Self-employment brings many benefits, especially to people who have a liberal-like desire to have more control over their own lives. Yet it also comes with its burdens, which is where the RSA‘s Charter for the Self-Employed and its eight proposals to improve self-employment come in:
The following ideas are intended to address the disadvantages facing the self-employed. They are aimed variously at the government, financial institutions, mortgage providers and public bodies.
Establish automated saving schemes for the self-employed on low incomes
To improve saving rates, banks should create a ‘Save When Paid’ initiative for their self-employed clients, which would allow them to channel a percentage of every invoice into a savings account.
Present a ‘compulsory question’ for enrolment onto a pension or ISA scheme
To improve readiness for retirement, the government should present the self-employed with a ‘compulsory question’ asking them whether they wish to join a workplace pension scheme and/or a government-backed ISA.
Explore the potential for creating a social enterprise with a ‘cash-pooling’ service
To alleviate the problem of late payments, the government should work with business groups to develop a new social enterprise that pools the finances of small business owners, allowing them to dip into a collective pot of money as they await payments.
Address the design flaws in the New Enterprise Allowance
To help more low-income groups into self-employment, the government should make several adjustments to
the way New Enterprise Allowance is delivered, for example by reducing the value of the payment gradually rather than abruptly, and ensuring every Job Centre Plus has a named self-employment adviser.
Establish a ‘Right to Request’ for more flexible terms on mortgage payments and rental costs
To manage income volatility, the government should establish a ‘right to request’ in the housing market so that self-employed workers (and employees) can ask for more flexible terms on their payment schedule, for example by switching to an interest-only mortgage for a short-period.
Redesign Universal Credit so that it reflects the reality of self-employed work
To help the low-income self-employed sustain and grow their business, the government should make several adjustments to Universal Credit, for example extending the ‘Start-Up Period’ (where claimants are treated more generously) from 12 to 24 months.
Fully open up the new Fit for Work service to the self-employed
To improve occupational health, the government should allow the self-employed to access the face-to-face assessment component of the new Fit for Work service, which supports people to return to work after an illness.
Introduce equal treatment under the Work Programme
To help more low-income groups into self-employment, the government should mandate that every Work Programme provider offer specific support to people who want to move into self-employment, and consider whether Work Programme participants be allowed access to the New Enterprise Allowance stipend.