The Future of Work

How to approach the burgeoning ‘gig economy’

Whether you think it’s the epitome of evil or a bright new future for the UK, there’s no doubt the ‘gig economy’ is high on the political agenda. Earlier this year, Theresa May commissioned Matthew Taylor to investigate ‘modern employment practices’, and whoever forms the next government will keep this debate going.

According to the RSA, there are 1.1 million people using platforms to work on short-term jobs – or ‘gigs’. These platforms are a mixture of crowdsourcing job sites (like PeoplePerHour.com or Freelancer.com) and apps for completing physical tasks (like Uber and Deliveroo). 

The number of people working in the gig economy is only going to grow in the coming years, but the legal framework we use for employment and tax status is outdated, and still seems to be rooted in the master-servant relationships of the Middle Ages.

A working definition

One of the most pressing problems in this area is that self-employment is still not defined in UK law, which causes major confusion for both individuals and larger companies. Worse, unscrupulous companies often exploit this confusion to shirk their responsibilities as employers and force people into self-employment.

The government needs to drop its medieval approach and acknowledge that work is changing. It is vital that it comes up with sensible policy solutions to adapt to this. In IPSE’s response to the Taylor Review and our manifesto, we outline the need to develop a statutory definition of self-employment, so the matter can be clarified for all parties. Based on rigorous analysis, we propose that any definition should consider a number of key principles:

  • Autonomy in work
  • Control over working arrangements
  • Taking on business risk
  • Level of independence from clients

Taxing the gig economy

Our tax system is also coming apart at the seams as new ways of working are forced into an outdated model. The last government’s disjointed attempts to deal with this resulted in a number of misjudged polices that hit the self-employed, including the disastrous changes to IR35 in the public sector, the national insurance debacle and onerous Making Tax Digital plans.

The next government needs a more grown-up, strategic approach to accommodating modern working practices into the tax system. This should include both a root and branch review chaired by an independent expert, and the consideration of ideas like IPSE’s ‘Freelancer Limited Company’.

Looking to the future

Amid all this discussion, we can’t lose sight of the fact that self-employment is a hugely popular way of working, which also delivers one of the key competitive advantages of the UK economy: flexibility. In a study by the Department for Business, it was found that not only do more than half of the self-employed consider themselves financially better off working for themselves; 84% also said their overall quality of life was better in self-employment than as an employee.  

As we go into the next parliament, IPSE will be working hard to ensure rational, evidence-based policy rules the day, and self-employment remains a positive and rewarding way of working. It’s time not only for long-overdue changes to our outdated tax and legal system, but also for a fair deal for the self-employed from our welfare system. That means proper support for pregnant self-employed women and better pension options, so the self-employed can retire with security and peace of mind.

For any policymakers looking for more information on how to help self-employment – and thus the wider economy – flourish, IPSE’s manifesto is a good place to start.

Tax, Policy, Employment

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