Warning issued to the self-employed

Rob Johnston, chief executive, Cumbria Chamber of Commerce
Rob Johnston, chief executive, Cumbria Chamber of Commerce
Friday, July 14, 2017 at 3:27PM

A Government review of employment practices contains proposals that would hit the self-employed and damage economic growth, says Cumbria Chamber of Commerce.

Prime Minister Theresa May commissioned Tony Blair’s former policy chief, Matthew Taylor, to produce the report, which was published this week.

Media coverage has centred on the gig economy and recommendations that affect companies such as Uber and Deliveroo, Cumbria Chamber of Commerce says that Taylor’s proposals for the self-employed are much more significant.

He argues that they aren’t paying their fair share of tax and says the principles behind National Insurance increases proposed in the Budget – and then dropped – are correct.

His review says: “The level of National Insurance contributions paid by employees and self-employed people should be moved closer to parity while the Government should also address those remaining areas of entitlement – parental leave in particular – where self-employed people lose out.”

Most controversially, he wants the Government to set up cashless platforms for making payments to self-employed workers such as window cleaners.

This, he says, would stop them under-declaring cash income and could reap “several billions” in extra tax revenue.

Rob Johnston, chief executive of the chamber, said: “There are sensible ideas in the review but the proposals on the self-employed are flawed.

“They do receive more favourable tax treatment but that reflects the greater risks they take. They shouldn’t be penalised. And we’re highly sceptical that proposals to give self-employed people parental leave are workable.”

Elsewhere, the review aspires to “good work for all”, arguing that pay is only one part of employment satisfaction.

It says people are most likely to enjoy work if they have job security, predictable hours, a work/life balance, opportunities to progress and a chance to make their voice heard.

Mr Taylor praises the flexibility of the UK labour market and comes out against Labour’s policy of banning zero-hours contracts.

But he does say that those on zero-hours contracts should be entitled to a higher National Minimum Wage rate, and should have the right to request a fixed-hours contract, and he does want to ban unpaid internships.

Other proposals aim to protect agency workers, enforce employment tribunal awards, and make it easier for employees to set up workplace consultative committees or works councils.

Mr johnston added: “It’s good that Taylor has recognised that the UK’s flexible labour market works and has delivered record levels of employment.

“His proposals here are more sensible and we welcome his call to clarify legislation around who is an employee and who counts as self-employed. This is a grey area that causes problems for employers and contractors.

“We’re delighted that he’s telling the Government to avoid increasing the ‘employment wedge’ – the non-wage costs of employing staff such as employers’ National Insurance, auto-enrolment and the Apprenticeship Levy.”

The Prime Minister has said the Government will respond to his review “later in the year” but she stopped short of a promise to implement it.

The Government’s ‘supply and confidence’ agreement with the Democratic Unionists does not cover employment legislation, so the Conservatives would need a degree of cross-party support to get it through.

That is unlikely to come from Labour, given that senior Labour figures believe the Taylor review doesn’t go far enough.

TUC General Secretary Frances O'Grady said: "From what we've seen, this review is not the game-changer needed to end insecurity and exploitation.”

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