The Self-Employment Review: a chance for a better deal
It’s now six months since the Government launched its Self-Employment Review, led by Julie Deane OBE. Aimed at addressing the barriers to self-employment, particularly around maternity pay, mortgages and pensions, the review is expected to publish a report in the coming week including a list of practical policy recommendations.
IPSE has met with Julie and worked closely with policy officials behind the scenes to ensure the challenges self-employed individuals face are really heard and addressed.
One of the biggest issues the review is tackling is pension provision for the self-employed. Just recently Citizens Advice published a report which found a lack of trust, understanding and information is holding self-employed people back from saving into a pension.
This certainly tallies with what we know – our own research highlights more than half (54%) of freelancers are concerned about their finances post-retirement. Not having an employer who makes a contribution reduces the incentive to save, and the nature of freelance work means you aren’t always on assignment and can’t commit to setting a regular amount aside for the future.
Clearly this situation needs to change and the self-employed need better support to save for the future. We have been urging the review to consider the creation of a new flexible pension scheme for the self-employed, provided by government’s auto-enrolment provider NEST, which allows withdrawal of the last two years of contributions without penalty.
Mortgages are another financial product where freelancers often struggle to get a good deal. Lenders are failing to recognise the reality of modern working, where 4.6 million individuals in this country are working independently.
Again, speaking to our members has illustrated the scale of this problem – a shocking 61 per cent feel mortgage advisers don’t understand their situation and almost half believe that mortgage providers don’t even want them as customers. Indeed 38 per cent of those independent professionals interested in a mortgage are concerned they’ll never get one purely because they work independently. Banks and other lenders need more appropriate guidance and training on how the self-employed actually work.
The other key area the review is focusing on is maternity pay for the self-employed, where the disparity between support available for employed and self-employed mothers must be addressed. At present self-employed women are only eligible for maternity allowance which is typically less than statutory maternity pay (SMP). This has to change - the self-employed should be able to claim a form of SMP based on an average of their earnings over the last two years, simplifying the system and making it fairer too.
The review reflects the growing importance of self-employment to the UK economy, as well as policymakers though. IPSE is building on this momentum and will be hosting its first Policy Conference on 26 April.
On top of analysing the outcome of the Self-Employment Review, we are aiming to bring to wider attention vital topics such as late payment, access to quality training, bidding for procurement contracts and the simplification of the tax system. On April 26 IPSE will build the case for sensible changes that make independent working simpler and fairer.