Self-employment as a freelancer? It’s on the rise again

Two months ago for FreelanceUK, I explored at fall in self-employment, writes Andy Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed (IPSE).

To recap, after years of steady, at times dramatic, growth, the number of people ‘going it alone’ dropped sharply, as the coronavirus pandemic took hold.

Self-employment officially up by 2.7%

But new figures from the Office of National Statistics (ONS), published just last week, indicate that things could be starting to look up again.

There's been a 2.7 per cent increase year-on-year in people working for themselves, with 4.3 million now operating as self-employed in the UK.

Big picture -- there's still a shortfall of around 650,000 self-employed workers compared to prior to the pandemic, but for the first time in three years there is actual, tangible growth. Does this signal self-employment is on the road to recovery. Or is this just blip?

Things starting to look up, potentially

The self-employed have had a tough few years. Uncertainty caused by Brexit; covid lockdowns, patchy government support, the worsening of IR35 rules, and the cost-of-living crisis. They have all taken their toll.

But, maybe -- just maybe -- things are looking up.

In addition to the ONS figures, we also had the news earlier this year that the Treasury benefitted from better than expected self-assessment tax receipts -- suggesting that some strivers, at least, are managing to turn a decent profit from their exploits.

A misplaced Spring Budget?

Traditionally, self-employment grows in recessions, when firms stop hiring employees. We are in quite a different situation now. Recession remains a threat, though one we have so far narrowly avoided. At the same time, employers are saying they desperately want to hire employees, but there are no candidates available.

A few months back, Spring Budget 2023 was almost entirely aimed at addressing this problem, hence the announcements on childcare and pension allowances. And yet it is self-employment -- not employment -- that has risen.

Perhaps then, chancellor Jeremy Hunt would have been better advised to focus on this flexible section of the workforce in his Budget (if you don’t recall, self-employment didn’t even get a mention in the Spring Budget).

As we said at the time of Mr Hunt’s package, if the government is serious about encouraging labour market participation it should accept that many want to work, but they want to do it on their own terms. They love the freedom and flexibility that freelancing offers them and it’s here that the government could really make a difference.

The media taking note

Earlier this week I was lucky enough to be invited onto Radio4’s Moneybox Live programme.

The show was premised on the increase in self-employment, and we heard from independent business owners that were cautiously optimistic about their prospects.

But they face challenges that will no doubt be familiar to many readers of FreelanceUK -- late payment, a lack of funding, and tax concerns, among other obstacles to thriving that came up. These three alone, though, are issues the government should be more actively trying to fix. If they manage it, we might see more people in work and the kind of sustained growth and vibrancy that could drive the whole economy forward.

Steely determination, a fair wind, and no more big shocks please

Despite their challenges, each of the self-employed people featured on the programme seemed to convey a steely determination to succeed.

No one knows what the future holds, but if those one-person businesses are in any way representative of the broader population, it suggests that self-employment will continue to grow and that the recent ONS figures are not a blip, but the resumption of the kind of structural growth that persisted prior to the pandemic. It will require a fair wind from the economy -- no more big shocks please -- and government could help (if it wants to that is), but last week’s stats update should provide us all with a glimmer, just a glimmer, of optimism for the rest of year ahead.