Slump in self-employment highlights gaps in support and will result in skills shortage, experts warn

The number of self-employed people in the UK in Q3 fell by 240,000 when measured against the same period last year, the latest Office of National Statistics (ONS) figures show. This decline is larger than the 238,000 drop seen in Q2 and has put UK self-employment figures back to a level not seen since 2015, says trade body IPSE, who also said it highlights the “devastating impact of the gaps in government support”. 

Derek Cribb, CEO of IPSE, said: “We see that the number of self-employed has fallen to 4.56 million, wiping out the growth of the last five years. This shows the devastating impact of the gaps in government support for the self-employed during the first wave of the pandemic.”

‘Red flag in confidence’ among self-employed

Cribb added: “The government has not only failed to plug the gaps in support that caused this decline: it has also reduced the support for eligible self-employed people. In locked down areas, the self-employed can claim only 20 per cent of their earnings from government, compared to 67 per cent for employees – an even more glaring disparity than before.”

IT contractor, Philip Ross, concurred: “To see self-employment figures falling is quite disturbing – people seem to be going for the security of paid employment over the opportunities that self-employment offers.

“As a contractor, I am pleased I have work at the moment, but it has made me anxious about what I will do when my contract ends. There is a real red flag in confidence at the moment among the self-employed about finding work.”

Meanwhile, campaign group BackinBusiness has warned that the falling number of self-employed people could result in a flow of skills crisis.

Freelancers to face ‘long, cold and hungry winter’ ahead

Freelancers and contractors provide businesses with access to vital skills on a short-term basis that can enable them to grow, innovate and create jobs, which experts have said will be key to the UK’s economic recovery. 

Despite this, an estimated 2million people who work through their own limited company have received little financial support during the crisis.

Simon McVicker, director of public affairs, policy and communications at BackinBusiness, said: “These figures are not surprising. Self-employed people have been unfairly left behind when it comes to financial support. It is no wonder they are leaving the sector to find permanent roles.

“[…] If we don’t look after those self-employed people we will face a flow of skills crisis. Freelancers, contractors, the self-employed – call them what you will – are the people who will supply the skills for recovery and are vitally important to our enterprise economy. But they face a long, cold and hungry winter if the government does not step up and offer support.”