New PM Rishi Sunak needs to work very hard to earn the self-employed’s trust

On October 25th 2022, we saw Rishi Sunak become our new prime minister and warn of a "profound economic crisis" – a crisis that he now faces as leader of our country. With his promise of change amid hopes for much-needed political and economic stability, Mr Sunak stated that “trust must be earned, and I will earn yours.”

Rishi Sunak and the self-employed

But the former chancellor is going to have to work very hard indeed to earn the trust of freelancers and the self-employed, writes Andrew Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed (IPSE).

As chancellor, he made policy decisions which strongly suggested an unsympathetic stance toward those who work for themselves, particularly if they happen to have incorporated their business, and are working through a limited company structure. Let’s not forget, a limited company (or personal service company as it’s sometimes called) is a perfectly legitimate, legally complaint, and often commercially-sensible option.

Sunak let freelancers fall between the cracks, and then just left them there

During the coronavirus pandemic, these company directors fell between the cracks of Mr Sunak’s offered support – benefiting neither from the Self-Employment Income Support Scheme (SEISS) nor in any meaningful way from the furlough scheme (the Coronavirus Job Retention Scheme). Financially as painful as it sounds, this falling between the cracks was pointed out to Sunak over and over again, by us and many others. But the-then chancellor was unmoved. The support never came for company directors (even though one of the freelance sector’s top advisers drew up an almost ready-to-go scheme). And the support similarly never emerged for a lot of the other self-employed groups who didn’t meet the arbitrary criteria of SEISS.

And then there’s Sunak’s position on IR35.

IR35, inertia, devastation

The reforms to the off-payroll working rules (IR35) were not thought up by Sunak, but he was the chancellor who oversaw their introduction to the private sector on April 6th 2021. Once again, our organisation joined by others lobbied hard against the reforms and once again, Sunak refused to budge.

These reforms have been devasting for thousands of contractors, not to mention a huge blow to clients and undoubtedly to the economy as well. Sunak has never acknowledged these glaring issues, but – and it is a significant ‘but’ - the government now has.

The government has finally recognised that IR35 reform is burdensome

We now know the government is well-aware of the problems caused by this damaging legislation. Then-chancellor Kwasi Kwarteng said so at the ill-fated Mini-Budget on September 23rd (“reforms to off-payroll working have added unnecessary complexity and cost for many businesses.”) And briefly-appointed prime minister Liz Truss made it clear during her leadership campaign that with IR35, something needed to be done.

The temporary victory of the reversal of the 2017 and 2021 reforms to IR35 was even more short-lived, following the reversal’s announcement by Mr Kwarteng. The cancellation of the IR35 reforms’ cancellation shattered the hopes of many individuals and organisations, making it new chancellor Jeremy Hunt’s practically first and possibly worst announcement. It was a desperately disappointing decision by Mr Hunt, but there is something to cling to now -- the fact that there are parts of the Conservative Party that do understand the many issues with IR35 and are sympathetic to freelancers, even if they are not currently in favour at Number 10.

What does this mean for the future of freelancers?

With a looming general election, it will be down to the political parties to fight for every vote in what is likely to be a very closely contested election.

The Conservatives are a party that claim to advocate for business, and at least some of them really mean it. The prime minister needs to unify his party and he needs to listen to his own MPs on issues like IR35.

Winning back the support of the self-employed will be hard, but not impossible. To do so, Sunak will need to bring forward a suite of policies catered to the needs of the self-employed – from clamping down on late-paying clients, improving freelancers’ access to key financial products, regulating umbrella companies, and yes – looking again at IR35. If the prime minister is serious about supporting micro-business, now is the time to show it.