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UK's self-employed community contracted by 5% in 2020

5 January 2021

The coronavirus pandemic has left the self-employed sector "undermined and diminished" according to the latest research by freelancer body IPSE.

The 2020 annual review of the UK freelance sector by the Association of Independent Professionals and the Self-Employed (IPSE) has found that the number of solo self-employed in the UK fell by 5% in 2020 compared to 2019 - reversing a long period of growth for the sector.

The total number of solo self-employed (excluding those who have others working for them) has fallen from 4.6 million in 2019 to 4.4 million in 2020. Until now the sector had been growing continuously for 11 years - by a total of 40%.

The decline has been uneven across the self-employed landscape, with the sharpest falls among 18-29-year-olds (-11%), less highly skilled male self-employed (-11%) and disabled self-employed people (-8%). There was also a sharp drop among 40-49-year-olds (-7%).

There has also been significant variance across the UK, with the sharpest falls (all by 10%) in Yorkshire and the Humber, the East of England and Wales. The only increases were in the East Midlands (+4%) and Northern Ireland (+17%).

Alarmingly, the number of solo self-employed accessing Universal Credit has risen by 341% from 47,000 in 2019 to 206,200 in 2020. Some of these are likely to be those that could not access the government's Self-Employment Income Support Scheme (SEISS) because they had not been self-employed for long enough. The findings show that 15% of all freelancers started working for themselves between 2019 and 2020 - equating to 591,000 people who have not been able to access SEISS.

IPSE said: "The fact that this and other significant groups such as sole directors of limited companies have been excluded from government grants may have played a part in the enormous increase in self-employed people accessing Universal Credit".

Looking at specific occupations, the number of people working in the biggest solo self-employed occupational group - construction and building - dropped by 8%. Road transport driver numbers fell by 20% to 261,000 and numbers in agricultural trades fell by 18% to 175,000.

Among highly skilled freelancers, the biggest freelancer group - skilled artistic, literary and media occupations - remained roughly stable at 16% of the freelance sector. The second-biggest freelancer occupational group, managers and proprietors, grew by 2%. The third-biggest group, teaching and education professionals, shrank by 11%. There were sharp declines in the number of public service professionals (-29%), managers and proprietors in hospitality and leisure services (-18%) and engineering professionals (-17%).

Derek Cribb, ceo of IPSE, said: "2020 has left [the self-employed sector] pockmarked and scarred, with hundreds of thousands dropping out of self-employment and into the benefits system.

"Aside from a smattering of positive stories, there has been decline right across the solo self-employed sector. This is especially worrying to see now because historically, it has always been the self-employed who have driven the economy in hard times, using their flexible skills to kickstart businesses and new projects.

"As with so many issues, however, 2020 has proved different. The circumstances of lockdown and the gaps in support for the self-employed have left the sector undermined and diminished."

IPSE is calling for the creation of a Freelancer Commissioner post to champion the interests of the UK's self-employed and it is urging the government to look again at support for excluded groups including sole directors and the newly self-employed.

Written by Rachel Miller.

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