A word from the CEO
- News
- 15 Jan 2021
Government should strive to make life as easy as possible for the self-employed and avoid creating new barriers to them running their businesses. To fix this, IPSE believes government should act in a number of areas that affect freelancers’ financial wellbeing.
The coronavirus pandemic is not just a health crisis but an economic one as well – and the self-employed have been amongst the hardest hit in the financial fallout. IPSE research has found two-thirds (69%) of freelancers have seen demand for work decrease, three-quarters have seen their incomes fall, and our quarterly tracker of self-employed business confidence is at a record lows amongst freelancers. IPSE campaigned for the introduction of the Self-Employment Income Support Scheme (SEISS) that has benefited over 2.6 million self-employed people – but there are gaps in support that still need to be addressed and we are urging the government to do more to help freelancers through the crisis.
Our recommendations:
We need a more modern tax system that genuinely supports our smallest businesses. The current tax system is based on the outdated employer-employee model - it is no longer fit for purpose in an age of growing self-employment and new forms of work. The next government should be pioneering a bold approach that looks to lift the burden of admin and provide greater clarity across a range of areas. A review could also resolve longstanding confusions and difficulties within the system, particularly IR35, that have been given additional urgency during the recent coronavirus crisis.
Our recommendations:
Late payment is the scourge of the self-employed. Around two-thirds of the UK’s self-employed have experienced it and freelancers lose an annual average of 20 days a year chasing unpaid invoices. This disruption can lead to stress, anxiety and insecure income. Freelancers find it difficult to enforce what rights they do have and are fearful of putting commercial relationships at risk by appearing to be ‘difficult’ in chasing up unpaid invoices or charging interest on them. Simply put, this is not good enough. IPSE has long campaigned on this issue and we led the way in calling for the Small Business Commissioner to be established in 2015. We have been pleased to see progress on this issue but there is much more that can be done, from fast-tracking proposals announced in June 2019 to give the Commissioner powers to fine late payers to ensuring government payment practices lead by example.
Our recommendations:
As the number of people working for themselves is growing, the proportion of those saving for later life is failing to maintain pace. IPSE research shows just 31 per cent of the self-employed are saving into a pension, highlighting the unavoidable need to act now before it is too late. A simple solution, such as introducing AE for freelancers, will not work for the diverse self-employed. Instead, Government and the pensions industry should treat this as an opportunity to develop new, tailored products that can avert a savings crisis. Options such as the sidecar pension, which works by channelling money into both a pension pot and a separate ‘rainy day fund’ to be drawn on in times of emergency, should be rolled-out and guidance to the self-employed on their saving options should be more readily available. Tailored interventions should also be targeted at Millennial and Generation Z freelancers – the future of the freelance workforce.
Our recommendations:
Freelancers find it particularly difficult to get on the housing ladder, due to their more variable income and the wave of tougher lending rules introduced since 2014. Research has found that more than two thirds of self-employed people applying for mortgages felt that they were asked intrusive questions and had to wait an unacceptable length of time before their loans went through. But the growing self-employed workforce means lenders are having to become much more open to these potential buyers, who will become an increasingly large market. Six years on from the implementation of the Mortgage Market Review, the government should encourage the mortgage industry in de-risking self-employed people to make it easier for them to successfully apply for mortgages.
Our recommendations: