This is a guest blog from David Rutley, MP for Macclesfield.
A little-appreciated fact is that the vast majority of UK businesses currently employ no one at all. A year ago, then, I secured a debate in Parliament about support for first-time employers. We had often discussed in the House ways to increase employment, or support small businesses, or support large businesses for that matter. What had less often been done, was to talk about the very smallest businesses—the one-person companies, the sole traders, the freelancers. Parliament also tended to debate more often those issues that affect existing businesses, rather than those that are yet to exist. But today, with 4.5million people now self-employed, there is an ever-growing political realisation of the economic importance of the self-employed, particularly the first-time self-employed whom we would like to become first-time employers. The new 'Everyday Employers' report from the RSA is therefore a particularly timely contribution to a public debate that needs to be had.
To spread opportunity, we need more people – from all backgrounds – to take on the roles of entrepreneur and employer. Where people are new to them – where there is no family history of business, or no network of contacts and friends who have been there, done that – we need to break down the tangible and cultural barriers – what Everyday Employers calls the pragmatic, mindset and cognitive barriers – to starting something new. First-time entrepreneurs and first-time employers should be as important to us as first-time homeowners and first-time shareholders continue to be in a more socially mobile Britain. The current “self-employment revolution” is fired by the benefits of being self-employed: the flexibility, the pursuit of your own dreams, the dignity and freedom. We need to find ways of supporting more people in achieving these positive aims.
Importantly, it is the new entrepreneurs, the small-scale self-employed, who are more likely than established companies to take on workers from the ranks of the unemployed, the excluded or non-active who often find the formalised application processes, let alone set working practices, of established firms rather difficult to adapt to. Furthermore, people who get jobs with small firms often learn from their hands-on experience there to set up their own small firm after a few years’ experience. It is a virtuous circle of the upwardly mobile entrepreneurs helping new entrants into the labour market and then into entrepreneurialism itself. 74% of those becoming self-employed with employees come from the self-employed who previously had no employees – a further 13% comes from employees who had previously been working in micro-businesses. It is right then, that the Treasury has focused help on smaller enterprises in the current recovery. In Macclesfield alone, 1,700 businesses have benefitted from the £2,000 National Insurance Employment Allowance that aims in part to encourage the smallest firms to take on their first employee.
Self-employment may not be right for everyone, but if we can persuade more of those in it to take on an employee, it can certainly work for us all.
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