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Volume 129: debated on Thursday 10 March 1988

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To ask the Chancellor of the Exchequer what has been the increase in self-employment in the British economy since 1979.

Self-employment fell between 1974–79, but has since risen in every year. The total increase since 1979 is nearly 1 million.

Does my right hon. Friend agree that the striking increase of more than 50 per cent. shows that substantially more people — [HON. MEMBERS: "Reading".]

Order. I think that the hon. and learned Gentleman is referring to his notes.

Does my right hon. Friend agree that the striking increase of more than 50 per cent. in the number of people in self-employment shows the substantial interest of many people in the freedom and independence provided by self-employment? Will he agree to ensure in the monitoring work being carried out by his Department that no pressure is exerted on self-employed people to become employed and that no one is deterred from self-employment by pressure from his Department?

On the first point, I entirely agree with my hon. and learned Friend. On the substantial point about the Inland Revenue, I note my hon. and learned Friend's concern, but whether an individual is self-employed is a question of fact and general law. Essentially, the test is whether someone is in business on his own account. If he is, the Revenue will treat him as self-employed.

The enterprise allowance scheme has allowed a number of people to become self-employed. However, my research shows that a number of them could have survived in business had an allowance been available to them in the second and even in the third years. Some are failing unnecessarily at the end of the first year. Will the Minister consider examining the enterprise allowance scheme with a view to funding people for a second year?

I note the hon. Gentleman's point. I think he will agree that the enterprise allowance scheme has been very successful. The number of entrants has increased by about 70 per cent. since 1985. Of those who remained on the scheme for more than a year, more than 60 per cent. were still trading two years later and in most cases had employed further staff by then. It has been an exceedingly successful scheme.

Does my right hon. Friend agree that it is a sign of the health of our economy that more and more people are self-employed, whereas under the last Labour Government the self-employed represented a declining proportion of the total?

My hon. Friend is quite correct. Self-employment has grown in every region in the country in recent years, whereas, as my hon. Friend said, it fell between 1974 and 1979. It now stands at its highest level since 1950.