New research from the Federation of Small Businesses (FSB) shows that confidence among the self-employed has nosedived since last year, but the Federation is determined to stop the downslide in its tracks.
Pessimism for Q3
The FSB’s Small Business Index for Q2 2018 was based on research from an April survey of 1,017 small firms.
The survey showed that the Small Business Index (SBI) for the self-employed stands at +2.8 in Q2 2018, a dramatic decrease from the two-year high of +9.7 seen in Q1 2017.
Yet among firms with up to 10 employees or those with 11 to 20 employees, confidence stands at +19.3 and +39.5 respectively.
Among the sole traders surveyed:
- 28% said they currently expect business performance to worsen over the coming three months
- 41% said they are not expecting a meaningful improvement
- Just 31% thought their business performance would improve
However, the FSB is determined to improve these figures and fight in the corner of the self-employed. It’s launched a new ‘Think Self-Employed’ campaign dedicated to improving the prospects of the country’s 4.8 million sole traders.
Think Self-Employed
As part of its campaign launch on 2nd July, the FSB produced an agenda that suggests measures to curtail the collapse in self-employed confidence across the UK. They include:
Pastoral and family-oriented measures
Such as two weeks of statutory paternity pay and an Adoption Allowance for the self-employed and amendments to the Parental Bereavement Bill to ensure sole traders are included.
FSB national chairman Mike Cherry said that despite the self-employed community’s significant contribution to the economy, it was still “treated as an afterthought by policy makers.”
He referred to the lack of statutory pay for self-employed new fathers, the lack of support for self-employed individuals wanting to adopt and the “glaring omission” of the self-employed from the Bereavement Bill.
“The right to paid time away from work for self-employed people suffering from the tragic loss of a child should be enshrined in law, just as it should be for employees,” he said.
Benefit measures
A reform of Universal Credit (UC) to protect sole traders from losing out due to fluctuating income and extension of the UC ‘start-up period’, so that claimants have at least two years to get firms off the ground.
Mike Cherry accused the current UC system of punishing sole traders because their income fluctuates and by unfairly giving them just a year to get a viable business off the ground before their entitlement is cut.
He said: “It’s simply wrong that a self-employed person earning £12,000 a year receives fifty per cent less UC entitlement than an employee earning the same amount.
“MPs across the board agree that the Minimum income floor is a risk to economic dynamism in the UK. The start-up period should be extended immediately.”
Brexit measures
A Brexit deal that allows sole traders to cross European borders without administrative burdens and additional costs.
The FSB want to avoid a scenario where working in Europe involves “burdensome paperwork” for contractors, putting them at a competitive disadvantage.
“Any Free Trade Agreements struck after 2020 need to include dedicated small business chapters to ensure firms of all sizes, including sole traders, benefit from new arrangements,” said Mr Cherry.
Other recommendations include:
- Using the self-assessment process to nudge the self-employed towards saving more for the future and retirement
- Ensuring lessons are learned from the impact of IR35 legislation changes in the public sector before rolling them out to the private sector
- Closer working between government and financial services firms to help the self-employed overcome barriers faced when applying for mortgages, loans and insurance products
- Introducing tax relief on training courses for the self-employed
- Providing Local Enterprise Partnerships with comprehensive information on the number of self-employed people in their area so they can target small business support effectively
If you are considering claiming Universal Credit while establishing a start-up or starting a family while you’re self-employed, ensure you take stock of your finances now, so that you know how much money will be left in your pocket each month.
You can download logos to support the FSB’s campaign and find out more about it on their campaign page.