Labour will create the conditions for the genuinely self-employed to thrive
Self-employed workers cannot be expected to jump to the same national insurance rates as employees before their more limited rights are addressed, says Peter Dowd MP.
The vitality which self-employed people bring to the economy is central to Britain’s success. Some of the new means of facilitating alternative working practices have brought cheaper prices and greater flexibility to consumers and similar flexibilities that have been welcomed by some workers.
Becoming a self-employed lawyer in a virtual law firm might suit experienced practitioners who are able to drive their own business and cope with variable income. However, stripping out the sharing of the social costs of employment is a less helpful prospect for workers starting a family or young graduates seeking training to enter their profession.
Too often we think because a company is new and exciting, it means that all its practices are an innovation. While technology may facilitate an updated way of carrying out a particular practice, the reality is very often a case of “putting old wine into new skins”.
There are, of course, many new scenarios that technological change has thrown up. The level of control which an app can wield over a seemingly self-employed worker, could not have been in the minds of the generations of judges who developed our definition of employment.
But it is not digitised exploitation which has prevented the existence of a truly effective regulator of workplace standards. Nor is it the latest app which has seen HMRC struggle as an increasing proportion of the nation’s workforce have their employment, tax and national insurance status structured in a way which challenges the foundations of the tax system.
Previous generations have sought to tackle similar problems, sometimes only to see these solutions dismantled as time moved on. We only need to look at the National Dock Labour Scheme, which after WW2 ensured improved common standards for workers and cool fractious labour relations across the industry. As well as the construction industry, which saw trade unions spend much of the 20th century building up a system of common terms and conditions, training and rights that could be ported between employers, through collective bargaining in an industry synonymous with appalling workplace standards, dominated by short term, fragmented workplaces.
Earlier this year we saw an aborted attempt by the Government to address some of the differences in how people of different working statuses are taxed.
From the outset, Labour opposed Philip Hammond’s attempt to increase national insurance contributions for low and middle income self-employed workers. Besides being a breach of a Conservative election pledge to lock the maximum rates of income tax, VAT and National Insurance, it was not a genuine attempt at reforming the disparities between taxation of different modes of work - you cannot fix a chaotic system by targeting just one of its aspects.
Self-employed workers cannot be expected to jump to the same national insurance rates as employees before their more limited rights are addressed. This is not just the entitlements that they enjoy as part of our social security system, but also the increased precariousness and far more limited rights which they have access to.
Increasing NICs for self-employed workers also made little sense on its own, when the bigger incentive for contrived moves away from employed status is not the small national insurance savings to the worker, but the much larger national insurance savings which accrue to the employer.
Labour does not pretend to have the solution to every question that will be thrown up in future, but our manifesto set out a comprehensive vision of rights at work for all types of worker.
The next Labour Government is committed to the introduction of a Ministry of Labour, which will give the tools to promote and enforce workers’ rights, whatever their status. We will extend entitlements such as parental rights to workers of all statuses and establish a commission to modernise the law on employment status.
We’ll create the conditions for the genuinely self-employed to thrive, while working tirelessly to create an employment market which works for the many and not the few.
Peter Dowd is the Labour Member of Parliament for Bootle.
IPSE have responded to Peter Dowd MP saying that the self-employed have never been more important to the UK economy, and as we leave the EU, we must create the conditions for them to flourish. Read their full remarks here.
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.