Contractors, freelancers and the self-employed should be enjoying the benefits of a UK ‘microbusiness utopia’. This is according to the association for Independent Professionals and the Self Employed (IPSE – formerly known as PCG) in its new manifesto Britain’s Secret Weapon: Unleashing Independent Professionals and the Self-Employed in the New Economy.
“There are now almost five million self-employed people working in the UK which means 15% of our workforce are now choosing to earn their living in this way,” highlights IPSE director of policy and external affairs Simon McVicker.
“The choice to become your own boss is a brave one, and we should be supporting those who take control of their own destiny. In our manifesto we outline the measures government needs to take in 2015 and beyond to unleash the full potential of Britain’s independent professionals.”
New measures to deliver the ‘microbusiness utopia’
IPSE’s proposals are wide ranging, and include measures such as creating a new ‘freelancer limited company’ structure exempting contractors from IR35, appointing a minister for self-employment, strengthening the prompt payment code to protect contractors from late payment and reforming the tax system by merging income tax and National Insurance Contributions (NICs).
McVicker explains: “There’s already a minister for small business, but not for self-employment. This needs to change. It is vital the UK appoints a minister for self-employment within the Department for Business, Innovation and Skills (BIS) with a specific focus on the needs of this group.
In our manifesto we outline the measures government needs to take in 2015 and beyond to unleash the full potential of Britain's independent professionals
Simon McVicker, IPSE
“Clients paying late is one of the biggest issues affecting self-employed people and microbusinesses. The next government, whoever that may be, must strengthen the Prompt Payment Code and name and shame the worst offenders.
“We need a system for small businesses to report clients who fail to pay within a reasonable timescale anonymously, so they aren’t compelled to jeopardise important relationships by sticking their heads above the parapet.”
Reforming taxation “for the innovation-driven economy”
According to the manifesto: “The UK’s tax system is at breaking point. It was designed around the traditional model of employees and employers. It doesn’t work for independent professionals and the self-employed.”
McVicker agrees, adding: “Experts have for many years criticised the way the self-employed are dealt with in the tax system, which is set up for employees or employers and not for those who work for themselves. IPSE suggests a full merger of NI and income tax, simplifying the tax system for all. As an interim measure, a new corporate form for independent professionals should be created.”
IPSE’s proposals are to create an independent body of experts to oversee the merger and to create a new ‘freelancer limited company’. This new entity would be optional and “would deliver clarity of employment status for independent professionals”, as well as exempting contractors from IR35 and “treat them as a business”.
“This scheme would provide a way for independent professionals to have certainty before a merger takes place,” continues the manifesto, “rather than having to continue using the present outdated, unclear system.”
“Creating a fairer market for the self-employed”
Alongside proposed changes to the late payment legislation, IPSE wants to see a reduction in red tape and unnecessary regulatory barriers that impact on the UK’s flexible workforce, and greater opportunities for contractors to win government contracts.
On regulation, IPSE suggests:
- Changing the rules on allowances for intra-company transfers so contractors are not unfairly undercut by abuses of the system
- Consolidating confusing employment legislation, in particular clarifying the different definitions of agency worker
- Improving business consumer protection. Businesses typically receive less protection than consumers for the goods and services they acquire, and IPSE believes that all consumers, whether businesses or individuals, should have the same protection
- Making it easier for contractors to change status. IPSE highlights that many independent professionals intersperse periods of employment and contracting, and “barriers to flexibility must be removed”.
Contractors should also be able to bid for public sector work without requiring excessive pre-qualification questionnaires to be completed, or having high insurance and capitalisation in place.
Encouraging women and young people to choose contracting
IPSE believes that supporting women and young people to become independent professionals could address economic challenges, such as skills shortages, as well as offering an alternative to employment.
“Four out of ten independent professionals are women, and the number of mothers working for themselves has shot up by 55% in the last five years,” says McVicker. “The main political parties must re-examine how the self-employed are treated when it comes to maternity and paternity benefits. There’s absolutely no reason why hard-working self-employed mothers should receive a different amount to employees when pregnant.”
And McVicker notes that: “The biggest growth area in self-employment is among people aged between 18 and 30 years old, but self-employment and entrepreneurship is still overlooked on the curriculum at secondary and sixth-form level.
I am confident that this manifesto will play a vital role in taking the debate forward
Julie Stewart, IPSE
“We encourage politicians to recognise the new economy of self-employment in education. It’s hugely important that young people are equipped with the knowledge and skills to decide whether they wish to enter traditional employment, or work for themselves.”
“Bold and joined-up thinking is needed” to unleash contractors
IPSE acknowledges that the government is starting to recognise the “structural shift” in the way that people work, with some important steps being taken to improve the environment for contractors.
However, IPSE chairman Julie Stewart believes that there is much more that can be done: “This piecemeal approach does not go far enough, though. Bold and joined-up thinking is needed if we are to unleash the huge potential of Britain’s secret weapon – independent professionals and the self-employed.
“Government must ensure that policy is in place which makes it easy to both become self-employed and to be self-employed, action around infrastructure, regulation and tax is clearly needed here. Doing so will secure a bright economic future for the UK.”
Stewart concludes: “I am confident that this manifesto will play a vital role in taking the debate forward.”