Freelancers 'omitted' from Osborne's business treats

A smattering of positives for enterprise in yesterday’s Autumn Statement indeed “takes Britain in the right direction” although few, if any, of George Osborne’s measures will directly help small, freelance companies thrive or survive.

Asked about the chancellor’s speech, one-person business captains, analysts and advisors told Freelance UK that it was hard to fault him for his claim in the Commons, given the sheer weight of business-friendly offerings.

Pointing to an announced £40bn ‘credit easing’ scheme for SMEs, a 50% income tax cut for investing in start-ups and an extended business rates holiday, PCG, the freelancing trade group reflected last night:

“We did not expect the statement to address core freelance issues, such as the AWR or IR35, so we’re at least pleased with the pro-small business nature of what the chancellor had to say.”

Still, says Martin Hesketh of freelance accounting expert Brookson, “it is again disappointing to see no targeted measures to promote the growth of the contractor sector” from a chancellor of the exchequer.

Mr Hesketh welcomed Mr Osborne’s business-friendly moves, among them a boost to exports by UK Trade & Investment backing 50,000 SMEs (up from 25,000 currently); further lending help, by extending the EFG scheme, and an ‘above the line’ R&D tax credit for corporates.

But if flexible micro-businesses, like freelancers, contractors and the self-employed, are after real encouragement from the state, they will have to look much harder into the statement, in the hope of identifying “sector-specific opportunities”.

Against a worsening economic backdrop, Hesketh added, this is an especially harsh blow to those “small, one person businesses which help make up the flexible workforce, [and who] will be key to driving economic growth.”

The Forum of Private Business agreed, saying that sole traders and other single-person businesses appear to have been overlooked by the government, just at a time when newly announced growth initiatives will increasingly need them.

“The chancellor has taken some steps in the right direction but he could have made much bolder strides to get Britain trading by providing more support for the smallest businesses.

“[We heard] very little for micro-businesses, which make up the majority of small firms in the UK and require special attention,” the FPB said. “Given their importance to plans for economic growth, this was an omission.”

Where they are mentioned in the chancellor’s statement, or in its supporting documents, the government’s references to ‘micro-businesses’ are neutral-to-positive.

The self-employed, for example, are generally to be exempt from H&S legislation and, elsewhere in the statement it says, a “compensated no-fault dismissal” process will be explored for firms with fewer than 10 employees.

There is a reference to the Agency Workers Regulations - yet only to confirm that the government will examine the AWR’s paperwork obligations in 18 months’ time, to ensure “practical arrangements for employers are as simple as possible.”

And the recruitment sector, as a whole, will be the subject of an incoming consultation on streamlining current regulation, which sector bodies have already started contributing to.

However there was no mention yesterday of IR35. The closest the government came was probably in the chancellor’s speech, where he nodded to the means to nullify IR35 – the merger of income tax and national insurance administration.

The Freelancer and Contractor Services Association is unimpressed the proposal is still in place. “We believe this merger will have a highly damaging effect on the three million people who make up flexible workforce in the UK,” the group said.

“Whilst we understand the economies of scale and efficiencies within businesses that could be brought about by this proposal, the current economic climate means that it will act as a disincentive to the freelance and contractor communities.

“If the government does insist on taking this proposal forward therefore, they will need to do so in a way that continues to incentivise the flexible workforce or risking losing it.”

Despite the overall lack of micro-business-specific measures, “there are some significant investment[s] promised in large scale capital projects, such as housing, roads and rail” that may benefit freelance workers, Brookson said.

In outlining these potential advantages from infrastructure investment, the accountant wasn’t referring to a cap on rail fare rises (next year) or a deferment of January’s fuel duty hike – although each measure won’t be sniffed at by freelancers and other temporary staff. Rather it pointed to the associated job creation.

Most visibly for creatives, such opportunities appear tied up in the launch of 10 ‘super-connected’ cities, with Belfast, Cardiff, Edinburgh and London among those due to be announced for 80-100mps broadband services from next year.

Creative staff recruiter Cogs Agency reflected: “ It remains to be seen what the real world impact of this will be but, with the credit easing scheme to provide low-interest loans, this could help small technology and creative businesses [by] allowing them to spend on… increasing opportunities for creative and digital talent.”

Later in the spring, and to complete the UK’s communications upgrade, procurement rounds will begin for contracts to extend mobile phone coverage to 99% of the population, with improved networked services scheduled for early 2013.

Problematically though, unemployment is at that time expected to be at its peak – 8.7% in Q4 2012 according to the OBR, with no real recovery until 2016.

But Cogs’ founder Liam Morgan suggested that the challenge of recruiting staff full-time is a ‘problem’ that contract and freelance candidates might actually embrace.

“Any sluggish market creates difficult conditions for permanent job creation,” the agency boss acknowledged. “But as we saw after the 2008 crash, demand for flexible resources in the form of freelance creatives or technologists may actually go up.”

Seeming to underline the need for more IT-led offerings to get to market, an extra £75m injection was also promised yesterday to support technology-based SMEs to “develop, demonstrate and commercialise new products and services.”

In terms of getting such products and services on-shelf, in the physical sense, £4m will go to Skills for Logistics, so training approaches and the “competitiveness and productivity” of the UK logistics sector can improve.

But addressing one-person suppliers last night, and regardless of their sector, the tech entrepreneur and respected analyst Richard Holway highlighted the importance of ‘diversity of performance’ whereby, “if you have the right products and services, you can buck any economic environment.”

In a statement to Freelance UK for its readers, Holway offered: “Success (or survival) will come in the next year or so depending on how business-savvy you are and despite the environment.

“Certainly the measures announced today are not going to have a lot of effect on that. Conversely, if you are running a struggling… business in a depressed area…, nothing here is going to save you either.” 


Editorial image courtesy of Ewan McIntosh

 

30th November 2011

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