The Government must work harder to create the right conditions in which entrepreneurs can flourish, a leading business group has said.
Against a background of rising unemployment, the Federation of Small Businesses (FSB) has urged the Government to establish the right to decide to be self-employed.
With the jobless total at 2.5 million and giving every appearance of climbing still further, the FSB voiced worries that the Government’s focus has been too narrowly concentrated on creating new employment opportunities within existing businesses.
The FSB thinks that greater emphasis should be laid on cultivating self-employment.
In its new report, Self Employment: Stimulating Economic Growth, the FSB argued the case for setting up a register that allows the self-employed to define their status.
Currently, many self-employed workers are obliged to prove they are indeed self-employed and are subject to regular check-ups, the FSB said.
In the view of the FSB, the present system is both overly complex and unfair, taxing self-employed people as though they are employees but without compensating them with the legal benefits to which employees are entitled.
The paper backed a regime that would see HM Revenue and Customs (HMRC) checking declarations of self-employment FSB within a six-month timeframe in order to determine whether the entrepreneur concerned meets the criteria for self-employment.
Once their status has been accepted, the applicant must be considered as self-employed until further notice.
Given that the self-employed contribute £21 billion in added value to the UK economy every year, the FSB expressed concern that too much of a priority is being assigned to increased recruitment by employers.
To support and encourage self-employment, the FSB set out a series of measures it believes the Government should take.
These include, among others, ensuring that access to the New Enterprise Allowance Scheme is more widely available so that applicants with a viable business plan can apply before six months; that the benefit system does not disadvantage the self-employed; that responsibility for self-employment and entrepreneurship forms part of the Small Business Minister’s portfolio; and that there is a statutory definition of self-employment.
John Walker, the FSB’s national chairman, commented: “The public sector cuts are really starting to bite and unemployment looks set to rise even higher. The Government has so far concentrated on creating employment opportunities, but they also need to help nurture an environment of entrepreneurialism. The Chancellor’s Budget provides the perfect opportunity for the Government to put a spotlight on self-employment and help break down the barriers to entrepreneurship.
“By extending the New Enterprise Allowance scheme and establishing the right to decide to be self-employed, the Government will send the right message to future entrepreneurs and allow self-employment to thrive. The self-employed people of today will be the wealth generators and job creators of tomorrow.”