Government urged to back new social insurance system to support self-employed, when sick

PRESS RELEASE: Government urged to back new social insurance system to support self-employed, when sick

• There are 4.4 million self-employed people in the UK, making up 13 per cent of people in work.
• The average full-time self-employed worker loses 81 per cent of income if they are too sick to work.
• New Fabian Society report calls for £5 per month opt-out sickness insurance, run by government, to protect workforce health and productivity.

A new report Ill-prepared out today from the Fabian Society urges the government to introduce an opt-out sickness insurance system for the self-employed. The report, supported by trade unions Prospect / Bectu and Community, argues this would reduce insecurity, prevent the spread of disease, improve productivity and ease pressure on the NHS and welfare.

 The report ‘Ill-prepared: strengthening sick pay for the self-employed’, sets out a series of reforms to improve protection for self-employed workers when they are sick.

 It finds that many self-employed workers face low pay and high levels of insecurity. Average employee income is 14 per cent higher than for a self-employed worker, if both are working full-time. In the creative industries or gig economy, many are only self-employed due to a lack of employee jobs in the sector.

 New analysis finds self-employed workers face a 81 per cent income cut when they fall sick, if they work full time and are aged 25 or over. This is because they are forced to rely on government sickness benefits which pay very little – and younger workers lose even more, due to lower benefit rates.

 Trade unions representing the self employed have warned that this lack of sick pay puts workers in ‘desperate situations’ and can lead to ‘dangerous spirals’. The government must learn from the Covid-19 pandemic, which exposed the lack of adequate income protection for these workers, the report argues.

 As the government’s ‘make work pay’ agenda introduces welcome reforms to employees’ sick pay, the report urges the government to also support the self-employed.

 By the end of this parliament, the government should create a sick pay system for self-employed workers, paying out at the level of statutory sick pay. The system would cover all self-employed workers unless they opt-out.

 This would be funded both through contributions by self-employed workers and a levy on the businesses that engage them, the report says. To reach the level of statutory sick pay, this would cost self-employed workers just £5 a month and those who engage them only an additional 3p per hour.

 The report also argues that the government should:

• Ensure self-employed people don’t lose their universal credit when claiming sickness support such as income protection insurance payouts, employment and support allowance, or the proposed new unemployment insurance benefit.
• Allow self-employed single parents who can’t work due to sickness to continue to receive the childcare costs element of universal credit, as is currently the case for employees.
• Support the expansion of co-operative ‘bread funds’ – which allow self-employed workers to support each other if they become unwell.
• By the end of the next parliament, build a full system of employment insurance, with a combination of paid leave entitlements for employees and adequate state income replacement benefits for the self-employed.

 Fabian Society Senior Researcher and author of the report Eloise Sacares said:

“The employment rights bill introduces welcome reforms to sick pay for employees. But we must make sure the self-employed have similar protections.

 “Right now, the average self-employed worker stands to lose around 81 per cent of their income when illness strikes. This can be a massive cause of financial and emotional distress, increase the likelihood of falling into debt, and pressure individuals to keep working while sick – contributing to the spread of illness and lowering productivity.

 “A fairer sick pay system for the self-employed, would see workers and the businesses that hire their services sharing the cost of sick pay before the end of this parliament. And in the long-term, the state should work towards providing both employees and the self-employed with much stronger income protection during periods of illness.”

 Rt Hon Liam Byrne MP, Chair of the Business and Trade Select Committee said:

 “Too many of Britain’s self-employed live one illness away from financial ruin. A workforce that loses over 80 per cent of its income the moment sickness strikes is a workforce left dangerously exposed. That is not system for national resilience. That is fragility. We cannot prosper as a nation if millions are left without protection.

 “This report shows a better way: an affordable system of shared responsibility that protects workers, supports businesses, and strengthens the economy. Ministers should study these proposals carefully. And then they should act. Because a country that values enterprise must also value the security, dignity, and health on which that enterprise rests.”

 Head of Bectu, Philippa Childs said:

 “Freelancers hold up our creative industries, but too often they miss out on vital support that other workers benefit from.

 “The lack of an adequate sick pay regime for the self-employed means that our members are often put in truly desperate situations, knowing that periods of illness could cost them far more than just their health and lead to dangerous spirals.

 “None of us should have to choose between our work and our health, and we know that society and the economy benefit from people being able to get well and get back on their feet. A sick pay safety net for the self-employed is long overdue, and we hope the government look seriously at these proposals which will benefits millions of self-employed and freelance workers.”

 Community Union Head of Policy & Communications, Dominic Armstrong said:

 “The self-employed in the UK have been let down by 14 years of Conservative governments. These governments have consistently failed to tackle the key issues facing the ever-growing self-employed workforce within the UK.

 “Too many self-employed workers face challenging costs when they get ill, with a lack of support that is available to workers employed by companies. If we don’t take the steps soon to provide the UK’s ever growing self-employed workforce with the support they need, we are simply storing up problems for our economy and NHS in the future.

 “Labour has shown its commitment to workers through the Employment Rights Bill. It is now vital that these provisions, such as sick pay, are extended to the self-employed as well. A healthy and thriving self-employed workforce is good for our economy, but most importantly it is good for the self-employed workers who make up that workforce. Community Union hopes that the Labour government looks at these proposals and takes the steps needed to overturn 14 years of Conservative neglect of the UK’s self-employed workforce.”

 ENDS

 Notes

 Contact: Matthew Patterson, Media Consultant, Fabian Society,

1. +447920 104025
2. ‘Ill-prepared: strengthening sick pay for the self-employed’ is published by the Fabian Society. It was edited by Iggy Wood.
3. The Fabian Society is Britain’s oldest political think tank. Founded in 1884, the society is at the forefront of developing political ideas and public policy on the left. The society is alone among think tanks in being a democratically-constituted membership organisation, with around 7,000 members. It is constitutionally affiliated to the Labour party.