Chancellor Rishi Sunak has been urged to use his Budget on 3rd March to give greater security to self-employed workers and prevent a possible ‘exodus’ from self-employment in the wake of the Covid pandemic.
The recommendation is made in a new report from the Inquiry into the Future of Self Employment, which is backed by trade unions Prospect and Community and the Federation of Small businesses and included a panel of experts from business, the world of work and across the political spectrum.
The Inquiry found that a majority of self-employed workers were unsure about continuing to freelance in the future, with a clear appetite for a stronger safety net if they are to continue.
If these workers did decide to give up on their businesses in favour of more secure working conditions, the impact on the recovery from the pandemic could be drastic, the Inquiry warns. To avert this fate, the Chancellor should take action to strengthen the safety net for the self-employed.
The package of recommended policy measures includes:
- Ending the exclusions from the government’s income support packages
- Extending health and safety rights at work, sick pay, and paid parental leave to the self employed
- Changes to Universal Credit and the pensions system so they work for the self employed
- A new Commissioner for the Self Employed in government to coordinate policy efforts
- Redrawing definitions of self-employment to be more inclusive, and delaying controversial IR35 rules which will cause more uncertainty
As part of their research the Inquiry conducted a survey of over 2,200 self-employed workers. Key findings included:
- 46% said they were less likely to continue in self-employment due to their experience in the pandemic (18% unsure, 36% likely to continue)
- 88% said the level of pandemic support for the self-employed was not a fair reflection of their tax contribution
- 79% would oppose the equalisation of National Insurance Contributions between employees and the self-employed (21% support)
- But 51% would support paying more out of their wages in exchange for a stronger safety net (12% oppose)
- 75% do not believe they have sufficient workplace rights compared to employees (15% believe they do have sufficient rights)
Roy Rickhuss CBE, General Secretary of Community, said:
“Over the last year the self-employed have often been the forgotten millions of the pandemic when it comes to government support, leaving many of them left behind and facing significant financial hardship.
“Our report highlights the extent of the difficulties self-employed people have faced in the last twelve months. The government has thus far been unwilling to respond to these challenges, but what we need now is for them to act swiftly and implement our inquiry’s recommendations. In the immediacy the government must provide the self-employed of this country with financial support to address those excluded from existing schemes, so millions across the country no longer have to worry about paying their bills or putting food on the table. They must also act to provide greater security to the self-employed in the future, including by extending benefits like parental leave and sick pay as well as delaying the introduction of the IR35 regulations.
“Self-employed workers play a vital role in our national economy, making up roughly 15% of our workforce and being pivotal to the UK’s fastest growing and innovative industries such as in science, engineering, healthcare, the arts, entertainment, the media, and in the delivery of other important services across the country. They must be supported through this pandemic and beyond. We hope the government heeds this report and creates a more stable foundation for self-employed workers in the future, and ensures that the many voices of currently struggling self-employed workers are heard.”
Prospect General Secretary Mike Clancy said:
“This pandemic has exposed the precarious nature of the UK’s self-employed workforce, with too many people risking too much to pursue their careers.
“It is time for a rebalancing of the risk and reward for the self-employed, with government acting to give greater support in the short term and a renewed sense of security and stability to protect against the uncertainty that the future holds.
“The self-employed can be the engine of our economic recovery if the government backs them now, this budget must be the one where the Chancellor finally delivers for our freelancers.”
FSB National Chairman Mike Cherry said:
“FSB was originally set up to be the voice for the self-employed in the 1970s, and we are now at a similarly critical moment for the UK’s self-employment community as we look to how to come out from this pandemic to 2030 and beyond.
The report includes a raft of proposals to help the self-employed stay in business and give them a shot at survival during these trying times. It will be essential reading for the Treasury, to inform what we hope to see on 3 March – a Budget that drives recovery, clarifies support and regulation, and puts a thriving self-employed population back at the heart of its medium-to-long term economic plan.
“We’re grateful for the work Prospect is doing in this space and for including us in this important Commission’s work.”