Confidence among the self-employed community has fallen significantly over the last year, according to new research from the FSB.
The UK’s largest business group is today launching a new campaign dedicated to improving the prospects of the country’s 4.8m sole traders.
FSB National Chairman Mike Cherry said: “The UK’s self-employed community contributes more than £270 billion to the economy annually yet they’re still treated as an afterthought by policy makers. We’ll be campaigning over the coming months to change that status quo.
“It can’t be right that a self-employed father isn’t entitled to any kind of statutory pay when he spends time with a new child. Equally, with thousands of children and young people currently in foster care, we need to create an environment where self-employed individuals who want to adopt are able to do so.
“It’s encouraging to see the Bereavement Bill making its way through Parliament. The glaring omission from the potential legislation is that it excludes the self-employed. The right to paid time away from work for self-employed people suffering from the tragic loss of a child should be enshrined in law, just as it should be for employees.
“As it stands, the UC system punishes sole traders simply because their incomes fluctuate throughout the year. It’s simply wrong that a self-employed person earning £12,000 a year receives fifty per cent less UC entitlement than an employee earning the same amount. To address that issue, quarterly, rather than monthly, reporting needs to be the norm.
“All the evidence indicates that it takes at least 24 months to get a viable firm off the ground, yet under UC you have just a year to get going as a sole trader before your entitlement is slashed. MPs across the board agree that the Minimum income floor is a risk to economic dynamism in the UK. The start-up period should be extended immediately.
“The self-employed need to be front of mind for Brexit negotiators. We must avoid a future scenario where our contractors have to fill out burdensome paperwork when completing jobs in Europe. The delays caused could well mean losing out to competitors already based in the EU. Any Free Trade Agreements struck after 2020 need to include dedicated small business chapters to ensure firms of all sizes, including sole traders, benefit from new arrangements.”
The FSB Small Business Index (SBI) for the self-employed stands at +2.8 in Q2 2018, down substantially from the two-year high of +9.7 seen in Q1 2017. By contrast, confidence among firms with up to 10 or 11 to 20 employees stands at +19.3 and +39.5 respectively this quarter.
More than one in four (28%) sole traders currently expect business performance will worsen over the coming three months. Four in ten (41%) are not expecting a meaningful improvement. Less than one in three (31%) think their business performance will improve.
FSB is publishing a new “Think Self-Employed” agenda as part of its campaign launch. The agenda details policy asks aimed at arresting the collapse in self-employed confidence across the UK. They include:
- Two weeks of statutory paternity pay and an Adoption Allowance for the self-employed; amends to the Parental Bereavement Bill to ensure sole traders are included in the potential legislation
- Reform of Universal Credit (UC) to protect sole traders from losing out due to fluctuating incomes; extension of the UC ‘start-up period’ to ensure claimants have at least two years to get firms off the ground
- A Brexit deal that works for sole traders: one which allows them to cross European borders without administrative burdens and additional costs
Other recommendations include:
- Using the self-assessment process to nudge the self-employed towards saving more for the future; only 17% of self-employed people have a private pension, compared to 78% of employees
- Ensuring that lessons are learned from the impact of changes to IR35 legislation in the public sector before rolling them out to the private sector
- Closer working between government and financial services firms to help the self-employed overcome barriers faced when applying for mortgages, loans and insurance products
- Introducing tax relief on training courses for the self-employed that provide them with new skills to ensure they can compete in a rapidly changing economy
- Providing Local Enterprise Partnerships with comprehensive information on the number of self-employed people in their area so they can target small business support effectively