Thursday 23 November was National Freelancers Day. This may sound a little chintzy but let me assure people that they didn’t need to buy their freelancers a card. The day wasn’t sponsored by Hallmark, it is actually the brain child of the Professional Contractors Group, whose aim isn’t to sell cards but to highlight the importance to the economy of the freelancing sector. They are right, because it does make a huge contribution to our economy that is often overlooked.
I helped to found the PCG 12 years ago when I was working as a freelancer, and ran their external affairs during their formative years until 2003. The PCG was Britain’s first trade association for freelance workers. It was founded online during the early days of the internet when the largest online community was IT workers. It had one of the first constitutions that allowed it to hold online meetings. It grew from nothing to over 14,000 paying members in just over 2 years. Among its early achievements was the presentation of the first ever e-petition to parliament. Its discussion forums were legendary and not for the faint hearted, where were you could experience being flamed (if you don’t know what that is then I won’t enlighten you).
It was established as a social enterprise in response to the Inland Revenue’s IR35 proposals in 1999 which treated self-employed freelancers as permanent employees for tax purposes. It aimed to address abuse in the system where people left their jobs on a Friday only to reappear as contractors on the Monday with beneficial tax status. Though this arrangement seemed to be more common for senior executives in the BBC and in other areas of the public sector, it was freelancers who found themselves most impacted by the tax.
William Hague, Vince Cable and a host of other coalition heavy weights lined up at the time to condemn the tax (and they were right to do so), promising to abolish it if elected. The ‘promise’ soon became an ‘aspiration’ and then ‘abolish’ became ‘review’. Then earlier this year the review decided it was best to just ‘improve’ how it was operated. At the time not even the PCG called for the abolition, which I can’t quite understand.
IR35 is an important issue, because freelancing is an important issue. New researched by Kingston University suggests that the number of freelancers in the UK now totals 1.56 million or one in 20 in the UK workforce. This is up from the previous figure of 1.4 million, revealed by the university’s initial study in 2008. The survey reveals that the top four sectors for freelancers are literary and media occupations (265,000), followed by management (161,000), then teaching/education (110,000) and with IT/Telecommunications (93,000).
The research also noted the rise of the ‘mumpreneurs’, with around 210,000 working mums choosing the freelance path in 2011 against 167,000 in 2008. This is equivalent to one in eight freelancers being a working mother and represents a 25 per cent rise in the number of working mums turning to freelancing.
The economy will grow if it has flexible access to skills and talent which is what freelancers and small business can provide. Some people choose to freelance as an entrepreneurial opportunity, others as a life style choice and others out of economic necessity. Whatever the reason it is a big step to choose to work for yourself.
Yet despite freelancing being such a big sector it seems to fall between the cracks of temporary workers and larger small businesses. There are a whole host of opt-outs and caveats in various laws and directives covering freelancers with regards to their tax and employment status. Even though small businesses can vary from the 50 person company down to the single freelancer there is a tendency to have a small business policy that works on a one size fits all approach. It doesn’t work.
This presents the opportunity for Labour to take the initiative and to consider freelancing on its own merits and create an regulatory and taxation framework that positively supports and encourages it, but one developed through the prism of opportunity and growth, not just taxation.
I think that Labour is making good progress; the appointment of Toby Perkins as the new shadow small business minister is an excellent one. Toby ran his own business and understands the difficulties and opportunities that small firms face. I hope you had a Happy Freelancers day.
Philip Ross is chair of the Labour Small Business Forum and writes for Progress small business in the Labour & Small Business column @PhilipRossLGC