The self-employed will be key to Labour’s transformative agenda

By Joshua Toovey , Senior Research and Policy Officer at IPSE

At IPSE, we often refer to the self-employed as bees that go around pollinating businesses across the UK and ultimately improving their knowledge, productivity and growth.

Although a little silly, it most clearly depicts the function of this sector; one that is too often overlooked.

Now that the dust has started to settle on one of the most remarkable electoral feats by a British political party, we’re slowly beginning to see Labour’s plan for change implemented across Whitehall departments.

From infrastructure projects and housebuilding to the NHS and growing the economy, the flexible workforce will undoubtedly play a vital role in bringing about this government’s vision for the UK.

And if we’re to make a success of these projects as a country, it’s imperative that this cohort feels truly valued at Westminster and incentivised in policymaking.

Providing clarity on employment status

Labour’s plans for drastically increasing the number of houses we build will require vast swathes of the contractor workforce. But without clarification of employment status rules, many of these contractors will be fearful that they may fall into traps such as IR35 and the Managed Service Company rules.

And housebuilders may also take the view that, with today’s rules, working with contractors and the self-employed simply invites too much hassle from the taxman. Potentially missing out on much-needed labour in the process.

Alternatively, if the government opts for large-scale public sector projects to drive housebuilding, we may well see government departments’ own cumulative IR35 bill – currently standing at around ￡300 million – grow even further. Perhaps not the best way to use taxpayer money…

Either way, contractors are going to be vital in turning housebuilding targets and policy statements into reality with legwork on the ground. By clarifying our complicated employment status rules, government could cut down on waste and make the most of the wealth of expertise in the contracting sector.

Getting doctors and engineers back to work

We’ve also heard much about plans to cut NHS waiting lists and transform the UK’s energy sector with the creation of Great British Energy. But with many of the key freelance workers in these areas disproportionately likely to have left the labour market, the government has work to do.

Indeed, the former Chancellor, Jeremy Hunt, was extremely vocal about the need to get the economically inactive back to work, although his actions to address this were not always clear or particularly impactful.

This cohort of economically inactive has only risen in the past year.

Many of these older workers see no benefit in returning to the labour market due to the complexity of rules such as IR35.

If this government wants to tackle labour shortages in the NHS and drive an entirely new energy provider, they must be prepared to take bold action to entice these workers back to the labour market. Removing the barrier of IR35 would undoubtedly encourage much of this flexible expertise back into work.

Growth, growth and more growth

Rachel Reeves set out her stall yesterday in her first speech as Chancellor and the focus, much like during the election campaign, was firmly placed on growing the economy.

IPSE’s quarterly survey of self-employed businesses shows that freelancers are still most concerned about the state of the UK economy, with confidence in the economy for the next 12 months remaining in negative territory.

So what can be done? Firstly, tackling the problem of the IR35 rules. The reforms have been ruinous in their impact, putting many viable small businesses to the wayside and costing UK companies millions in compliance costs.

The second would be to encourage side hustles, start-ups and anyone with a mind for business. We shouldn’t be capping the ambitions of those with innovative ideas so soon into their journeys; that’s why IPSE made the case to increase the Trading Allowance – which has been frozen at ￡1,000 for seven years now – to ￡5,000.

Just like Rachel Reeves, the self-employed are keen to see some growth in the economy and their own businesses. Removing these barriers to growth and work will be most important if the sector is to drive the UK’s economic recovery as was the case in the aftermath of the financial crisis.

IPSE’s campaigning

Building on our conversations with Labour during the election campaign, our work to open a fresh dialogue with the new government and holding them to the pledges they made during the campaign has already begun. We want to see Labour live up to their commitments to overhaul employment rules and clamp down on late paying clients but we’ll also be pushing other key barriers for the sector up the political agenda.

This is where you come in. Once we have contact details for the new MPs, we'll be asking you to write to them.?We want every MP to know about you, your business, and IPSE - the association that campaigns on your behalf. Don't miss any updates and sign up to our email newsletter.