The 4.6 million people who work for themselves in the UK have played a major role in creating a more innovation-driven and entrepreneurial economy. The recent Independent Review of Self Employment presented a welcome opportunity for this same group to highlight anything that is holding their business back. The hope going forwards is stronger support for the self-employed. George Anastasi, IPSE’s Policy Development Manager, responds to the recommendations it has presented.
On Valentine’s Day, the results of the Independent Review of Self Employment were published, outlining a number of recommendations on what the Government can do to better support those who work for themselves.
Led by renowned entrepreneur Julie Deane OBE, of The Cambridge Satchel Company, the review explores why people opt to be self-employed, the challenges they face, and the different types of work they carry out.
The review is the result of the Government fulfilling its promise to IPSE, to investigate ways to make it easier for the UK’s self-employed to prosper.
Here are the review’s ten recommendations along with IPSE’s responses:
There is a need for education to better prepare our young people for the role self-employment may play in their future
Self-employment is seldom presented as a real option for students, with ComRes research showing that just 1% of freelancers learnt about self-employment in school or college and 2% in university. Students should be more exposed to the workings of small business and self-employment. The report recognises this, and IPSE agrees with its proposal for the Government take forward the recommendations of Lord Young, the Government’s own enterprise adviser, who called for better integration of enterprise within the education system.
It is important that advice and support available is as accessible as possible
Any initiative which incentivises people to start their own business is a good thing, and the Government can be the source of mentoring schemes for the self-employed. These schemes should be promoted in further and higher education institutes, and through jobcentreplus and the DWP website, and made available to everybody considering starting out on their own. The report suggests a central Government portal for the self-employed, and this is an excellent starting point. At IPSE we will play our part by raising awareness of business support available and have already been in touch with the Department of Business, Innovation and Skills about this.
The self employed need for more flexible financial solutions
We are delighted the report took up all of our suggested policy solutions in order to provide freelancers and the self-employed with more flexible financial solutions. Over half (54%) of freelancers are concerned – or very concerned – about their finances post-retirement. The Government’s auto-enrolment provider NEST should produce a scheme geared specifically towards the self-employed, allowing them
to withdraw two years’ contributions without penalty to minimise any perceived risk. Julie Deane’s report suggests better access to mortgages and bank accounts too, alongside
better, more specific advice from the Money
There must be equal treatment and recognition from the Government
It’s great to see the review has focussed on this key issue for new parents. Under the current system, conventional employees are entitled to 90% of normal pay for six weeks, then a further 33 weeks of £138.18. Yet the self-employed receive only £138.18 for 39 weeks, a substantially lower amount in total. We hope the Government implements the recommendation for equal treatment, which we first put to them ahead of the General Election and have actively been campaigning for since. This is a very positive step. We will support the Government should they choose to implement a form of self-employed maternity pay so that freelancing mothers aren’t at a disadvantage. Employment status should not be a barrier to having children.
Making this available would ensure adoptive parents receive the same level of financial support as birth parents – adopters shouldn’t face a barrier to freelancing.
The lack of a legal definition of self-employment is creating an issue
There’s currently no common definition of self-employment between tax and employment law, so it can be very difficult for independent professionals to work out what applies to them. This is something our members have highlighted and one we hope the Government will explore further in the future. There is a lot of work being done in this area and IPSE will support any measure that makes it easier for the self-employed.
Overly complicated legislation and admin is costly for Government and burdensome to business growth
Research already shows that the self-employed are vital for the economic success of the UK, creating innovation and entrepreneurship. As most self-employed people are their own administration department it’s vital that regulatory burden is kept to a minimum. It is good to see the report recognise that time spent dealing with unnecessary red tape is time that could be spent running your business.
Self-employment is not one of the sectors considered in impact assessments for new policies
It’s often said that policymakers all too often think either in terms of employers or employees, rarely considering the self-employed directly. Julie Deane is right to stress that Government must think about how any regulatory changes will affect the smallest businesses. Ensuring that the impact on the self-employed is considered when developing new policy would be a huge step forward and one we would be delighted to see the Government pursue.
Current means of taxations are considered an administrative burden, a barrier to growth, and an issue that could benefit from improved simplicity and better advice
Even though the tax system was outside of the remit of the review and there is a lot of work going on by the Office of Tax Simplification in this area, you asked us to raise the issue with Julie Deane, and we did. Therefore we were glad to see the review re-emphasise the challenges the tax system can create for the self-employed. As well as the problems caused by IR35 legislation, the proposal of quarterly tax returns would mean the self-employed need to spend even more time going through their books – when they could be working. It would also mean paying more for an accountant’s support. We’re glad to see this has been recognised as a problem and we will continue to work with the Government to find a workable solution that doesn’t penalise people who work form themselves.
Shared workspaces are becoming more important
The need for physical office space to do business is becoming less and less common. The self-employed in particular are embracing the ‘virtual office’, and workhubs allow them to network and collaborate. There are an estimated 109 around the UK. We hope that policy makers go one step further than the review, which simply calls for raising awareness of shared workspaces. Workhubs should benefit from reduced business rates and local authorities should incentivise the use of empty properties as workhubs.
Technology has revolutionised the way we work and trade organisations must take responsibility for keeping members up to date with technological advances
IPSE welcomes the recommendation for taking a more active role in the professional development of its members. We’ll continue to do that by delivering high-quality training courses and products tailored specifically for those who work for themselves.
What happens next?
Julie Deane’s report rightly identifies a role for groups like IPSE to signpost our members to helpful support and information. We already have an excellent relationship with the Department for Business, Innovation and Skills, and a close working relationship with senior policymakers. We will work in partnership with Government to build on this and make sure the self-employed community is aware of the help that’s out there.
With so many people making the decision to be their own boss, it’s now important for the Government to move ahead quickly and implement the Review’s recommendations. Otherwise this heartfelt love letter to freelancers could become nothing more than a meaningless gesture. The upcoming Budget represents a great opportunity to announce maternity and adoption pay for the self-employed on the same level as employees. This report is an opportunity for the Government to reaffirm its commitment to this growing part of our economy, as they are here to stay.