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House of Commons Hansard
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09 January 2017
Volume 619
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2. What recent assessment he has made of trends in the level of self-employment. [908056]

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The Government support those who aspire to be their own boss. The number of self-employed people in the UK labour market has increased by nearly 800,000 since 2010 and by 129,000 in the last year alone. We continue to monitor and review the impact of self-employment on the wider labour market and benefits system.

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A Citizens Advice report in August 2015 said that there were as many as 460,000 people in bogus self-employment, with a cost of hundreds of millions of pounds in lost revenue. Is it not about time that the Secretary of State, rather than hounding disabled people, started tackling exploitative companies, many of which have lucrative public sector contracts, that are forcing people down the self-employment route?

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The hon. Gentleman is right that there should be no exploitation of workers, particularly through forced self-employment, but he will have noticed that the Government are on the case, having set up the Matthew Taylor review specifically to explore alternative employment structures and to consider how employment rules need to be altered to keep pace with changes in how people work in the modern economy. If, however, he is characterising the growth of self-employment as harmful to the jobs market, I would disagree. The new enterprise allowance is proving very successful at making sure that people who want to can work for themselves. I am sure that he, like me, welcomes the fact that in his own constituency self-employment is up by 7% since 2015, and that the claimant count in the last year has fallen by 12%.

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Happy new year, Mr Speaker.

Does my right hon. Friend agree that rather than denigrating people who become self-employed, we ought to be celebrating the fact that they are prepared to take a risk that many others are not? Will he make it as easy as possible for them to take on new employees and become employers themselves?

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I completely agree with my hon. Friend. I have already mentioned the new enterprise allowance, which is designed specifically to help people to stop claiming benefits, set up their own businesses, and then carry on and employ others in a way that I hope everyone on both sides of the House would welcome. This scheme is proving extremely successful. A survey published last year showed that 80% of businesses that started with the new enterprise allowance were still trading, which makes it more than twice as effective as the old jobseeker’s allowance in terms of keeping people off benefits, so it is doing good work.

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Happy new year, Mr Speaker.

Will the Secretary of State ensure that there is much closer co-operation between the single fraud investigation service and local authorities on the prosecution of abuse, including on self-employment status, so that councils can be confident that when they report possible scams, including by employers, they are properly followed up?

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I am happy to pass on the right hon. Lady’s message to the relevant bodies—councils and the fraud investigation service. Of course, while self-employment is a good thing, fraud involving any kind of employment is wrong, so clearly we must get ever more effective at combatting it.

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I am sure that the Secretary of State agrees that online opportunities are giving many people the chance to set up a microbusiness. Does he agree that schemes such as the pop-up shop initiative that Torbay Council ran to help internet micro-retailers to take their first step on to the high street are the kind of thing we should be looking at in terms of self-employment, rather than some of the negative impressions we hear from the Opposition?

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I very much agree, and I particularly welcome Torbay’s pop-up shop experiment. I had such a scheme in my constituency a couple of years ago, and it did indeed prove successful in allowing microbusinesses to start and to develop into larger businesses, thereby creating more employment and wealth, so I am delighted to hear what is happening in Torbay.

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Happy new year, Mr Speaker.

Many self-employed people do not earn a great deal of money and will be losing out from cuts to tax credits and the introduction of universal credit. Should not the Government be supporting those who become self-employed?

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I am sorry, Mr Speaker, that I have not yet wished you happy new year publicly—I have done so only privately—as clearly that is becoming a compulsory part of this question session. I now wish you happy new year publicly.

I do not agree with the hon. Gentleman’s characterisation of self-employed earners and universal credit. Universal credit reduces poverty by making work pay. It supports claimants to enter work, and then to be able to keep some of their benefits while they are at work if they are not receiving or earning very much money. Universal credit actually does the opposite of what the hon. Gentleman says—it helps people who are getting into work for the first time.

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But is not the biggest trend in self-employment the massive increase in women who are self-employed, with 70% of those newly self-employed in 2014 being women? Yet self-employment is the area where the wage gap is biggest. According to the OECD, self-employed men earn an average of £17,000 a year, but average earnings for self-employed women stand at £9,800. We know from the Department’s figures that women are less likely to access loans and so forth for self-employment. What is the Secretary of State doing to deal with gender inequality in self-employment?

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I agree with right hon. Lady that gender inequality and pay generally are issues that we need to do more about, and self-employment is one part of that. That is why we have introduced measures such as the new enterprise allowance—

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Only men take it up.

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The right hon. Lady says that only men take it up, but that is patently not true.

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It is disproportionately men.

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If the right hon. Lady is saying that it is disproportionately men who take the allowance up, I would urge more potential women entrepreneurs to take it up. We are improving the new enterprise allowance later this year to make sure that the mentoring and advice goes on for longer so that more people—men and women—will be able to benefit from the freedom of being able to start, set up and run their own business, which millions of people want to do.

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A happy new year to you, Mr Speaker, and to everyone.

Resolution Foundation data show that self-employment accounts for 81% of the net change in employment since 2008. The Government’s plans to abolish class 2 national insurance contributions could leave low-income, self-employed women paying five times as much to access maternity allowance. Given that nearly 2 million self-employed workers earn less than the national living wage, why have the Government decided to make social security support harder to access for so many of Britain’s entrepreneurs?

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They have not. Let me update the hon. Lady’s figures, which I know she has quoted before. Since 2010, 29% of the increase has been in self-employment, and in the last 12 months—

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Since 2008.

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I know about 2008; I am giving more up-to-date figures, as I said.

Over the past year, 38% of the increase in employment has been in self-employment, so the figures are not as the hon. Lady suggests. As I said in answer to the hon. Member for Torfaen (Nick Thomas-Symonds), the whole point of universal credit is that people, whether it be through self-employment or employment, are able to keep their income. We have reduced the taper so that less of their income is lost when they go up the earnings scale and get into work. I am afraid that the hon. Lady simply misunderstands what is happening in the welfare system.