Rob Light is Chair of IPSE (the self-employment association) and a former Conservative Councillor.
Rachel Reeves’ Budget will have left a sour taste in the mouth of business. More taxes on work (and ultimately, on workers) and nothing to inspire the kind of growth our economy desperately needs. It’s a far cry from Labour’s pro-business posturing in the run up to the election.
The Conservative party – with a new leader in Kemi Badenoch, a reorganised top team, and freedom from the pressures of governing – now has an opportunity to reassert itself as the political home of entrepreneurship. But to do that, it must first face up to its failure to ally itself with the bedrock of Britain’s business population: the self-employed.
As a business owner and a former councillor of 30 years, I’ve seen first-hand just how misunderstood the self-employed are in the public sector, as well as the impact this has on policy. This can only be overcome by determined political leadership from people who know what makes the self-employed tick, and a belief that government should encourage and reward them for the risks they take.
But this is the opposite of what Conservative governments have delivered over the past decade. Stringent new regulations on hiring freelancers have turned contract roles into fraught affairs for all involved; the tax burden on company owners has been lifted to new heights through raids on ‘unearned’ income; and sole traders are set to be roped into sending as many as five separate tax reports to HMRC each year under digital tax reforms.
The Conservatives in government turned their back on one of its strongest natural support bases, and it paid the price on election day. If Badenoch wants to renew the party, winning back our support must be near the top of her to-do list.
She has made her position clear: the best way to support small businesses is to roll back the barriers that stand in their way – barriers that almost invariably come in the form of needlessly complex tax rules and disproportionate regulation.
There are, in my view, some commercial barriers that a pro-active government can help to dismantle. The scourge of unpaid and overdue invoices is one example of a barrier to success for the self-employed that government should take bold action on, by putting a stop to the practice of treating small business’ unpaid invoices as a line of credit.
But among the freelancers IPSE surveys each quarter, it is without exception tax policy and hiring regulations that rank in the top three factors impacting business confidence.
During her leadership campaign, Badenoch chose not to get into the weeds of policy; after all, it worked well enough for Sir Keir Starmer. Instead, her emphasis has been on the values she believes the Conservative Party should embody.
But having been on the receiving end of a series of tax raids and legal blockades on their ability to win work, the self-employed will want to see that the Conservatives are willing to acknowledge the mistakes they made in government.
As a party with low taxation as a key value there is no better way to re-state this and reclaim the mantel of Thatcherism than by policies which reduce the tax burden on the self-employed, the conservative bedrock of entrepreneurship.
They must use their opposition platform to distinguish themselves from Labour, who are yet to prove that their approach to self-employment will be positive or differ from the previous government. Reeves’ Budget already offers some opportunity to do this.
For instance, we learned that the highly contentious ‘Making Tax Digital’ reforms for sole traders will be extended to those earning as little as £20,001 in self-employment. This will drag low-earners, part-timers, and new starters into a time consuming and potentially costly new tax reporting regime. It’s exactly the sort of thing for which a Conservative opposition could – and should – hold government to account.
Similarly, freelancers forced to work via an umbrella company due to IR35 tax reforms – ones introduced by the Conservatives – are now reeling from Labour’s planned Employer National Insurance increase, the cost of which will be immediately passed onto them.
Badenoch can start to make things right for the hundreds of thousands of freelancers and hirers forced to deal with the impact of IR35 by supporting calls from the CBI and IPSE, which I Chair, for a complete rethink on what the now Shadow Chancellor Mel Stride previously described as the “dreaded IR35”.
More than anything, what the self-employed need is an opposition party that is firmly in their corner, that champions entrepreneurship, and pushes the Government to make being in business an aspirational and sustainable choice for those who want to take it.
Badenoch can and must be the person to give the millions of self-employed business owners a voice in Parliament again. It’s something they didn’t have under previous Labour and Conservative governments, which were able to pursue the erosion of the benefits of self-employment without much of a fight in the Commons.
