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Just the Job: What next for self-employment advice?

Elizabeth Taylor, CEO, ERSA
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From drivers, cleaners, and farm workers to hairdressers, childminders and builders, plus many more besides, self-employment is in no way the sole preserve of highly qualified consultants and business professionals. Once a policy priority, with headline highs outstripping growth in traditional employment, self-employment has underpinned the UK economy for the past two decades. During that time, we’ve seen huge growth and diversity in roles – and their associated skills and pay rates – which has created an agile and enterprising labour market, contributing massively to HMRC’s coffers. However, with many of the lower paid self-employment sectors hard hit by the pandemic – hospitality, the arts, manufacturing, construction – thousands have found themselves lured by the buoyancy of vacancies, or forced by financial necessity, into employed status. Let’s face it, having a job is almost always easier than being self-employed, and with some scathing reviews of Government support for the self-employed community through the crisis, we’re seeing self-employment figures drop to somewhere we think near-2015 levels.

But with no national programme now governing or supporting new enterprise, and people’s work-life decisions morphing as quickly as Coronavirus, figures are patchy at best.

THE SHAPE OF THINGS TO COME

Interestingly, what some providers did report was a sizeable increase, upward of 40% in some cases, in referrals to the New Enterprise Allowance scheme in its final six month period. The government-backed programme closed to new participants at the end of Dec 2021, averaging 6,000 new referrals a month.

What’s clear to me is that as we emerged from the shadow of the pandemic, people seized the opportunity of expectation. Furlough ending; the now familiar and adaptable pattern of working from home; sectors reopening; a public appetite and demand for all-things-service-industry… Not to mention the multitude of people with caring responsibilities; disabilities and health conditions; or other barriers to traditional work for whom self-employment is a sensible option; it all contributed to an encouraging upturn in interest.

So, will Covid ultimately increase the demand for self-employment support?

I certainly think so.

The question is how and what support will be provided?

Mainstream programmes generally offer limited self-employment provision and often don’t best support those people – on universal credit, or who need more intensive support due to a health condition or disability – for whom self-employment is a viable option with the right level of help. The Future Self Employment Fund came to no avail. While the UKSPF and Community Renewal Fund offer, at best, only light-touch start up support. There’s no tangible or coherent long term business support available.

SPECIALIST SUPPORT

Specialist support plays a vital role in assessing and assuring the viability of new enterprises. We’re not just talking about broad brush advice from a Jobcentre Plus work coach. Nor the promise of sometimes unnecessary start-up loans for people who haven’t yet had the coaching to ensure their business idea has legs. If we want to support more people to become self-employed, and help low paid self- employed people to better their incomes, you need tailored support delivered by people who understand it. Past research from the Institute of Employment Studies indicates that most self-employed people are in lower and mid-paid work, and 85% of self-employed workers are solo self-employed – they simply don’t have ready access to quality business advice from colleagues, or even family members, to maximise their potential.

So what support do people new to the world of self-employment need?

  • Help to budget and manage fluctuating incomes is a must.
  • Understanding access to wider health and childcare support, especially for minority groups could make a very real difference to someone’s ability to work well. 
  • While digital access and ability will play a key part in both the daily processes and ongoing growth of any modern-day business.

What’s clear is that face-to-face training, mentoring and professional business advice are key ingredients in the recipe for success.  

COMMISSIONING RECOMMENDATIONS

The ERSA Enterprise Works Forum has been active since Nov 2020 and comprises experts from across the field of self-employment, social enterprise and entrepreneurship. Jointly chaired by Ian Carlier, CEO of Momentic Limited and Suzanne Caldwell, Managing Director of Cumbria Chamber of Commerce it offers front line knowledge and extensive experience of supporting sustainable businesses.

Recommendations from the Forum to support the building back of our vibrant self-employment landscape are:

National, bespoke provision

Capacity and expertise are required to provide the specialist support self-employed people need. We must avoid regional disparities and fragmentation of support, and offer access to specialist business advisors to give meaningful, quality advice. There has been national self-employment provision since the 1980’s – we’re now entering an era without such provision, when self-employment has been hit hardest.

Ringfenced provision for minority groups

People from all backgrounds transition into self-employment. Corporate high-flyers, ex-public sector, young people, lone parents, disabled people, long-term unemployed… no matter your background, you’ll need help to set up successfully. However, what past provision has also taught us is that targeted programmes for specific disadvantaged groups are proven to work. And the failure rate is higher for minority groups that aren’t given specialist support.

Mandatory discovery workshop

Service design should be inclusive of an initial, no-commitment workshop for people interested in self-employment. Anecdotal evidence suggests that having a pre-registration, one-to-one session to learn about self-employment improved progression outcomes. Learning what self-employment involves, its pros and cons, gives participants chance to consider if the timing and conditions are right for their new adventure. Some may decide to gain more work experience or training, or indeed conclude that self-employment isn’t the right route for them. While those that progressed engaged more fully with subsequent sessions after attending an initial discovery workshop.

Support the transition to a living wage

People setting themselves up as self-employed are eager to get going – often driven by financial necessity to do so. Past programmes have been beset by process delays and red tape in the time to go live.

There’s understandably also a period of transition as people grow their self-employed income. Disadvantaged groups are unlikely to have substantial savings or redundancy payments to tide them over. With often irregular wages in the early months, the past weekly payment provided by the New Enterprise Allowance was an invaluable lifeline.

The Minimum Income Floor barrier needs removing for small businesses. 12 months is not long enough for someone coming from an unemployed background to start and grow a sustainable business, especially with no national training provision to support them.

More open ended outputs

Measuring success in this space is notoriously difficult. Ethical business advisors understand the challenge of sometimes sympathetically saying no, supporting people to look at other options. Or indeed helping people out of unsustainable self-employment safely and quickly. Self-employment experience can also equip people with a mass of transferable new skills to take to a future employer.

Targets looking at progressive, alternative outcomes, including gaining employment or reaching a sustained self-employed living wage should therefore be embedded in any future commissioning.

Two year+ lifecycle

Continuous and progressive self-employment takes time to mature. There’s a minimum 12 to 18 month cycle to fully understand most accounting, revenue returns, and other business reporting. The ability to provide holistic advice over a tapered two to three year period will best support people in low income self-employment, as well as supporting people to start up.

CONCLUSION

As a consumer, I enjoy seeing small business thrive… A varied high street, different world foods to eat, available tradespeople of all kinds with vastly different talents to mine. Microbusinesses help shape our economy. And all big businesses started small somewhere!

The rights of our self-employed community to quality advice and support should therefore be protected, for all our sakes.

ERSA continues its call to Government for a successor to New Enterprise Allowance. A national strategy is required to address this hopefully-temporary shift away from self-employment and to protect the flexibility and diversity of our labour market. Providers too need to make the case to commissioners for self-employment provision and the benefits it brings to thousands of our country’s workers.

CONTRIBUTORS

With thanks to Ian Carlier, Suzanne Caldwell and members of the ERSA Enterprise Works Forum. Plus insight from Tony Wilson, Director of the Institute Employment Studies.

Elizabeth Taylor, CEO, ERSA
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