Home Business News A year after the first lockdown, self-employment has seen ‘a shattering financial loss’

A year after the first lockdown, self-employment has seen ‘a shattering financial loss’

by LLB Finance Reporter
23rd Mar 21 10:10 am

A year after the first lockdown the Association of Independent Professionals and the Self-Employed (IPSE) has responded to the latest ONS data saying self-employment has suffered a “shattering financial loss”, leading to one in eight leaving self-employment and many more left “desperately struggling”.

The latest ONS report, released this morning, shows that the total number of self-employed people has fallen by 660,000 compared to the same time last year – equivalent to more than one in eight self-employed people leaving the sector.

IPSE research has also shown the devastating impact of the pandemic on the finances of those freelancers who remain – particularly the more than 1 million who are still excluded from government support. 1.05 million freelancers – more than one in five – have had to take on credit card debt to get by, while one in seven (14%) have had to use their overdrafts. Meanwhile more than a quarter (27%) have had to use up all their savings.

There has also been a staggering 341 per cent increase in the number of self-employed people claiming Universal Credit during the last year: from 47,000 to 206,200.

The ONS data today also shows the scale of the decline in both male and female freelancers: a fall of 462,000 in the number of male freelancers compared to 198,000 female freelancers. This is in-line with IPSE research from last year[3] that suggested the sharpest drop was among the male self-employed (an 11% drop in less highly skilled self-employed and a 3% drop among the highly skilled).

IPSE research from earlier in the pandemic also suggests where the biggest drops by age have come: the biggest drop – 11 per cent – among 16-29-year-olds. The second-biggest drop was 7 per cent among 40-49-year-olds.

There was also a particularly worrying drop of 8 per cent in the number of disabled self-employed people – a group that had seen continuous growth over the last decade.

The same research showed the rates of decline across the UK. It found there were moderate drops across the UK, with the sharpest – 10 per cent – in Yorkshire and the Humber, the East of England and Wales. The only regions that saw increases were the East Midlands (+4%) and Northern Ireland (+17%).

Derek Cribb, CEO of IPSE said, “The latest ONS figures, which show 660,000 people have left self-employment in the last year, demonstrates the devastating impact of the pandemic on the sector. In the year since the first lockdown, the self-employed have suffered a shattering financial loss – especially the 1.5 million who were excluded from government support for much of this time. A large proportion of this group – particularly those working through limited companies – are also still excluded, with devastating financial consequences.

“The pandemic has had a disproportionately damaging impact on the self-employed sector in the last year, with one in eight being driven out – into employment or out of work altogether – and many more struggling with severe financial loss. More than one in five have had to take on credit card debt to get by, while one in seven have gone into their overdrafts and more than a quarter have burned through all their savings. And we have heard many much sadder stories from individual excluded freelancers. These are drastic problems that freelancers will be struggling with for years to come.

“One of the crucial causes is the complexity of self-employment in the UK: the excessive number of ways people can be freelance – from limited companies to PAYE freelancers. This systemic complexity then led to terrible individual consequences as the government struggled – and in many cases failed – to distribute support to the various and very different self-employed groups.

“We continue to call on the government to look again at excluded groups while there are still damaging restrictions in place. Looking to the future, though, we also urge the government to give the disproportionately hit self-employed sector the time and space to recover – with economic stimulus and not tax grabs. We therefore also continue to urge the government to delay and rethink the coming changes to IR35 taxation. Instead of such damaging changes, we call on the government to take a longer-term view and initiate a full review of how self-employment and self-employed taxation work in the country – with a view to simplifying this harmfully complex system.”

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