Government must 'seize the opportunity' of Taylor review to boost self-employed rights
Labour MP Rachel Reeves, a candidate to chair the Business Select Committee, says the Government must use today's Taylor review to provide a "holistic solution" to the rights of the self-employed.
The proposals in the Taylor review to give workers in Britain’s gig economy new protections are welcome. But the surging growth in self-employment means the Government must not adopt a piecemeal approach to reforming workplace rights and benefits.
Media reports on the Government-commissioned review due out today suggest self-employed workers will get new minimum wage guarantees. The review will also set out proposals for a new category of worker called a “dependent contractor” – a new status between company employees and independent contractors. The Social Market Foundation estimates that 45% of self-employed individuals earn less than the equivalent of the National Living Wage.
This new category will be aimed at those who work for “gig” firms like Uber and Deliveroo and apparently pave the way for them to receive some entitlement to benefits such as holiday leave and sick pay.
While we await the full findings of Matthew Taylor’s review and the Government’s eventual response, there are some certainties about the growth in self-employment and the challenges that will pose.
Self-employment has grown by 14% in the last five years and 25% over the last decade. Yet, the number of self-employed saving into private pension schemes has dropped from 23% in 2010 to 16% in 2015.
Fewer self-employed people are able to get a mortgage and many battle daily with the insecurity of the “gig economy” and zero-hours contracts.
But it is clear this growth in self-employment will continue and could soon overtake public sector employment as a share of the UK labour market.
In 2011, there were 1.5m more people working in the public sector than among the ranks of the self-employed. But the Office of Budget Responsibility forecasts that the two will be level by 2021, given an expected fall in public sector employment and the predicted increase in self-employment.
This shift will leave the Government, employers and workers facing a series of important challenges. These include how to help the self-employed better save for the future, buy their own home and how to guarantee them workers’ rights.
There is also the issue of making sure the Chancellor does not unfairly penalise the self-employed in some future tax grab – such as the abandoned effort to hike National Insurance contributions.
We must develop policies and create an infrastructure around self-employment that safeguards economic inclusiveness and encourages entrepreneurs.
The key challenges including giving workers’ protection in the form of social security, while at the same time preventing bogus self-employment by those seeking to secure tax or benefit advantages to which they are not entitled.
There is no simple solution. But that does not mean the Government can just ignore the problem and avoid any effort to come up with a holistic solution when it comes to self-employment.
A few simple ideas:
Moves to reform workplace benefits for the self-employed should be accompanied with better advice on pensions.
The workplace pension scheme NEST should be aimed at the self-employed so that they have the option of contributing to a pension.
Instead of cutting corporation tax further, the Government should instead prioritise help for small businesses and the self-employed by targeted reductions in National Insurance for small businesses employing the first worker or business rate cuts for businesses in their early years.
We also need to help the self-employed get affordable mortgages. The Council for Mortgage Lenders should look at ways they can get a mortgage without a return to the self-certification mortgages that created such problems during the financial crisis.
Another important step would be to reform Universal Credit so that it better reflects the actual earnings of a self-employed person, rather than an assumption that they are consistently earning the ‘Minimum Income Floor’.
It is important we address all the challenges around the world of the gig economy so we can support the self-employed and give them justifiable workplace protections and benefits, while making sure tax revenues do not suffer through bogus self-employment.
Theresa May must seize the opportunity the Taylor review provides to give the self-employed the protections they need and deserve.
Rachel Reeves is the MP for Leeds West