Self-employment surges in UK cities but too many lack access to training

By Alasdair Hutchison
Political Correspondent

By Christina McLean
News Correspondent

There has been a post-financial crisis boom in the number of people becoming self-employed in UK cities, new research has revealed

According to the report by Centre for Cities, which uses new data from Her Majesty’s Revenue & Customs (HMRC), self-employment in urban areas has risen by 44 per cent since 2008, outpacing the national average by almost 25 per cent.

The study found that while growth in self-employment between 2008 and 2012 was largely concentrated within Greater London and the South East, increases since then have been more evenly spread across the country.

per cent rise in self-employed people in Luton

In cities such as Northampton and Luton, self-employment has grown by as much as 62.8 per cent and 65.7 per cent respectively, between 2008 and 2016.

However, the report warns that too many self-employed people lack access to training and risk being stuck in low-skilled roles that are vulnerable to automation. Nearly 80 per cent of urban self-employment is found in mid and lower-skilled industries such as construction, transport and personal services.

The problem is particularly acute in cities with weaker economies. In Burnley, for instance, the number of self-employed people grew by almost 50 per cent since 2008 but only 14 per cent of them are in high-skilled work. This compares with 42 per cent of self-employed people in Cambridge.

Centre for Cities are calling for self-employed people to have better access to training in order to respond to the changing world of work.

Training is a vital way for the self-employed to increase their skills and ‘future proof’ their careers against technological changes that may affect some industries. However, at present they are disadvantaged by a tax system that prevents them from deducting many training costs, particularly training to acquire new skills, from income tax.

One in five jobs in cities is likely to be lost to automation

Centre for Cities chief executive Andrew Carter said: “One in five jobs in cities is likely to be lost to automation and, though we are seeing a self-employment boom, too many people working for themselves in cities are in lower-skilled roles and lack access to the training they need to future proof their careers.

“The government should act to make it easier for the growing numbers of self-employed people can develop their skills. The rules governing what types of courses self-employed people can deduct from income taxes should be relaxed and establish industry training boards that support people looking to upskill or retrain.

Andy Chamberlain, deputy director of policy at IPSE, said: “This is a timely and excellent report that shows the enormous rise of self-employment in cities across the UK. And not only that, but also the rise of different types of self-employment: from full-time contracting to side-hustles, which allow people to add to their income and pursue a passion in their spare time.

“At IPSE, we fully support the Centre for Cities’s calls for self-employed people to be able to deduct training costs from their income taxes. We also believe the New Enterprise Allowance should be extended to give self-employed people mentoring and benefit support for two years.

“The self-employed are clearly a rapidly growing part of our workforce, making a vital contribution to many sectors of the economy – and the government must make sure they can access the training support they need.”