Almost every week I seem to come across a story in the press about some super executives and their mega-salaries, which are meekly justified by their board members who insist that they are worth. The myth is that some sort of battalion of superstar executives is driving the recovery. The reality I feel is somewhat different. This is not a recovery led by the genius of these superstars but by working people from the ground, the vanguard of which are the self-employed.
According to the Office for National Statistics’ monthy Labour force survey, self-employments accounts for almost two-fifths (38 per cent) of new jobs since 2010 and the self-employed make up almost one in six of those in work. Indeed the RSA recently reported that the number of people working as self-employed is set to outstrip those working in the public sector by 2016.
Unfortunately, unlike our battalion of superhero executives, the self-employed have not fared well in the cost of living crisis since 2010. According to analysis from Labour, their incomes have fallen on average by £2,000 a year. None of us in regular employment have done that well, with incomes falling by nineper cent but for the self-employed it is a fall of 14 per cent.
Labour has had to do its own analysis because the ONS figures do not include it, so Rachel Reeves and Chuka Umunna have written to Andrew Dilnot, Chairman of the United Kingdom Statistics Authority, to ask him to examine whether new measures are needed to fully take into account the earnings of self-employed people.
The world of work is changing with this growth in self-employment, which includes those setting up traditional businesses as well as those working freelance. Springing up all over the country are a large number of workspaces or hubs where the self-employed can come and work in a collective workspace. Today Rachel Reeves and Chuka Umunna are visiting one in Camden.
Some, I know, bury their heads in the sand and insist that there should only be permanent full-time jobs for everyone. Though people can support that sentiment, the reality is that people have lost faith in many of our institutions and the ability of business to provide them work and so are moving towards self employment for both economic and personal reasons. I met people at one of these hubs who said yes they would like permanent employment, but that they are working for themselves because there are not any jobs. Yet, they noted, they feel ignored by policymakers who only pay attention to the margins of what they do by just focusing on those abusing self-employment for tax avoidance or those being exploited by being forced into self-employment. They want recognition, as they feel like the forgotten middle who are marginalised and outside the system. They are not employees, so the unions tend to see past them or even see them as a threat. They are not all super rich – the statistic show quite the opposite – and many need to interface with the benefits system.
The Tories do not get it. The new universal credit will create huge new burdens for those self-employed people who receive benefit payments, requiring them to report on their income each month, rather than once a year, and using a completely different accounting system to that used by HMRC meaning that each individual will be expected to prepare two different sets of accounts each month.
Labour does get it. It realises that business is not just the board of FTSE 100 companies and that the worlds of business, employment and work do come together, especially when thinking about the self-employed. So it is good to see Rachel Reeves and Chuka Umunna working so closely together today and also with Stephen Timms on employment and with shadow small business minister Toby Perkins.
Umunna has said of the self-employed that their ‘entrepreneurial spirit should be encouraged, but worryingly under the Tory-led government the situation has gone into reverse as we have seen self-employed people hit hardest by the cost-of-living crisis’ and Rachel Reeves says ‘ministers must rethink their plans to hit the self-employed with unnecessary red tape under new universal credit rules.’
The self-employed need to be empowered to engage in business but also need to be able to interface seamlessly with the benefits system. The self-employed should not be the forgotten middle that they are under the current government. All indications are that under a future Labour government they will be the subject of their own policy agenda and recognition by the government as being a key constituent in the economy. Next month the Labour Finance and Industry Group will contribute to this debate by publishing its report on freelancing in a progressive economy.
While health, education and public services will be crucial issues at the next election, to win Labour will also need to continue to communicate with this growing army of self-employed people and small business owners that it ‘gets it’ and by doing so should not be afraid to place the issue at the centre of its manifesto.
Philip Ross is a member of the Labour Finance and Industry Group and co-author of their report ‘Freelancing in a Progressive economy’, due to be published in September
Photo: J de B
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