Prime Minister launches review into ‘modern employment’ – What should it look at?

This weekend (1 October) Prime Minister Theresa May launched an independent review into ‘modern employment’, led by Tony Blair’s former policy head. It is excellent to see that government has recognised the way we work has changed for good, and is seriously considering how to better support and recognise those working outside the traditional employer/employee model.

In an article announcing he will be undertaking the review, Matthew Taylor reflects what IPSE has consistently demonstrated - ‘self-employed people are happier with their work than employees’. There is though a small minority who feel they have been forced into self-employment, and the review must examine those business models which risk exploiting people –Self-employment must remain a positive choice for individuals to make, and not risk being tarnished by unscrupulous companies.

However, there are still too many unfair and unnecessary obstacles facing people who go it alone. One issue we will raise when responding to the review is pension provision. It can be difficult to save when your income is volatile, and the current pension model does not work for the self-employed. IPSE wants to see government create a new pension product for the self-employed, administered by Nest, which allows withdrawals two years early without penalty.

We will also call on the government to give our 270,000 freelancing mothers a fair deal. This means implementing a key recommendation from their Deane Review published in February – self-employed mothers should receive a form of Statutory Maternity Pay, rather than the much less generous Maternity Allowance.

But something all self-employed people will recognise is that the tax system is too complex and difficult to navigate. IR35 has been the bane of contractors since the last millennium, and government’s plans to change the way the rules operate in the public sector will only make things much worse. IPSE think these plans will significantly damage our flexible labour market and even our ability to cost-effectively deliver public services. Government needs to listen to the widespread concern of business groups and change course ahead of the Autumn Statement.

The potential impact of government’s Making Tax Digital Agenda needs to be closely explored by this review too. The plans would see the self-employed have to use specific software to report income and outgoings every quarter to HMRC. A running calculation of the tax liability will then be kept up-to-date throughout the year. We are concerned by the cost burden of having to possibly buy new software, the admin burden of having to file a return four times a year and the sheer speed at which these big changes are being implemented – government wants this to apply to all self-employed businesses by April 2018.

All these issues are problematic for the self-employed, but this review is an excellent opportunity for IPSE to push forward real solutions. Jeremy Corbyn talked last week about the need to review tax and social security for the self-employed. We hope the Prime Minister in her speech tomorrow also reflects on the importance of the self-employed, recognising their immense contribution to the economy and the need to support them overcome the challenges they face.

Policy

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