Posted: Sun 14th Feb 2016
Improved maternity pay, more shared work spaces and flexible mortgages are among the suggestions made by entrepreneur Julie Deane in her review of self-employment.
The founder of The Cambridge Satchel Company was commissioned by prime minister David Cameron last July to "report to the government on the challenges and opportunities for those who want to work for themselves".
Around 900 people responded to a consultation and Deane spoke to support organisations including Enterprise Nation and a wide range of business owners including tech start-ups, farmers, construction workers, taxi and cab drivers, hairdressers and artists.
As we demanded in our 10 point wishlist for government actions, the entrepreneur calls for improved benefits for the self-employed who despite numbering 4.6m and representing 15% of the UK workforce don't receive the same benefits as traditional employees.
The government should, she says, improve maternity allowance for the self-employed by bringing it in line with statutory maternity pay and introduce a new 'adoption allowance' like that enjoyed by employees who adopt children.
Deane comments that she had not been able to find "a compelling explanation" for why the self-employed are treated differently to employees when it comes to parental pay. "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," she said.
"Implementing these recommendations would send a clear statement that government recognises the growing importance of the self-employed and the principles of equality and fairness."
Deane also calls for more flexible mortgages and pensions to provide greater access for self-employed workers who often struggle to secure such financial products.
With shared work spaces playing a greater role in modern business, the entrepreneur says the availability of such places need to be better communicated and libraries and community centres should open hubs where business owners can work.
The review acknowledges that lots of support already exists for the self-employed. Among the resources specifically referenced by Deane are Enterprise Nation's blog, webinars, events, adviser marketplace and Enterprise Nation TV.
She also highlights the ICAEW's Business Advice Service, Start Up Loans, National Enterprise Network and the British Library's Business and IP Centres plus support offered by corporates including KPMG, O2, Xero, KPMG. Microsoft and Google.
Deane reveals that the first advertising by her company, which now turns over Â£10m per year and employs more than 130 people, was funded by a free Â£50 Google Adwords voucher.
Some support though, particularly government help, needs to be better signposted, Deane says. She calls for "a central portal from which to navigate impartial support and services available to the self-employed".
Motivations for self-employment
The report gives some insights into why people become self-employed. Among those who responded to the consultation, 87% listed positive reasons as their motivation for going it along. The most frequently mentioned reason was freedom, flexibility and independence.
Other common themes were:
to earn more money
to meet a social need
to fulfil a personal ambition
for job satisfaction
as work after retirement
because they were unhappy in employment
career development and health benefits
to work in an area of interest
self-employment the only model of business suited to their particular skill
Appetite for growth
When asked if they were planning to grow their business, 52% of the self-employed who responded to the consultation said they were.
The most popular route for growth was taking on more work and clients by developing existing partnerships and improving and increasing their reputation. Another 15% sought to expand by diversifying existing goods and services, and 11% planned to do so through increased marketing and communication.
Only 7% said they were planned to grow their company through innovation and new ideas, and just 4% highlighted exporting. "This seems shocking to me and is something that I think government should look at in more detail," Deane says. "From personal experience, I have been surprised and encouraged by the export help available through UK Trade & Investment (UKTI) and the GREAT campaign.
"Having worked extensively with UKTI over the last year, I know that the work has been done but the message is not getting out. This is yet another area, part of a recurring theme, where a central portal would help to direct those looking to start and scale their businesses."
Deane points out however that many self-employed individuals "are happy with the size and scale of their business, have made a lifestyle choice and are contributing to the economy in a positive and beneficial way". Research shows that less than a quarter have an employee.
"Given the size of this population it is incredibly important that these are not be overlooked, dismissed or in any way excluded from future policy making and planning," she concludes.
Commenting on the report, prime minister David Cameron said: "Up and down the country there are millions of hard-working self-employed people and I want to make sure they get all the support and security they need to achieve their ambitions.
"I'd like to thank Julie for her hard work in delivering this review, and her wide-ranging recommendations will be carefully considered."
The 10 recommendations in full
During the review many self-employed talked about their concerns around a lack of knowledge regarding finance, cash flow, bookkeeping and taxation. These are skills that would benefit many adults regardless of their employment status and yet they are still lacking from our curriculum.
A central portal listing impartial support and services available to the self-employed is vital. Presently there is much confusion over the duplication on offer which is a significant detractor in recognising the usefulness of what government bodies offer. Government should consider reviewing how well information on its official GOV.UK website signposts the self-employed to the resources already available.
As the number of self-employed continues to increase, the need for more flexible mortgages, insurance and pensions will become more imperative. The financial institutions that choose to address this need stand to benefit enormously. When such flexible financial instruments do begin to appear trade organisations will play a key role in signposting these so that their self-employed members can benefit from them.
There is a clear desire for equal treatment and recognition from the government for the self-employed and discrepancies should be reviewed. The support provided by government to those starting or extending a family should be consistent whether the beneficiary is employed or self-employed.
Government should consider enhancing 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% of earnings (in the case of low earners)
Government should consider introducing a new 'adoption allowance' for self-employed adopters. In line with statutory adoption pay, this should also be enhanced to 90% of earnings in the first six weeks, ringing 'adoption allowance' in line with statutory adoption pay and the above recommendations for maternity allowance. The remaining 33 weeks of 'adoption allowance' should be paid at the lower of the statutory flat rate or 90% of earnings (in the case of low earners)
Definition of self-employment
The lack of a legal definition for self-employment is causing an issue. Simplification and clarification with a single definition for tax and employment law is desired and should be considered.
Overly complicated legislation and administration is costly for the government and burdensome to the growth of our businesses and needs addressing in a clear and common-sensical manner.
Impact of regulations
Currently an impact assessment is carried out to calculate the impact that new policies will have on different sectors. Self-employment is not one of these sectors and it should be.
Taxation was repeatedly raised by all of those interviewed as an administrative burden, a barrier to growth, and an issue that could benefit from improved simplicity and better advice. Given the scale of concern, Deane recommend that government looks at this in more detail.
The visibility and access to shared work spaces needs to be improved. Spaces should be set up in local libraries and community centres to bring commercial activity and life to underutilised resources already in place.
Trade and professional organisations must take responsibility for keeping members up to date with technological advances. The self-employed, if wanting to grow their businesses, need to use whichever networks and forums they feel most comfortable with to keep their knowledge base current.