Failures in support

Government support for workers and businesses was hastily put together. Support for the self-employed was announced days after the announcement of furlough and after pressure was put on the government to provide something similar for the self-employed and the Self Employment Income Support Scheme (SEISS) was announced. There were many gaps in the packages of support offered, but these were not filled, meaning over 3 million people were excluded from any support at all. According to ExcludedUK, the vast majority of people who have fallen through the gaps are self-employed.

The major shortcomings of SEISS would have been immediately obvious to anyone that has spent time working for themselves. The biggest failing was the 50 per centrule, where only those who were deemed to have made half of their earnings from self-employment could claim. This rule caused over a million people to receive no help at all. It is normal for self-employed workers to take on short-time contracts, paying tax through a company’s PAYE and there are many good reasons to do this, such as mitigating the risk that comes with full time self-employment. During lockdown however, these contracts were generally not available for furlough, but also excluded people from SEISS.

There are other factors which would have been taken into account if the system had been designed with the realities of self-employment in mind. Maternity leave, taking money from pensions and savings are all factors which would exclude someone from SEISS, but are completely normal. Income for a self-employed worker often fluctuates wildly. To be self-employed requires careful management of income and savings and a creativity in finding ways to be paid for work. People that are self-employed as limited company directors were completely excluded, despite this being normal practice to mitigate risks and on the demand of people hiring self-employed workers.

The gaps in support for the self-employed has had devastating effects. The number of self-employed workers had been steadily rising, hitting 5 million at the start of 2020. Data from the ONS published at the start of October 2020 show the number fell by 240,000, back to levels seen in 2005.

The design of support shows a poor understanding of the realities of being self-employed and reveal a very simple truth. Self-employment status is not a tax code, it is not a legal definition, it is far more intangible. Someone’s identification as self-employed is about the way they organise themselves, find work and pay themselves and covers a wide range of circumstances. Workers should be able to organise and represent themselves, and this has been proven to be especially true for self-employed workers.

Prospect Union and Community Union have launched an inquiry including an online survey to consult with self employed people, including company directors, on the future of self-employment. At the Labour Connected conference I chaired a Labour Business session on self-employment with representatives from unions, co-operatives and trade bodies. We are all in agreement that we need a strategy for increased visibility and support for the self-employed – and it must the self-employed who design this.

Greater union involvement is to be welcomed and an obvious place to start for the Labour party. Supporting self-employed people that develop a business and take on employees of their own is a more complicated problem, but becoming an employer should not be a bar for representation by the party. Working with employers so that they can become good employers should be a goal of the party, and again self-representation should be key. However, the bodies that are supposed to stand up for sectors of business can have conflicts working within them and so their advice can be compromised. For example, in the pubs industry there are long disputes between tenant pub owners and pub owning businesses. Trade bodies get funding from both sides of this dispute, so cannot represent individual needs for individual workers. Greater transparency of who funds bodies that make representations to government would be a helpful for those not in the industry to understand the advice and produce better results for self-employed workers.

This conclusion that self-representation is the best route will have implications for more policy areas than just working rights, taxation and benefits. The terms of the new Community and Prospect Union inquiry into the future of self-employment rightly focuses on these areas and how unions can work better for the self-employed. To build on this, the Labour party needs to hold its own inquiry using the widest definition of self-employment, so the self-employed are included in all areas of policy discussion as an independent voice. This can ensure that all policies are as supportive of the self-employed as they are of traditional employment.

As we enter a second wave of infections and restrictions, the support for the self-employed is set to be below that of an employed worker, and there are already suggestions that taxes among the self-employed will be raised in order to pay for the support packages from which many were excluded. In order to stave off this injustice the Labour party must urgently take action to offer a credible alternative.