A recently published independent review has called for greater support for the self-employed. The review, headed by leading entrepreneur Julie Deane, has argued for the self-employed to be granted the same rights as company employees.
Self-employment in the UK has been steadily rising. There are currently an unprecedented 4.6 million self-employed people in the UK, representing 15 per cent of the workforce. Much of the growth seen over the last few years has been driven by this sector and the trend is set to continue. The report finds that this is almost always a positive decision, stating that 86 per cent of self-employed people say they are better off in terms of job satisfaction than being an employee.
Particularly owing to the growth in accessible technology, the last few years has seen the UK’s self-employed represent an increasingly heterogeneous group. Since 2009, women have accounted for over half of the overall growth in self-employment.
The information contained within the review amounts to a series of noteworthy recommendations.
The review calls for more flexible financial solutions for the self-employed. As the number of entrepreneurs increase, there is a need for mortgages, insurance and pension arrangements to reflect the differences that come with self-employment around income volatility and savings. These changes, as well as supporting the self-employed, also serve to benefit financial institutions.
The lack of financial solutions lies alongside an insufficient legal definition of self-employment. The lack of simplicity and clarification over a single definition for tax and employment law is cited as particularly burdensome for businesses.
The report also highlights the significant disparity between the self-employed and employed with regard to maternity and adoption pay. Currently, self-employed women on Maternity Allowance are at a significant disadvantage. The review recommends that, "Government should enhance the level of Maternity Allowance provided to the self-employed in the first six weeks – bringing Maternity Allowance in line with Statutory Maternity Pay. As is the case with Statutory Maternity Pay the remaining 33 weeks would be paid at the lower of the statutory flat rate or 90 per cent of earnings (in the case of low earners)".
In addition, self-employed adopters do not qualify for Statutory Adoption Pay. The report issues the recommendation that "Government should introduce a new ‘Adoption Allowance’ for self-employed adopters. In line with Statutory Adoption Pay".
These revelations are rightly met with serious concern by Julie Deane; "I have not been able to find a compelling explanation for this difference in treatment, and looked at objectively it seems that there is a fundamental principle that the self-employed should not be treated any less favourably than employees where they are planning to start or extend their family."
Alongside these specific recommendations, the report also highlights the need for better education of young people about self-employment. Currently, key skills such as finance, cash flow, bookkeeping and taxation are not taught on syllabuses; arguably knowledge that would benefit many adults regardless of their employment status.
It is recommended that improved education should be supported by more accessible advice for existing businesses. Presently, there are a range of initiatives and tools that support entrepreneurial businesses; however there is significant confusion in the sector over duplication. The review proposes that the provision of a central portal, from which to navigate impartial support, would give clarity to businesses seeking advice.
The review comprehensively demonstrates the clear need for the government to improve its awareness and treatment of the UK’s increasingly important self-employment sector. The government is due to respond over the coming months and we’ll be keeping a close watch on the developments.