Why our next prime minister must openly support the self-employed

The race is heating up. After a few weeks of campaigning, some of the Conservative leadership candidates from the original 10-strong field have either crashed and burned or set themselves up for the next round. But wrongly, not a single candidate has set out their stall on self-employment, writes Andy Chamberlain, director of policy at IPSE.

While former chancellor Rishi Sunak supposedly won Sunday’s televised debate on ITV, the bookie’s favourite just before (on Saturday) was former international development secretary Penny Mordaunt, and foreign secretary Liz Truss is still very much in the running.

The three headline-grabbing issues (so far)

The leadership election is wide open, with the end result still unclear. What is clear, however, is that the debate so far has been limited. In fact, the leadership campaign can be summed up by three issues: tax cuts, government spending and trans rights.

While each of these issues is important, they aren’t the be-all and end-all of government policy. There are numerous areas that have so far been ignored by leading candidates that will need to be addressed before any one of them becomes prime minister.

One essential policy area that hasn’t been debated so far is self-employment. After 11 years of continuous growth, the number of self-employed workers fell dramatically by 5% during the coronavirus pandemic. Thousands lost work due to tightened budgets and many fell into debt -- relying on credit cards and loans to get by.

Sunak’s SEISS (is sort of hard to forget)

Despite the creation of the Self-Employment Income Support Scheme (SEISS) by Mr Sunak and his Treasury during the pandemic, thousands of self-employed workers fell through the cracks. As a result, many have either retired or sought out full-time roles. For those that have continued as freelancers, they have been hit by numerous challenges, including the recent reforms to IR35, as well as late payments and the ongoing cost-of-living crisis.

While the state of the self-employed sector might be overlooked by some, freelancers are essential to the growth of the UK. Self-employed workers contribute an estimated £303 billion to the economy. They also provide businesses across the country with innovation, entrepreneurism and dynamism -- skills that are paramount to the success of any company.

What Tory leadership candidates need to offer the self-employed

If the freelance sector is going to recover to pre-pandemic levels of growth, then there needs to be a clear plan from the government to help revitalise self-employment. While none of the candidates so far have provided such a plan, it isn’t too late for them to spell out how they would take on issues like IR35.

To that end, the decision from the Sunak and Truss camps to cancel last night’s Sky News debate (apparently because each candidate thinks taking chunks out of each other as they did on ITV is unedifying), is regretful. That could have been the platform upon which we heard what Sunak and Truss would do to help one-person enterprises. Interestingly, Sunak and Mordaunt both explicitly spoke of ‘companies’ and ‘businesses’ in their appearances on Sunday, but the smallest members of those communities did not receive any mention – from any candidate.

Grasping the IR35 nettle

At IPSE, we have long argued that there needs to be changes to IR35. The flawed legislation has completely upended freelancers by shifting the responsibility for determining notoriously difficult employment tax arrangements to their clients. Since its implementation in April 2021, there have been numerous complaints from thousands of self-employed workers, with a significant number stating how vague the new rules are.

In fact, IR35 is so destructive that our research has found that more than one-third of freelancers (35%) have closed their businesses since the changes. Moreover, the 2021 off-payroll reforms have added unnecessary stress for companies, with one in two businesses (47%) reporting that IR35 has been a significant administrative burden.

If Sunak, Truss, Mordaunt or any other of the leadership hopefuls want to solve the IR35 issue (N.B. self-described ‘wild card’ candidate Kemi Badenoch formerly worked at HM Treasury), then they need to announce a government review into the flawed reform of the Intermediaries legislation. They also need to demonstrate they are prepared to grasp the nettle on other tricky issues like employment status – something which the government has been committed to doing for four years -- albeit without taking action.

Tory leadership candidates who display a willingness to tackle IR35 alongside other issues affecting self-employed workers will find that they have the support of thousands of sole traders and freelancers.

Our economy and workforce? Both are going the way of the freelancer; the new PM’s policy will need to reflect that

While debates around tax cuts, government spending and trans issues may spark the interest of MPs, the hard-working electorate will want to know what each candidate thinks about a wider range of issues. Self-employment is one such sector that needs to be addressed during the campaign as sole traders, freelancers and other independent workers represent a huge chunk of the UK, capable of propelling any one of the leadership hopefuls into No 10 and towards supporting the invariably flexible worker-focused economy which our country’s future massively depends upon.