Should the government do more to help people who go it alone?
Freelancers are a vital part of the UK economy – highly skilled self-employed consultants and professionals who lend their skills to companies on a short-term basis.
There are more than 2.1 million freelancers in the UK, contributing £125 billion to the UK economy. The vast majority of them freelance as their main occupation, meaning it’s often the primary source of income for individuals and families.
Despite the impact that freelancers bring to UK businesses, the government has neglected freelancers. Throughout the pandemic, millions of self-employed individuals were unable to claim grants under the Self Employment Income Support Scheme (SEISS), including the newly self-employed who did not file a 2018-19 tax return, company directors, those who had earned more than £50,000 prior to the pandemic, or had less than half their income from self-employment.
Unsurprisingly, the lack of resource allocated for freelancers has caused them to go back in house and seek permanent employment – the ONS estimates that almost 300,000 workers changed their status from self-employed to employee between the second and the third quarter of 2020, the highest number since 2005.
This exodus back to employment comes at a time where freelancers are needed most. The ongoing uncertainty of the pandemic, the new rules and regulations from Brexit, and the combined financial turbulence of the past year mean that many firms are struggling.
This is the ideal time for businesses to bring in expert but temporary talent, helping to integrate a new, more flexible ethos to firms who are looking to bring in new business models and cater to business models.
A fresh face with a breadth of experience across multiple businesses, is exactly what a struggling firm which is unable to hire permanent talent needs.
Businesses will require the talent of the UK’s 2.1 million freelancers to get back on their feet – and they need to be supported by the government.
In a time where the government should be doing more to support freelancers, it’s clear that there is an underlying problem – the self-employed have been disregarded.
Despite making up a significant proportion of the UK workforce, freelancers are often treated like second class citizens, by both their employers and the government.
So what can the government do to support freelancers and the businesses that need them? Now that the 2019-20 tax deadline has passed, the government should extend the next SEISS payment to all self-employed individuals who have filed returns – although we hope the end of the pandemic is in sight, it’s unclear when things will return to normal.
Extending financial support to more of the freelance industry ensures that it will still exist – and thrive – after the pandemic, which will then have a knock-on effect on the wider economy.
Putting a pause on the upcoming IR35 tax policy would also benefit freelancers and the self-employed. Despite widespread calls for the policy to be pushed back to a later date, the rollout is set to go ahead this spring.
Designed to ensure private sector employers are responsible for assessing whether or not contractors need to pay income tax and national insurance contributions, some self-employed workers fear that the changes will see the private sector take a risk averse strategy and wrongly place contractors under the regulations. Halting the roll out until after the pandemic will give freelancers space to breathe and adjust before the new regulations come in.
Eliminating non-compete clauses is also a key move for the government. There has been talk that UK ministers are aiming to restrict the use of non-compete clauses to prevent staff leaving to set up rival companies – thought to be a boost to entrepreneurship in the start-up environment. This should also be extended to freelance and consultancy work.
Antiquated policies prevent fresh freelancers from working on the jobs best suited to them, stifling their work and creativity. Abolishing the non-compete clauses allows for focusing on the individuality of the employee and empowering the freelancer to grow and adapt in their career.
It’s clear to see that the world of work, and the world of freelancing is changing. Although economic uncertainty may lead to a short-term drop off in freelancing, it’s likely that the sector will make a full recovery.
After the 2008 financial crisis, freelancing boomed. With the job market in turmoil and unemployment levels rising, and the PAYE paycheck no longer a reliable constant, we may see another explosion.
Although the past year has been difficult, many entrepreneurs are seeing the opportunity to become their own boss and launch a business or, at least, the next stage of their career.
With many firms making redundancies, and vacancies at an all-time low, freelance workers can create their own job tailored to their expertise and tap into years’ worth of skills and experience, and gain true security from their own knowledge and skill – instead of starting again at the bottom of a ladder. Hopefully the government can keep up.
Avalyn Kasahara is membership director of Future Strategy Club.
Why Are Freelancers So Low Down On The Government Agenda?