New research from the Association of Independent Professionals and the Self-Employed (IPSE) has suggested that the contribution of the self-employed sector to the UK economy fell by an estimated £25 billion last year. In total, the sector was reported to have contributed £278 billion to the UK economy in 2022, down 8 per cent compared to 2021.
The IPSE called the figures, released as part of its latest “Self-Employed Landscape” report, a “wake-up call” to the UK government, arguing that it should review policies which it said were detrimental to freelancers, including IR35 legislation and the VAT threshold.
The report, which draws on data from the ONS’s Labour Force Survey as well as the government’s own estimates of business population and turnover, found that, despite the drop in economic contribution, the UK’s freelance population remained stable at 4.1 million self-employed people in 2022.
The report also highlighted some positive trends within the industry, with the number of disabled self-employed people continuing its trend of yearly growth since 2013, during which time it has increased 42 per cent. The number of working mothers in self-employment also continued to grow, increasing 55 per cent since 2008 and now comprising around 13 per cent of the UK’s solo freelance workforce.
The average age of solo self-employed people in UK increased by one year from 2021 and now stands at 48 years old. The age demographic with the highest growth last year was the 60+ bracket, which increased 7 per cent and now comprises 21 per cent of the solo self-employed workforce.
IPSE Director of Policy Andy Chamberlain said: “Whilst the self-employed population has been resilient at best – and stagnant at worst – it is very concerning that the sector’s economic contribution has fallen by £25bn, pointing to a less rewarding operating environment for solo business owners.”
“This research should act as a wake-up call to government. Policies which are detrimental to the sector, such as the IR35 rules and the VAT threshold acting as a cap on activity, should be reviewed.”
“We know that self-employment is an attractive option for key groups, particularly older workers; if government is serious about growing the economy and tempting them out of economic inactivity, it should be doing all it can to make self-employment an attractive and aspirational option.”
