Why the Industrial Strategy must not ignore the self-employed
Author: Jack Airey |
To launch the beginning of our new research project on The Making of an Industrial Strategy, Localis research fellow Jack Airey considers the rising numbers of the self-employed workforce, the trend’s regional variations; and how the Government’s emerging Industrial Strategy can help support such workers.
The rise of the self-employed
From Theresa May’s review of worker’s rights in the ‘gig economy’ to their falling wages in real terms, the rising number of self-employed people is a trend that is increasingly catching the attention of policymakers (and politicians).
In short, policy needs to work better for both the self-employed – extending worker’s rights and ensuring higher pay (e.g. the National Living Wage) – and for Government itself, which is said to be losing £2.85 billion a year in tax revenue due to lower national insurance contributions by self-employees, and by those employers that contract work to self-employees.
Accounting for regional and local variations
As policymakers contend with these challenges, it is important to understand the regional context to the rising numbers of self-employed workers. As illustrated below, in London the percentage of workers aged 16-64 who are self-employed is almost twice as much as in the North East. Generally all regions have seen similar rates of growth in the number of self-employed (though since 2010 London has risen sharpest), but they play a larger role in regional economies of the South.
Data source: Annual Population Survey (accessed via NOMIS)
Delving deeper into the data, the difference by local authority is much starker. In Richmond-upon-Thames, one in five workers aged 16-64 is self-employed. In Hull one in twenty are. (Going against the national trend, the proportion of self-employed workers in Hull has actually decreased by 0.7% in past five years).
The five areas with the highest percentage of self-employed workers are in London (the sixth being Cornwall), while three out of the five lowest are in the North East.
Areas with the five highest percentage of self-employed workers (aged 16-64). Data source: Annual Population Survey (accessed via NOMIS)
| Area | Percentage aged 16-64 who are self-employed, Jul 2015-Jun 2016 |
| Richmond upon Thames | 19.4 |
| Ealing | 18.9 |
| Camden | 17.4 |
| Kensington and Chelsea | 17.1 |
| Haringey | 16.4 |
Areas with the five lowest percentage of self-employed workers (aged 16-64). Data source: Annual Population Survey (accessed via NOMIS)
| Area | Percentage aged 16-64 who are self-employed, Jul 2015-Jun 2016 |
| Kingston upon Hull, City of | 5.0 |
| Sandwell | 5.1 |
| Sunderland | 5.3 |
| South Tyneside | 5.6 |
| Middlesbrough | 5.9 |
An Industrial Strategy that works for everyone (including the self-employed)
While some issues such as workers’ rights can and should only be organised and accounted for at a national level – as exemplified by the recent legal case against Uber – there is scope for the Government’s emergent Industrial Strategy to help meet the policy challenges of the self-employed.
For example, one scheme that the Government could support is a devolution package which delivers greater control over skills policy. This would allow local councils to better train their local population in all the types of skills that self-employment requires – from how to put together a profit and loss statement, to understanding the tax system.
In places with low numbers of self-employed workers, such as Hull, this could allow the council to establish a local skills infrastructure that better supports local entrepreneurs. Equally in places with high numbers of self-employed workers, such as Richmond-upon-Thames, this could mean their self-employed workers are better trained to run their business.
By placing a more devolved skills policy within the Industrial Strategy, local areas would be provided with the flexibility to reflect what their local market demands (and which the expected effects of the Brexit vote – i.e. lower immigration – will be required by local businesses). The Industrial Strategy could also support local policymakers to ameliorate the aforementioned effects of a possible shadow self-employed economy forming – low pay and lost tax revenue.
The Making of an Industrial Strategy
Our new research project, The Making of an Industrial Strategy, will be considering place-based issues such as these. If the Industrial Strategy is to be successful, it will need to be driven by tangible factors that genuinely share prosperity, not just national GDP figures.
To find out more about this new research project, please contact jack.airey@localis.org.uk.