Small Talk: Self-employed need targeted help. They can’t be treated as if they’re all the same

Mr Corbyn’s suggestion that it might be possible to offer self-employed workers access to statutory sick pay and maternity pay will resonate with many

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Who are the self-employed? When Jeremy Corbyn spoke last week of his desire to support the 4.5 million workers in the UK who now officially have this status, it wasn’t necessarily clear who he was thinking of. Some in Labour saw their new leader’s words as evidence that the party retains its interest in aspiration and entrepreneurship. Others talked in terms of vulnerable workers pushed into self-employment because they can’t find jobs.

Such divergent interpretations partly explain why self-employed workers, despite their growing number, have routinely been overlooked by policymakers of every political persuasion. This is a group spanning everyone from some of the richest people in our society to those barely scratching a living, from small business owners running fast-growing enterprises to others simply taking any casual work they can find.

It does not make any sense to lump all of these people together, but equally their diversity does not excuse the failure to address their issues individually and separately – besides which, there are some policies that could be applied broadly. 

For example, Mr Corbyn’s suggestion that it might be possible to offer self-employed workers access to statutory sick pay and maternity pay will resonate with many. Even among those who don’t think of themselves as vulnerable, it rankles that if they can’t work because they’re sick or they want to take time out for childcare, no support is available.

Extending that support would not be cheap, however. While the Government no longer funds statutory sick pay in most cases, taxpayers would be on the hook for payments to the self-employed, as well as for maternity pay, where employers do get help with the cost.

For that reason, there might be a price to pay. The self-employed make lower national insurance contributions, for example, so there would be a credible case for asking them to pay more if they are entitled to take more out of the system.

Then there is the question of pensions. The auto-enrolment reforms mean that within a year or two, every single worker will be able to claim pension contributions from their employer, as long as they’re making contributions of their own. The self-employed will get no such assistance – and that might be something to address in the Government’s continuing review of pension tax relief.

It’s worth pointing out that the Government is already investigating the obstacles and opportunities for the self-employed, in a review that is being led by Julie Deane, founder of the Cambridge Satchel Company. It has a brief to consider many of the issues now being highlighted by Mr Corbyn. It will also look at the difficulties faced by many self-employed workers in obtaining a mortgage on competitive terms.

All of these debates are worth while and have the potential to provide greater security and peace of mind. However, let’s not make the mistake of targeting all self-employed workers as a single distinct group. If we do so, the policy responses will be blunt – too generalised to help those who need assistance and simply irrelevant to many others.

Look beyond the usual suspects for funding

Financiers offering alternative forms of funding to small and medium-sized enterprises are on target to break through the £5bn barrier by next month, new research on the sector suggests. 

Alternative finance providers had collectively lent £4.36bn by the end of August according to Fleximize, one such lender, and are now supplying funding worth an average of £212m a month.

Fleximize’s definition of alternative finance spans concepts such as crowdfunding, revenue-based loans, pension-led funding and invoice discounting. Many of these services have grown rapidly during a period when bank lending to small and medium-sized enterprises has shrunk. Fleximize said that over the 18 months to the end of last year, SME lending was down by an average of  3.2 per cent each month – but now there is a compelling alternative to traditional forms of funding even where these are available.

“Although banks have become less willing to lend to SMEs, the funding options open to businesses have never been more flexible and diverse,” argues Max Chmyshuk, the founder and managing partner of Fleximize. “I would encourage every small business seeking funding to do a bit of research on the web and learn about these alternatives.”

Small wonder – dividends are flowing on AIM

The stock market’s smallest companies are not normally expected to be generous payers of dividends to shareholders, who generally understand that these are growing businesses that may need to plough back earnings into investment. 

However, new research reveals there has been a sharp increase in the number of companies listed on AIM, the junior stock market, that do pay a dividend.

Options trader Banc De Binary said 59 of AIM’s 100 largest companies were now making payments, up from 51 last year and only 41 in 2013. The researchers said that many AIM constituents are now mature and profitable enough to pay dividends.

“AIM has always been a market for more adventurous investors to back smaller firms they think will grow rapidly. But as the market matures, more of them are offering the potential for yield too,” says Oren Laurent, the founder of Banc De Binary. “Some of the larger AIM companies have now become reliable dividend payers, with progressive dividend policies in place.”

Small Business Person of the Week: Ross Marshall, Founder, The Palatinate Group

“I started our business with my co-founder Andrew Harding in 2005. We were in our early 20s, we wanted to start our own business, and we were both passionate about travel. We’d played golf together at university and we saw an opportunity to sell golfing holidays online; it was a sector where no one had really developed a digital approach. We scraped together the money to build our business through loans and credit card debt, and the original idea was just to give ourselves three years and to see if we would survive. We set ourselves some simple and achievable targets.

“Yourgolftravel.com, our consumer brand, was the first online golfing breaks holiday in the UK; we were fortunate in that the Ryder Cup in 2006 enabled us to sell some very big corporate deals. At the end of our first year, we were showing a small profit and we were confident sales were increasing.

“Other opportunities came along. For example, we’ve worked hard to grow our female customer base, but we were also seeing lots of demand from non-golfing partners of our customers who wanted something to do themselves; that led us to launch Spabreaks.com in 2008. More recently, we’ve branched out into areas such as horseracing and we’re about to launch a project in the cycling holidays sector.

“The business has grown very rapidly. In 2005 our turnover was £35,000; this year we’re on target for sales of more than £65m, which will make us the largest golf travel company in the world.” 

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