Helping self-employed families
What more does the 2017 Budget tell us about the Government’s approach?
Self-employed people were at the heart of much of today’s biggest Budget announcements. The Chancellor outlined a range of measures targeted at people who work for themselves.
The labour market has changed dramatically in recent years and tax, welfare and other parts of the state are playing catch-up.
The fine-tooth comb analysis of today’s various tax changes will unearth the full impact on self-employed people’s bank balances. Just two hours after the announcements it’s already being debated.
Looking beyond the immediate financial implications, what do today’s statement, and other announcements to date, tell us about Government’s approach to helping self-employed families?
A parental leave consultation is good news
The Chancellor confirmed the good news that the Government will consult on parental support for the self-employed. This is welcome and something Citizens Advice has long advocated. If the Government delivers on this and offers equal maternity and paternity support for the self-employed, in the way it does for employees, it will mean all parents can enjoy support to balance work and family life.
Citizens Advice research showed that nearly half of self-employed people took less than three days off work when their child was born, whilst over one in five took off no time at all. The UK’s labour market is today comprised of 15% people who work for themselves, so it’s crucial that changes like the one considered today, are made to help them manage work and family life.
“44% of self-employed people took only three days off with their newborn child”
Not only would this reform balance out a basic issue of fairness in the tax and benefits system, it would be warmly welcomed by those people working for themselves and raising a family. Our analysis shows that 54% of men working for themselves wanted to take paternity leave, whilst overall, more than one-third of the self-employed wanted, but were unable, to take more time off with their child.
This is a policy change whose time has come and the Government is right to make this move.
Up next? Pensions and bogus self-employment
As well as looking at what Government can do to help people manage as they start a family, ministers should also consider how they can do more to help people coming to the end of their working life. The Chancellor rightly highlights that the self-employed now have the same state pension access as employees; the next step needs to be to help them save into a private pension. We’ve recommended that Government expand auto-enrollment rights — where people have to opt-out, rather than opt-in to a pension — to include the self-employed. The Work and Pensions Select Committee is currently looking at this, providing a perfect opportunity for the government to make even further strides helping the self-employed to manage their finances and save for the future.
Finally, the Government’s latest consultation comes alongside a review led by Matthew Taylor of the RSA, into modern employment practices. One really important change that this review should consider is the technical, but crucial, change in how self-employment is defined. There are several definitions of who can be classified as self-employed, leaving room for confusion and exploitation by unscrupulous employers, who can call someone self-employed, in order to dodge basic workplace rights like sick pay and annual leave. Tightening this definition would help to protect the 460,000 people who, our analysis shows, are in so-called ‘bogus self-employment’.
Complex challenges, complex solutions
By its nature, self-employment comprises a huge range of experiences and types of work and income. This presents a challenge for policymakers, which the Prime Minister and her ministers, in their first nine months in office, have pledged to take on. Today’s announcement on parental leave is another step in the right direction.
