Next election can’t be won without support of the self-employed - Shadow digital minister

Posted On: 
27th September 2017

At a Labour fringe event, the shadow digital minister Liam Byrne was joined by shadow treasury minister Peter Dowd and a panel of experts to discuss 'the greatest policy challenge of our time' - legislating for the self-employed.

“Growth of self-employment is one of the biggest and most important changes in the labour market,” declared shadow digital minister Liam Byrne at the Labour Party fringe on modern work practices.

There is a revolution happening in Britain today in our working practices. With the development of remote working platforms like Uber, and the increased desire for a more flexible career path, almost 5 million people now describe themselves as ‘self-employed’. By the next election this will constitute well over 15% of the workforce. 

“I don’t think a party can win the next election unless they carry a significant chunk of the self-employed,” predicted the MP.

But, as last week’s decision to remove Uber’s licence in London showed, the success of the exploding ‘gig economy’ sector has created its own set of unique challenges. Shadow chief secretary to the Treasury, Peter Dowd, told the audience that tackling the issues of regulating the sector is “one of the great policy challenges of our time.”

Employment status is also an area of controversy, with constant debate about how individuals should be classified and what rights they are therefore entitled to.

Nita Clarke, ex assistant political secretary to Tony Blair and Director of the IPA, agreed saying: “This issue about employment status is a very complex one and it is wrong and dangerous to talk about it as one thing. It is not.

“The gig economy is far more complex than people understand. We do ourselves a great disservice, as some of [the Labour party] spokespeople seem to do, by lumping it all together in one and calling it a ‘bad thing’ because it does not fit with the traditional model that so many of our senior people in the Labour party grew up with.”

Much of the difficulty in creating policy for the sector is due to a lack of definition of what it means to be self-employed.

“This uncertainty has led to real confusion”, said Simon McVicker, Director of Policy at IPSE, “with the self-employed unsure of what to expect from Government on one hand and then on the other, a small number of unscrupulous companies ready to exploit vulnerable workers – and deny them rights – calling them self-employed when they are not really.”

He called upon the government to introduce a statutory definition of self-employment, saying, “We are keen to define who are the truly self-employed and who fall under the vulnerable category, and those people must be looked after by government.”

“If we don’t we are going to continue to have this confusion about what is a vulnerable worker, what is a gig worker, and what is genuinely self-employed.”

The sector can be better understood through the varying levels of financial security experienced by the self-employed. Nigel Meager, Director of the Institute for Employment Studies, says those who are struggling with financial insecurity will need a different type of support from policymakers than those who are living in insecurity, with low incomes. These types of workers need to be supported by the Government to get into regular employment, or if they want to stay self-employed, must be given help to do so.

 “In today’s world it is not enough to talk about how to minimise disruption to earnings we must discuss how to maximise potential of earnings,” said the shadow digital minister.

He continued: “In terms of skills development and reskilling people, and in terms of key assets like pensions and housing the welfare state just doesn’t function for people who will spend some of their career in steady work and some of their career working for themselves. We need to recast the welfare state in modern times.”

Training should be tax deductible, added McVicker.

“The new lifelong learning fund should support people on the vulnerable side of self-employment to develop skills.

“Another crucial area is pensions. IPSE studies show that 40% of self-employed have not arranged a pension but 60% are not saving for later life at all. But when you ask them what they want to do, saving for a pension is their number one desire . Low pay and insecurity makes it hard for them to save for later life.”

Byrne agreed saying, “the most important institution we can get right today is a 21st century social security system. That should be one of the biggest debates we have as a party.”

Simon commended the Government’s Taylor Review, published in June, for identifying the lack of legal clarity on ‘what is self-employment’ as a key issue. But it failed to go ‘far enough’ and create a new definition of self-employment. Simply creating a new dependent contractor status would only add to the confusion, especially in the gig economy, he warned.

But, as Nita Clarke pointed out, the Taylor Review was at least step in the right direction.

“It is ironic, you are not going to like me saying this, but it was this current government that set up the Taylor review, it was the current government that brought in the apprenticeship levy. And there are issues around the levy, but nevertheless it is an attempt to finally try to force companies to take responsibility. So, there is an element of the Conservatives stealing Labour’s clothes here, and we do need to be a bit careful about that, because we can promise the earth but they are actually doing a couple of things.

“And if indeed on the corporate governance review they really do include a worker on the board as one of the three options, well then would you have predicted that would come out under a Conservative government? No, you wouldn’t. So, there is some interesting stuff that is going on that we can build on.”

Clarke called for Labour to think more imaginatively when it came to solutions. She reminded the audience that when McDonalds’ workers were offered the choice of moving to fixed hours contracts, the majority wanted to stay on the zero hours. What is more critical, in her opinion, was a focus on ensuring ‘good work’. 

“We should be thinking about what makes a good job? What can I expect from my employer? Respect, trust, right to be heard...there are a range of things we should be campaigning for and I would like to see Labour think about a Charter of Good Work.

“I don’t want it reduced to a zero-sum game about the nature of the employment contract.”

Liam Byrne said that policymakers need to stop doing policy based evidence making and speak to those in the sector.

“When I have done focus groups with Uber drivers and asked them ‘what do you want back from the state?’ Very often it is help with credit scoring, because they can’t get access to a credit card because their income is so up and down, or they can’t get mortgage references because they don’t have two years of unbroken earnings. Facts are always quite helpful in these debates.”

“This is not going to be fixed in Whitehall, this is not going to fixed in Westminster. The capacity, if it ever was there, certainly it is not there now and we need to look locally.”

Simon McVicker agreed saying: “Politicians need to consult widely on this whole issue and they need to listen to what they are being told rather than act on their prejudices.”