No changes to self-employed National Insurance contributions will be included in the raft of consultations the government announced today in its response to last summer’s Taylor Review. The review, triggered by public concerns about the rise of the “gig economy”, made over 50 recommendations for changes to government policy and employment status, as well as proposing changes that would mean higher NI payments for self-employed contractors, aiming to remove the perceived tax advantage for firms from contracting out work rather than employing workers.

For contractors, Taylor’s report raised the prospect that concern for poorly-paid workers being exploited by false self-employment would undermine the business and status of genuinely and happily self-employed professionals, today’s announcement comes as a relief for them. Mike Cherry, national chairman of the Federation of Small Businesses, described it as a watershed moment. “Of course we need to stamp out false self-employment. But what we definitely can’t have is the genuinely self-employed disadvantaged in the process,” he said.

IPSE, which represents contractors, freelancers and other self-employed professionals, also welcomed the news. “We were particularly pleased that of Taylor’s 53 recommendations, the one the Government has decided not to act on was his call for a move towards parity between employee and self-employed NICs,” said their CEO, Chris Bryce. Defending the decision from critics, including the Institute of Directors, Bryce pointed to the risks that self-employed workers take: “the self-employed currently pay a lower level of NICs because by providing flexible expertise for businesses across the UK, they take on much higher levels of business risk than their employed counterparts. Through their freedom and flexibility, the self-employed add huge amounts of value both to businesses and the wider economy. They should not be punished for this with tax rises.”

Many of the policy proposal brought forward by the government today are aimed at protecting those on zero hours contracts, alongside “unwilling” self-employed people, typically in industries such as delivery. People in these roles are frequently classed as workers under employment law and entitled to benefits such as holiday pay. The government proposals would require firms to actively inform these workers of their rights.

For those who are genuinely self-employed, initiatives to improve pension provision and ongoing training were broadly welcomed. IPSE though expressed disappointment that support for the self-employed did not go further. Bryce cited the example of benefits for new parents. “The one area here where the Government’s response is lacking is parental benefits. Although the Taylor Review recommended improved parental benefit provision for the self-employed, the Government does not seem to have taken this forward”, he said. “It is unjust that while employees can receive both paternity and maternity pay, self-employed mothers only receive a much smaller Maternity Allowance and self-employed fathers get no benefits at all. The Government can add to the many positive commitments it has made in response to the Taylor Review by consulting on ways to improve parental benefit provision for the self-employed.”

While today’s announcements generally brought positive news for contractors, caution will still be needed. With trades unions agitating for restrictions on outsourcing and use of self-employed workers, designed to protect the vulnerable, the genuinely self-employed will need to make sure the government doesn’t undermine the contracting industry.

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