Budget 2021: Prospect urges Chancellor to strike new settlement for self-employed

An Inquiry backed by unions and business groups calls for a rebalancing of risk for the self-employed after the pandemic.

Prospect has urged Chancellor Rishi Sunak to use his Budget on 3 March to give greater security to self-employed workers and prevent a possible ‘exodus’ from self-employment in the wake of the Covid pandemic.

The recommendation is made in a new report from the Inquiry into the Future of Self Employment, which was founded by Prospect along with Community union and the Federation of Small Businesses, and included a panel of experts from business, the world of work and across the political spectrum.

The Inquiry found that a majority of self-employed workers were unsure about continuing to freelance in the future, with a clear appetite for a stronger safety net if they are to continue.

If these workers did decide to give up on their businesses in favour of more secure working conditions, the impact on the recovery from the pandemic could be drastic, the Inquiry warns. To avert this fate, the Chancellor should take action to strengthen the safety net for the self-employed.

The package of recommended policy measures includes:

• ending the exclusions from the government’s income support packages
• extending health and safety rights at work, sick pay, and paid parental leave to the self employed
• changes to Universal Credit and the pensions system so they work for the self employed
• a new Commissioner for the Self Employed in government to coordinate policy efforts
• redrawing definitions of self-employment to be more inclusive, and delaying controversial IR35 rules which will cause more uncertainty.

As part of their research the Inquiry conducted a survey of over 2,200 self-employed workers. Key findings included:

• 46% said they were less likely to continue in self-employment due to their experience in the pandemic (18% unsure, 36% likely to continue)
• 88% said the level of pandemic support for the self-employed was not a fair reflection of their tax contribution
• 79% would oppose the equalisation of National Insurance Contributions between employees and the self-employed (21% support)
• But 51% would support paying more out of their wages in exchange for a stronger safety net (12% oppose)
• 75% do not believe they have sufficient workplace rights compared to employees (15% believe they do have sufficient rights)

Prospect general secretary Mike Clancy said:

“This pandemic has exposed the precarious nature of the UK’s self-employed workforce, with too many people risking too much to pursue their careers.

“It is time for a rebalancing of the risk and reward for the self-employed, with government acting to give greater support in the short term and a renewed sense of security and stability to protect against the uncertainty that the future holds.

“The self-employed can be the engine of our economic recovery if the government backs them now, this budget must be the one where the Chancellor finally delivers for our freelancers.”