As self-employment becomes an ever more significant aspect of the UK economy, how can the lack of sick pay and peer support be tackled? A self-organised solution called “Bread Funds” has sprung up in Holland, and groups are now starting in the UK and looking for people to take part in a pilot.
In 2004, when the Dutch government abolished sick pay for self-employed people, several members of a co-operative network decided to set up their own provision for self-employed people in their network. The government had recommended they take out income protection insurance to cover them if they became ill, but some were quoted premiums of more than 600 Euros per month, so they created a peer-to-peer alternative to insurance, which they called Broodfonds (Bread Fund).
Members of this “Bread Fund” put aside money each month, and if any member became unable to work for an extended period through illness or injury, they received a monthly income made up of small gifts from each of the members until they could get back to work. This worked well, and after a few years they decided to set up a co-operative, De BroodfondsMakers (The Bread Fund Makers) to enable other groups of self-employed people to do the same.
There are now over 250 Bread Fund groups with over 11,000 members, who support each other if unable to work because of illness or injury. Unlike insurance, where support is purely financial, Bread Fund members often receive moral and practical support as well as money to live on when they cannot work.
An example of how it works was featured in The Guardian a few years ago. Jackie Smeets had a stroke just 3 days after joining a Bread Fund, but received both financial and moral support from the other members as she recovered and got back to work.
Could something like Bread Funds work in the UK too? British self-employed people have never been eligible for sick pay. When sick pay was established by the National Insurance Act 1911, politicians thought of the self-employed as well-off middle-class people who did not need sick pay. With average earnings from self-employment now lower than average earnings of employees, these Edwardian ideas are now well out of date.
Matthew Taylor’s review into modern employment practices is re-examining self-employment and its associated rights and responsibilities in the light of the emergence of the “gig economy” and the spread of “flex-work”. But the issue is much wider than work carried out via online platforms; it also affects traditional self-employed trades, such as the carpenter portrayed in Ken Loach’s film “I, Daniel Blake”, whose struggle to obtain benefits when unable to work because of a heart condition outlines the absurdness of the current benefits system. There are plenty of real examples of self-employed people turning to food banks when unable to work because of illness or injury.
Is insurance the answer? Income protection insurance is available for self-employed people in the UK at much lower premiums than in the Netherlands, yet only 9% of UK self-employed people take it up (compared to around 22% of Dutch self-employed sole traders). Insurance tends to come with exclusions, e.g. for prior conditions or jobs considered risky, and premiums rise substantially with age. A Bread Fund, on the other hand, is quite different from insurance: it is about people supporting each other financially and interpersonally, so there is no external institution to impose exclusions. Members who are unable to work also benefit from the kind of moral and practical support that no insurance company can offer.
Following a successful feasibility study funded by Esmée Fairbairn Foundation, Bread Funds UK are now looking to set up pilot groups to test the concept in the UK. We would like to invite Fellows who have been self-employed or freelance for more than a year to join a pilot group. As a pilot group member, you need to be willing to experiment, accepting that the initially agreed terms and conditions may later be changed if the members agree. But you are also a pioneer, helping build a new model for mutual support for freelancers at a time of uncertainty.
If you are interested, please contact Stuart Field at info@breadfunds.uk
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Hi, this sounds like a really interesting initiative. As someone who is self employed and expecting my first child in a few months time, I wonder if you have given any thought to extending this to support maternity/paternity cover as well? As a self-employed person maternity leave is a major challenge - statutory maternity pay is about £130 per week, which is obviously not enough to life off. Something like this could be a major source of support, with Mums and Dads who have benefitted in the past or expect to in the future helping out those who need the assistance now.
Back in the 19th Century, groups of people came together and formed the first societies to provide mutual aid for members. These were the Friendly Societies and they provided a variety of benefits for their subscribers.
Some - such as the Foresters founded in the 1830s - are still in existence today and I can remember my father telling me about them when I was younger as he worked for them for a time in the 1960s.
He would tell people about the range of benefits, including social events, life insurance to cover burial costs, a stream of income in the event of sickness / injury etc. and at the end of it he would invite them to join, saying 'the choice is yours'.
Mutual Friendly Societies, such as Holloway, still offer - as Stuart mentions - income protection insurance. And he is right that the take-up is poor. However, unlike the mainstream insurance companies, pre-existing medical conditions can usually be accepted after a waiting period, there are choices between short-term and long-term cover periods, and some styles of plans do not charge extra for what are seemed as riskier occupations. To avoid the fear of putting in & never getting anything back, the traditional policies also pay out a share of their investment profits to members.
Even further than this, membership can also bring (depending on the Society joined) professional services such as benefits such as bereavement and stress counselling and emotional support and information services or discretionary hardship payments, educational grants and convalescent homes (See examples at http://www.holloway.co.uk/members/map and http://www.forestersfriendlysociety.co.uk/foresters-customers/foresters-extras/)
Increasing wider Financial Literacy remains a key objective for society so that more people can be well-informed enough to make the decisions as to what their financial priorities ought to be, remembering that for each and every one of us, the choice is ours.