Blog: Dear Julie, an open letter on self-employment

As part of its Review into Self-employment, the government has just launched a survey to gather the views of business owners from across the country. In this blog we write an open letter to Julie Deane OBE, the Review’s lead, asking her to make the most of this rare opportunity to address the personal obstacles facing people who work for themselves.

Dear Julie

Firstly, we have to say thank you for taking on the responsibility for leading the government's new Review into Self-employment. The job is likely to be as demanding as it is exciting, and knowing that 4.5 million people's lives could be affected by your findings must be a sobering thought.

The Business Secretary Sajid Javid has asked you to do three things: explore why people opt to be self-employed, look at the challenges they face, and recommend what might be done to address the barriers to success. 

Having spent the past few years exploring these questions, we want to take the time to share our findings with you. These are based on data crunching, original surveying and nearly 100 interviews with the self-employed. At every point in our journey we have sought to rise above the hyperbole and paint as accurate a picture as possible of this incredibly diverse community – as I am sure you will hope to.

Let us state it clearly at the outset: the vast majority of the self-employed are happier answering to themselves. Our RSA/Populus survey last year found that 84 percent felt more satisfied with their lives than they would have been working for someone else.

Indeed, most people started up in business not because they struggled to find work elsewhere – although of course some did – but rather because they sought more autonomy and creativity. The notion that the self-employed are just unemployed by another name bears little resemblance to reality – as the Bank of England affirmed in their own study.

Yet we must recognise that self-employment is not without its perils and pitfalls. One of the biggest groups identified through our typology exercise are who we term the 'Survivors' – people who want to work for themselves but who struggle to get by. We know from our analysis of government data that the self-employed earn a third less on average than their counterparts in a typical job.

The government has made no secret of its desire to see a country that is more entrepreneurial. How then should it support the struggling self-employed, particularly the lowest earners? Here is one way: reduce taxation, repeal burdensome regulation and get credit flowing to smaller businesses. It is a formula that successive governments since Thatcher's have abided by.

We realise there is a temptation for the Review to go down this familiar road, and no doubt there is potential for further progress to be made. But we need something different this time. Take a step back and it is clear that the vast majority of government efforts to date have sought to support the business as an entity in itself rather than the individual that sits behind the business.

By this we mean there has been limited attention paid to addressing the personal issues facing the self-employed, despite the glaring need for action. Statutory sick pay, statutory maternity pay, training support and employer pension contributions are some of the occupational benefits people forgo when they strike out on their own.

It is obvious the self-employed are finding it hard to plug these gaps. According to our analysis of government datasets, people who work for themselves are half as likely as employees to contribute to a private pension, and also half as likely to engage in regular training.

So what can we do about it? The RSA will shortly launch a Charter for the Self-Employed, supported by our Fellows, that sets out a number of proposals for boosting their living standards. Among our ideas are to:

• Mortgages – Establish a 'right to request' for more flexible terms on mortgage repayments
• Pensions – Create a modified version of pension auto-enrolment for the self-employed
• Universal Credit – Redesign Universal Credit so it reflects the reality of self-employed work
• Cash flow – Explore the potential for creating a social enterprise with a 'cash-pooling' service
• Employment services – Introduce equal treatment for the self-employed under the Work Programme

Of course, there is only so much money that can be spent on new initiatives, not least in straitened times. But each of these proposals should be seen as a long-term investment rather than an immediate drain on the public finances. For every person that is able to sustain and grow their business, there is an added benefit in the form of higher tax receipts and job creation.

It is worth reminding ourselves of a stark finding from our polling: that only 14 percent of the self-employed say they feel adequately supported by the government. Your Review is perhaps the best opportunity there has been to turn this situation around. Our goal should be for everybody to have the chance to work for themselves, regardless of their background or financial starting point.

The prize is a nation that is arguably healthier, happier and more prosperous – an opportunity that I'm sure you'll agree is too good to miss.

Yours sincerely

Team RSA

A note to self-employed Fellows – Please do contribute to the Deane Review if you have time. You can find out more information here. The government's survey will close on the 8th November.

Engage with our research