Self-Employment: Government Review Reveals Risks of Going it Alone

by securedatamgt | 22 Jul 2016

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There are 4.6 million self-employed in the UK, making up 15% of the economy, and yet a report released by the government shows still not enough is being done to support them. The government asked Julie Deane, founder of the Cambridge Satchel Company, a business which she started in her kitchen, to compile a report into the state of self-employment in the UK and advise what measures should be taken to further assist entrepreneurs.

The recommendations of the report, no doubt enlightening, have probably been somewhat disappointing. Despite the fact that self-employment rates currently stand at their highest since records began it’s clear that many who go it alone are not receiving enough help. The report shows that the self-employed are still at a disadvantage when it comes to workers’ rights, for example it was highlighted in the report that the self-employed receive a smaller maternity leave allowance.

The self-employed do not benefit from protections such as in work tax credits or security from unfair dismissal. The self-employed are therefore cheaper for the government to maintain than other employees, perhaps a balance that governments have in the past looked to keep.

Julie Deane urged the government to consider having basic book-keeping be taught in schools to equip potential entrepreneurs for future business ventures. Record management and financial administration can be daunting and time consuming for those new to it but both are absolutely necessary for business continuity,. Inefficient record management can lower productivity and hold back entrepreneurs looking to expand their operations.

Deane’s report showed there are calls among the self-employed for these processes to be simplified and made more accessible for entrepreneurs just starting out. However, Deane is probably correct in concluding that these problems stem with the national school curriculum, which lacks an emphasis on critical vocational skills.

Interestingly the report also suggested that the government should improve its’ Gov.uk website when it came to giving advice to the self-employed. The creators of the Gov.uk site,  The Government Digital Service (GDS),  had their own conference recently and no doubt Deane’s recommendations will form a part of their plans for further digitisation of records in the public sector.

As has been pointed out in the press recently the current government is likely to take heed of Deane’s recommendations as it has often shown favour to the self-employed over the public sector, which could mean a roll out of benefits designed to support entrepreneurs very soon. Self-employment values are certainly more in line with the values of the conservative party; lower taxes, a smaller public sector and a focus on employee productivity.

Furthermore, as self-employment rates are particularly low in the North (just over 10% in the North East), any changes to how the self-employed are treated could become a part of the government’s Northern power house pet project.

Although self-employment comes with some risks Deane’s report showed that most of those who are self-employed are by choice, not by necessity. It is commonly believed that after the financial crisis those made redundant were forced into self-employment but Deane asserts that it is the attractiveness of a work/life balance that has led to the rise in numbers.

The demands of the self-employed are not going anywhere soon, it was perhaps in recognition of this that the government decided to launch this review. There are some predicting that it will soon overtake the public sector in both numbers and political capital. Perhaps the greatest indication that the self-employment trend is here to stay is that despite the relatively open employment market at the moment self-employment numbers are rising close to post- 2008 rates.

Self-employment is not just indicative of tough financial circumstances anymore. Workers are actively choosing the road less travelled, a road of speed bumps and unexpected turns, but perhaps more rewarding in the end.