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‘New deal’ needed to help self-employed

A ‘new deal’ is needed to help the growing number of people who are self-employed in this country, according to a new report.

The report by the think-tank Demos and commissioned by the Association of Independent Professionals and the Self-Employed (IPSE) warns the policymakers of the need to pay attention to the 4.8 million people in the UK – around 15% of the total workforce – who are now registered as self-employed.

In particular, it says many self-employed people have concerns about tax, over-strict government regulation, pensions, and a general lack of support.

It argues a new deal is needed from ministers to bring government policies up to date and makes a series of recommendations, including writing a definition of self-employment into law.

It also calls on the Government to ‘comprehensively reform’ how Universal Credit works for self-employed workers.

The report says the Minimum Income Floor exemption should be extended from one year to three years, dependent on an annual ‘gainful employment’ interview within that period.

New Enterprise Allowance advisors should conduct these interviews until ‘work coaches’ have been sufficiently retrained to understand self-employment.

And after years one and two, this interview should assess the annually submitted accounts, with the monthly Universal Credit income then set for the whole of the following year. This will be paid each month, irrespective of the self-employed workers actual income, with any extra income being clawed back only at the end of the year at the next interview.

A survey carried out for the report also found that the majority of the self-employed are happy (80%) and actively choose to be self-employed.

It also found the vast majority of self-employed workers (70%) are content to stay in self-employment for the foreseeable future.

And economic security issues – often associated with irregular income patterns – represent the biggest challenges in terms of the self-employed ‘experience’.

The chief executive of IPSE, Chris Bryce, said the self-employed sector now rivals the public sector is size and is the ‘most significant story in the UK labour market this century’.

‘We commissioned this landmark report with Demos to reveal the realities of self-employment today, open up much-needed discussion about it, and find ways to promote and support this vital and burgeoning sector,’ added Mr Bryce.

‘We are also very glad the report backs IPSE’s calls for a statutory definition of self-employment being written into law, and for the Government to halt the roll-out of the disastrous changes to IR35.

‘Overall, this report should help not only push self-employment to its rightful place at the heart of political discourse, but also make a vital contribution to the debate about the future of this sector.’

Demos’s head of modern economy and report author, Alan Lockey, commented: ‘The rise of self-employment is one of the biggest changes to the modern economy in the last couple of decades.

‘We need to think pragmatically about whether we should actively encourage it – it could be that it is the British solution for a more flexible, less rigid approach to life and work in the future, as it already is for millions of people. That means we need a new deal to boost security for the self-employed.’

To read the full report, click here.

Jamie Hailstone
Senior reporter - NewStart

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