Rob Light is Chair of IPSE (the self-employment association) and a former Conservative Councillor.
Rachel Reeves’ Budget will have left a sour taste in the mouth of business. More taxes on work (and ultimately, on workers) and nothing to inspire the kind of growth our economy desperately needs. It’s a far cry from Labour’s pro-business posturing in the run up to the election.
The Conservative party – with a new leader in Kemi Badenoch, a reorganised top team, and freedom from the pressures of governing – now has an opportunity to reassert itself as the political home of entrepreneurship. But to do that, it must first face up to its failure to ally itself with the bedrock of Britain’s business population: the self-employed.
As a business owner and a former councillor of 30 years, I’ve seen first-hand just how misunderstood the self-employed are in the public sector, as well as the impact this has on policy. This can only be overcome by determined political leadership from people who know what makes the self-employed tick, and a belief that government should encourage and reward them for the risks they take.
But this is the opposite of what Conservative governments have delivered over the past decade. Stringent new regulations on hiring freelancers have turned contract roles into fraught affairs for all involved; the tax burden on company owners has been lifted to new heights through raids on ‘unearned’ income; and sole traders are set to be roped into sending as many as five separate tax reports to HMRC each year under digital tax reforms.
The Conservatives in government turned their back on one of its strongest natural support bases, and it paid the price on election day. If Badenoch wants to renew the party, winning back our support must be near the top of her to-do list.
She has made her position clear: the best way to support small businesses is to roll back the barriers that stand in their way – barriers that almost invariably come in the form of needlessly complex tax rules and disproportionate regulation.
There are, in my view, some commercial barriers that a pro-active government can help to dismantle. The scourge of unpaid and overdue invoices is one example of a barrier to success for the self-employed that government should take bold action on, by putting a stop to the practice of treating small business’ unpaid invoices as a line of credit.
But among the freelancers IPSE surveys each quarter, it is without exception tax policy and hiring regulations that rank in the top three factors impacting business confidence.
During her leadership campaign, Badenoch chose not to get into the weeds of policy; after all, it worked well enough for Sir Keir Starmer. Instead, her emphasis has been on the values she believes the Conservative Party should embody.
But having been on the receiving end of a series of tax raids and legal blockades on their ability to win work, the self-employed will want to see that the Conservatives are willing to acknowledge the mistakes they made in government.
As a party with low taxation as a key value there is no better way to re-state this and reclaim the mantel of Thatcherism than by policies which reduce the tax burden on the self-employed, the conservative bedrock of entrepreneurship.
They must use their opposition platform to distinguish themselves from Labour, who are yet to prove that their approach to self-employment will be positive or differ from the previous government. Reeves’ Budget already offers some opportunity to do this.
For instance, we learned that the highly contentious ‘Making Tax Digital’ reforms for sole traders will be extended to those earning as little as £20,001 in self-employment. This will drag low-earners, part-timers, and new starters into a time consuming and potentially costly new tax reporting regime. It’s exactly the sort of thing for which a Conservative opposition could – and should – hold government to account.
Similarly, freelancers forced to work via an umbrella company due to IR35 tax reforms – ones introduced by the Conservatives – are now reeling from Labour’s planned Employer National Insurance increase, the cost of which will be immediately passed onto them.
Badenoch can start to make things right for the hundreds of thousands of freelancers and hirers forced to deal with the impact of IR35 by supporting calls from the CBI and IPSE, which I Chair, for a complete rethink on what the now Shadow Chancellor Mel Stride previously described as the “dreaded IR35”.
More than anything, what the self-employed need is an opposition party that is firmly in their corner, that champions entrepreneurship, and pushes the Government to make being in business an aspirational and sustainable choice for those who want to take it.
Badenoch can and must be the person to give the millions of self-employed business owners a voice in Parliament again. It’s something they didn’t have under previous Labour and Conservative governments, which were able to pursue the erosion of the benefits of self-employment without much of a fight in the Commons.