In different ways, self-employment works for us all, explains David Rutley
Self-employment continues to surge and the Government is putting its weight behind our growing army of entrepreneurs. Some 4.6 million Britons are now self-employed – roughly 15%, or more than one in seven of all those in employment. At the start of the 21st century, less than 12% worked for themselves. We need to be clear that this change is good news. As Esther McVey , the Employment Minister, said recently, “If you have this seed, this idea, this creativity, you want to set up a business, then that is what you should do and we as a Conservative Party...are going to support and liberate people, to give people as many opportunities to succeed as possible, without being prescriptive.”
The message is compelling: our business in government is not to defend privilege, but to spread opportunity. To do this, and achieve what John Major called the “classless society” , we need to ensure that our economy is open to new entrants, not a closed shop of long established firms. We must keep finding new ways to unleash the freedom to innovate, enable competition and celebrate enterprise. We need also to encourage the increasing number of self-employed to aspire to take the next step and become employers, or take on apprentices. Opportunity Britain, for all.
To spread opportunity, we need more people – from all backgrounds – to take on the roles of entrepreneur and employer. Where people are new to them – where there is no family history of business, or no network of contacts and friends who have been there, done that – we need to break down the tangible and cultural barriers to starting up alone. First-time entrepreneurs and first-time employers should be as important to modern Conservatives as first-time homeowners and first-time shareholders continue to be in a more socially mobile Britain.
There are always warnings from the unions and others that self-employed jobs are not ‘proper’ jobs, or that people have been pushed into it part-time as a last resort rather than pulled into it fulltime by its attractions. The Left has historically had an ideological dislike of self-employment: it reduces dependency on the state, it allows people to follow their own way, it blurs the ‘them and us’ of their class-conflict politics. Yet the Royal Society of Arts has recently found that what they call the “self-employment revolution” is fired by the benefits of being self-employed: the flexibility, the pursuit of your own dreams, the dignity and freedom.
Of course, self-employment is not right for everyone. But, importantly, it is the new entrepreneurs, the small-scale self-employed who are more likely than established companies to take on workers from the ranks of the unemployed, the excluded or non-active - those who often find the formalised application processes, let alone set working practices, of established firms rather difficult to adapt to. Furthermore, people who get jobs with small firms often learn, from their hands-on experience there, to set up their own small firm after a few years’ experience. It is a virtuous circle of the upwardly mobile entrepreneurs helping new entrants into the labour market and then into entrepreneurialism itself. 74% of those becoming self-employed with employees come from the self-employed who previously had no employees – a further 13% comes from employees who had previously been working in micro-businesses.
It is right, then, that the Treasury has focused help on smaller enterprises in the current recovery. The New Enterprise Allowance, for example, actively encourages the unemployed to start up as entrepreneurs, while the £2,000 National Insurance Employment Allowance aims to encourage the smallest firms to take on their first employee.
Those who would seek to regulate existing businesses should always think about the consequences on those businesses yet-to-exist, as this Government is doing. Whitehall communication with the self-employed should make every effort to emphasize the assistance available to businesses, not act as a psychological ‘closed door’ to exploring the options for taking on employees. Lord Young powerfully stated that “psychological barriers stifle ambition.” Creating an aspiration nation means ensuring that the road to running your own business is a clearly signposted fast lane, not Labour’s minefield of forms, box ticking and regulations.
Plan A has worked to bring back jobs and growth, and we are moving on to reach our long-term economic potential. As a Party, we are showing that we are committed to achieving our social potential too. By energising and enabling the self-employed, this Government - and future Conservative Governments - can spread opportunity across the country and revitalise Britain’s great spirit of enterprise, producing jobs and growth. Self-employment may not be right for everyone, but it works for us all.
David Rutley is Member of Parliament for Macclesfield
This article was originally published in Crossbow, the Bow Group Magazine - Conference 2014 on 27/09/2014. Published online 04/08/2016