Self-employment boom powered by UK house prices

A dramatic rise in the number of self-employed people in the UK has been triggered by a surge in property prices rather than any tax changes, according to the latest research.

Aspiring entrepreneurs have taken advantage of the rising amounts of investment in their houses by using it as an incentive for start-up, says the Office for National Statistics.

The data shows the number of self-employed rose by 108,000 over the year to June – far higher than the amount of people being hired by companies.

Those opting to be their own boss appeared not to consider recent changes in tax legislation but instead were inspired by the strength of the property market.

Craig Lindsay, an ONS researcher, said house prices tended to encourage people to start-up because they could use the additional capital to support their enterprise.

"It seems to enable people to move into self employment," he said, adding that the last house boom of the late eighties saw rising levels of self-employment in the UK.

Some of the strongest levels of self-employment were noted in banking, finance and insurance industries, sectors where professionals often start-up from redundancy packages left by City jobs.

Increases to the numbers of construction workers were mainly due to overall sector growth, including sharp gains for self-employed joiners and carpenters- increasing by 27,000 in the year to September 03.

There is also a growing army of entrepreneurial teachers in the UK, often also understood to start-up on redundancy pay.

Overall, the figures are welcome news for the Federation of Small Business, which has given its seal of approval to the rising numbers entering the self-employment sector.

Stephen Alambritis, FSB official, told the FT that people can now set up a company in almost a day but warns more could be done educating about the pitfalls of entrepreneurship.

Such online company formations have contributed to figures from Companies House, which show 396,339 new registrations in 2003 compared to 292,735 the year before.

 

11th October 2004

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