The self-employed are underrated in Westminster – it’s time political parties embraced them

By Fred Hicks Senior Policy and Communications Adviser at IPSE - The Self-Employment Association

The self-employed are too often treated as an afterthought, or an inconvenience, by policymakers. They’re seen as too disparate, too diverse, too difficult to deal with. They don’t fit neatly into the systems that have been designed with standard employment in mind. And so, they get excluded from the benefits of change.

The problem with this is that 4.3 million people in the UK are self-employed – that’s equivalent to 1 in every 13 people currently in work. That number is growing, and freelancing is expected to play an even bigger part in the future of work. The sector can no longer wait for a government that truly understands their circumstances and supports their way of working.

At the 2024 election, we believe that the self-employed are floating voters. The party that fully embraces this cohort stands to win their support, and IPSE’s 2024 manifesto sets out how to do just that.

What it means to embrace self-employed businesses

At this election, both main parties are claiming the mantle of the ‘party of business’. We can expect to see plenty more photos of parliamentary hopefuls touring wind farms, shipyards and factories sporting gleaming white hard hats and spotless high-vis jackets. Jesting aside, the classic ‘heavy industry photo-op’ tells us everything about what the word ‘business’ means in Westminster.

There’s no doubt that big business matters. They’re big employers, big investors and big taxpayers. But it’s certainly not the only show in town. There are millions of UK businesses comprised solely of one person.

Despite their significance, the self-employed struggle to attract a meaningful focus from policymakers. They are often bundled in with a comparatively small number of much larger businesses under the catch-all term ‘SME’. We also hear often about the need to clamp down on ‘bogus self-employment’, but less so about how to meaningfully help those who aren’t ‘bogus’ – our hardworking and hard-pressed self-employed sector.

Rather than merely focusing on access to start-up capital or business rates – although important for many small businesses – it’s time that politicians also turned to the barriers that are holding back one-person businesses. We believe that our Manifesto sets out exactly how the next government can do so.

Financial fairness for the self-employed

The self-employed often run into financial barriers that are in place for little other reason than that they happen to work for themselves, rather than someone else. As the size and significance of self-employment grows, the case for inaction on issues like unfair payment terms, maternity pay shortfalls and a looming pensions crisis grows ever thinner. We’ve put forward calls to finally fix these issues – from better incentives to save for later life, extending the maternity allowance and more.

Our manifesto also calls for tougher guidance and legislation to clamp down on unfair payment terms, including by deeming contractual payment terms of longer than 60 days null and void, mirroring an approach recently adopted in Belgium.

Making tax work for the self-employed

The benefits of moving to a digital tax system risk being overshadowed by the procedural and financial burden of proposals to report tax quarterly – in addition to submitting annual tax returns. Damaging enforcement strategies for tax rules like IR35 and Managed Service Companies are stifling commercial relationships and forcing freelancers onto payrolls against their wishes.

In short, we’re inching towards a tax system that exclusively suits the needs of the taxman at the expense of the businesses and individuals who pay their way.

Our manifesto calls a fresh look at the way we tax the self-employed for their work, from reviewing MSC legislation to scrapping the off-payroll working rules altogether as part of a modernisation of our outdated employment status rules.

Getting a grip on HMRC

We’re also calling on the parties to commit to stronger oversight of HMRC in government.

Currently, despite its size and significance, HMRC operates largely independently of oversight by the minister responsible for it. This makes it extremely difficult for the self-employed to seek recourse where they believe they’ve been treated unfairly. Certainly, here at IPSE we’ve seen countless interactions we’ve had with self-employed individuals whose lives have been put on hold, even turned upside down, by their experiences with HMRC.

We want to see the role of the Financial Secretary charged with greater responsibility to oversee and support the taxman’s activities, ensuring that taxpayers have a robust champion at the helm of HMRC. We also believe the Financial Secretary to the Treasury should attend Cabinet, to boost the visibility and scrutiny of the department’s activities.

There are many reasons why a tax authority should be free of political interference; but when faced with the experiences that freelancers regularly share with us at IPSE, it’s valid to ask whether the minister responsible for HMRC understands and supports their department’s activities, and whether they should serve to champion taxpayers against unfairness.

The Courage Economy

IPSE’s 2024 manifesto is an expression of what we’ve always believed – that people who strike out on their own are bold, brave and deserve government’s backing. The ideas within it are just some of the ways that a government could – and should – be doing just that.

We want to get the issues affecting the self-employed back up towards the top of the political agenda at this election and beyond. To do this, we need to remind the parties just how much the self-employed care about their businesses.

If you support our mission, please consider sharing the manifesto with your local candidates, and discuss the ideas with your network and campaigners at the doorstep.