - alongside plans for auto-enrolment in pension contributions. But these won’t apply to freelancers, MP for Torfaen, Nick Thomas-Symonds, pointed out. He said that the self-employed were also likely to “lose out with cuts to tax credits”.

He told IPSE later: “There’s not enough attention given in Whitehall to this rapidly growing group of people”. He went on to say “We have to bear in mind what happens in tough times - we have to look carefully about the self-employed losing out.”

Brexit

While it’s easy to see why the self-employed may not be at the top of the Prime Minister’s inbox as she gears up to trigger Article 50 in March, a changing workforce should still be a concern as the economy threatens to wobble later this year.

Brexit could be a mixed bag for freelancers. While some MPs are hopeful that it will release self-employed workers from so-called “red tape”, others are concerned at the impact of a potential economic downturn once we leave the European Union. Fears of inflation rises later this year could also squeeze the self-employed, who are already likely to earn less and work longer hours, without the security nets of sick or holiday pay.

David Morris MP, chair of the All Party Parliamentary Group on the self-employed, is concerned about what will happen to VAT structures when Britain leaves the EU, and feels that the Government is “playing catch up” to the changes of the self-employed on the economy.

He called for the Government to introduce a self-employment minister as “the self-employed work differently from everyone else… you need someone who understands this.”

But he played down concerns of a bonfire of EU regulations on workers’ rights, and welcomed the opportunities he hoped Brexit would bring. “We will be looking at what Europe do, get our ideas across and transpose them - we won’t be going back to the Victorian days,” he insisted. “Stripping back of some business agreements and trade agreements could open up a whole new ballgame for the self-employed,” he added.

As with all British domestic policy at the moment, the priorities for the self-employed are likely to be pushed back until after the Prime Minister gets a firm grip on the immediate challenge of Brexit. MPs are concerned that the Government is playing catch up with its numerous reviews and consultations, but as the numbers of freelancers in the economy continue to grow, ministers and the civil service can’t continue to write off their concerns forever.

 

Words by Freelance Journalist for the Sun and The Sunday Times, Natasha Clark