Politics is broken and the self-employed are paying the price

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Prior to the Christmas recess, our political system was bogged down in decidedly partisan conflict.

The prolonged focus given to the Rwanda bill, the in-fighting within the Conservative Party and the inability to make any sort of cross-party consensus on the many very real challenges facing the UK (the cost of living crisis, critical levels of trust in our systems and public services and low economic growth and productivity to name a few) more than substantiate this.

As a result, policymaking has gone missing. We are currently experiencing a real dearth of ideas and actions from this government. Not just in the headline-grabbing policies either, but, also when it comes to those who work for themselves.

With politicians returning to Parliament next week, the self-employed will be quite rightly pleading for a government that can fulfill its function rather than squabble. Perhaps even go as far as consider the self-employed in policymaking…

Ducking the issue of employment status

It took the government four long years to finally respond to its own consultation on Employment Status back in 2022.

Instead of implementing the many serious and positive recommendations for clarifying employment status rules made by Mathew Taylor and accepted by the government at the time, the government rowed back on this commitment and simply issued fresh guidance.

“Now is not the right time”

This was the government response to the consultation.

Clarifying employment status rules could have made the implementation of IR35 less damaging.

Let's not forget that risk-averse clients were issuing blanket determinations en masse. Indemnity clauses being inserted left and right. Contractors out of work due to the confusion of the rules governing employment status. This was the perfect time.

Alas, over a year later and we’re no further along. IR35 cases continue to rage in the courts, at a significant cost to both the taxpayers caught up in the ongoing fiasco but also all taxpayers that are being forced to cover the excessive pursuits and appeals through the courts.

After all of this, we’re no closer to definitively knowing the distinction between self-employed and employed. The primary and secondary factors that we’ve all come to know that determine IR35 status are still being challenged and redrawn in the courts.

What the sector really needs is a definitive boundary between the genuinely self-employed and employed with clear key tests and example scenarios.

This would also remove any nervousness from clients around the hiring of contractors and freeing them up to gain the vital flexible expertise and talent they require to grow.

At a time of stuttering economic fortunes (to say the least), bringing about much-needed reform of employment status could even be the catalyst for economic growth. Let’s not forget, of course, that the self-employed played a pivotal role in driving the UK’s economic recovery following the 2007-2008 financial crisis.

Where have all the self-employed gone?

Unfortunately, this is a question that doesn’t seem to concern this government. Regularly-cited ‘record’ employment figures tend to omit the self-employed.

And the so-called ‘back to work’ drive –  the government’s proposed solution to tackle a rise in the economically inactive – also seemingly omits the self-employed.

Nobody is saying it’s wrong to be prioritising the return of workers to the labour market. Almost all economists agree that the rise in the economically inactive is holding back the UK’s growth right now. But, the current plan to encourage these workers back to work has done little to persuade them to rejoin the labour force.

This group are disproportionately attracted to self-employment. They tend to be over-50, perhaps don’t want to be employed and maybe put off by the possibility of reporting to a boss that is 20 years their junior.

Evidence suggests that employers are also less likely to employ these older workers. Why then, you may ask, are we not empowering these to work for themselves?

The selection process of prospective parliamentary candidates

Despite comprising almost 13 per cent of the UK’s workforce, MPs with real-life experience of self-employment are few and far between.

A quick look at the fascinating project from Michael Crick (@TomorrowMP’s on X/Twitter) demonstrates the problem with the UK’s selection process for our future politicians. The vast majority of these prospective parliamentary candidates already work in politics, or for a charity or a think tank.

Those with experience of running a business are a rarity. And as a result, the representation of the self-employed suffers.

How can we expect our politicians to understand the many diverse challenges facing small business owners when the overwhelming majority have never encountered these unique set of circumstances themselves?

Many of these so-called ‘politicos’ may now also subscribe to the seemingly accepted thinking from many think tanks that payrolled employment should be our number one focus as a country.

The self-employed sector is crying out for just a basic understanding and appreciation for their tireless contribution to clients and to the wider economy; perhaps it’s time IPSE members start putting themselves forward for a spot on the ballot...

IPSE’s campaigning efforts ahead of the 2024 election

With a general election in either Spring or Autumn this year, IPSE will only be stepping up our efforts to make these exact points at Westminster and beyond. It’s vital that any future government recognises and embraces this vital cohort of the UK’s economy.

We’ve already begun work on IPSE’s manifesto for the 2024 election, with input already from our various in-person Member Meet-Ups across the UK and from our Policy and Research Committee.

We’re also planning on putting on events ahead of the election with some of the UK’s leading politicians from across the political spectrum, where IPSE members will be able to put your questions and points to these senior figures. Keep an eye out in our newsletter for details!

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Meet the author

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Joshua Toovey

Senior Research and Policy Officer