Could personal data make capitalists out of all of us?

December 17, 2014 by · 1 Comment
Filed under: Enterprise 

Capital matters. Not only does it provide us with financial security (through the income that comes from wealth), it also has the power to transform mindsets and foster active citizenship. Indeed, we know that people who own property are more likely to volunteer, vote and start a business. In short, capital is the essential ingredient that enables people to be the authors of their own lives.

The problem is that capital ownership – whether in the form of housing, savings or stocks – is heavily concentrated in the hands of a small proportion of the population. The latest government data indicates that the wealthiest 10 per cent of households in the UK own 44 per cent of total household wealth. Moreover, these inequalities are worsening – in part because of a housing boom that favours the already wealthy.

While discussions grow around how to boost capital ownership through conventional measures such as taxation (think Piketty’s idea of a global wealth tax), there is clearly a need for fresh thinking in this debate. One area that is ripe for exploration is that of data ownership and monetisation. From browsing history, to retail transactions to medical and financial information, each of us produces a wealth of data that has the potential to be used to generate income. Read more

Boosting protection for the self-employed is a priority. But so too is raising awareness of existing entitlements

December 9, 2014 by · Leave a Comment
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There was some good news for the business community in the Autumn Statement. The Chancellor promised to extend the Funding for Lending scheme, which channels low-cost finance to banks providing loans to small businesses. There was also a commitment to carry on with Small Business Rate Relief, as well as to scrap the National Insurance contributions employers have to pay for apprentices.

Yet these measures – as with many that have come before them – tend to focus on supporting businesses rather than the individuals behind those businesses. In other words, they are aimed at making businesses profitable, rather than making self-employed lives liveable. If the Chancellor wanted to give a real boost to entrepreneurship, he would have committed to strengthening social security for business owners – whether that be by helping with insurance, pensions or mortgages.

If anything, the proposal to deepen welfare cuts – which formed the centrepiece of the Autumn Statement – is likely to have as detrimental an impact on the self-employed as those in wage work. This is because many business owners are low-paid and therefore dependent on the state to top-up their income. Our research with the Joseph Rowntree Foundation, for example, has shown that 21 per cent of the self-employed are in receipt of Working Tax Credits, compared with 17.5 per cent of employees. Read more

6 key take-aways from our new report on stimulating growth among microbusinesses

November 26, 2014 by · 2 Comments
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Today we launch a new report called Everyday Employers, looking at how behavioural insights might be used to encourage business owners to expand their operations and take on employees. Here are the topline findings:

 

#1 – The number of microbusinesses is growing rapidly, but the vast majority are one-person businesses

One of the most notable and enduring economic stories of the past few years has been the rapid expansion in the number of microbusinesses, defined as firms with 0-9 employees. Figures released just today show there are close to a million more microbusinesses than there were when the recession first began in 2008. Yet an even more significant trend has been the rise of the one-person business. As the graph below shows, the number of firms with zero employees (i.e. just the owner) has grown by around 70 per cent since the turn of the century. In fact, almost 95 per cent of all the growth in the microbusiness population over the last decade is owed to non-employing firms. Firm size

 

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Some ideas for taking self-employment to the mainstream

November 25, 2014 by · Leave a Comment
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This blog first appeared on the Progress website, as part of a series of self-employment articles guest edited by Toby Perkins MP, the Shadow Small Business Minister.

Self-employment is growing rapidly. Since the turn of the century there has been a 30 per cent increase in the number of people working for themselves, with an extra 100,000 choosing to start up in business this year alone. The result is that one in seven of the labour force are now self-employed – the highest figure in living memory.

While the debate rumbles on as to whether or not the boom is a ‘good thing’, there is broad consensus that the labour market is unlikely to return to business as usual in the foreseeable future. Indeed, the RSA’s recent report on self-employment, Salvation in a Start-up, argues that high rates of self-employment should be seen as a permanent feature of our economic landscape, rather than a fleeting phenomenon brought about by the economic downturn. The implication is that we need to begin designing policies that go with the grain of this structural shift – whether around housing, welfare or wellbeing.

Past and present governments have taken several steps to support the United Kingdom’s small business community, for instance through the StartUp loans scheme, national insurance contribution holidays and corporation tax cuts. Yet these measures have overwhelmingly centred on supporting businesses as entities in themselves, rather than the individuals behind these ventures. The result is that the majority of the self-employed feel overlooked by policymakers. Our RSA/Populus survey found that only 14 per cent of those who work for themselves believe the government adequately supports people like them. Read more

Pensions for the self-employed? Sometimes an ISA can be nicer

November 5, 2014 by · 2 Comments
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The ONS published a report this week showing that the proportion of self-employed men contributing to a personal pension has fallen sharply over the past 20 years. Just over 60 per cent were adding to a personal pension in 1996/7, but today the figure is only 22 per cent (see the graph below). For some reason the ONS didn’t include the details about self-employed women, but our own analysis of government data shows the picture for them is more or less the same, with around 25 per cent actively contributing to a pension.

pensions

Our data crunching also reveals that the self-employed are likely to have smaller pension pots than employees. The average total pension wealth of the age group closest to retirement (55-64 year olds) is £50,000 for the self-employed, versus £104,000 for employees – in other words, less than half the size. Moreover, around 23 per cent of the self-employed in this age group have no pension wealth whatsoever, compared with 17 per cent of typical workers.

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Why our fears over red tape are overblown

October 30, 2014 by · Leave a Comment
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What would you do to help more businesses survive and grow?

If you’re like most people, you’d probably call for greater deregulation and a cull of burdensome red tape. This is what Cameron promised at the start of this year when he announced plans to drop or change more than 3,000 business rules. Regulation was also the target of Adrian Beecroft’s infamous report in 2012, which proposed introducing no-fault dismissals so that small businesses could let go of staff at will. Only a few weeks ago, a senior EU official argued for a ‘bonfire of red tape’ across Europe, which would make small and medium sized businesses virtually exempt from rules affecting business practices. The rationale for these moves is clear: cutting red tape would reduce the risk and costs of doing business, and thereby encourage entrepreneurs to innovate, expand and take on staff.

Yet if this sounds too good to be true, that’s because it is. The reality is that red-tape just isn’t as big a deal as we like to make out. The OECD, for example, reports that the UK has the third least regulated labour market in the world – so flexible, in fact, that it is thought to be easier to dismiss someone here than in the US. Similarly, the World Bank consistently ranks this country as one of the easiest places in the world in which to do business – ahead of Germany, France, Japan and many other developed countries. The government also continues to enact measures that make the labour market more flexible for the benefit of employers. Last year saw the introduction of new fees of up to £1,200 for any workers seeking to make a tribunal claim. As a result, the number of employers being taken to tribunal have plummeted.

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The illusion that is the decline of deference

October 23, 2014 by · 1 Comment
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Regular readers of this blog will know that the RSA has a new worldview called the Power to Create. In short, this is about helping more people in more places to turn their ideas into reality, and thereby become the authors of their own lives. The animation below gives you the gist of what it’s all about.

I broadly subscribe to the vision, except for one assertion: that people are clambering for greater power, and that this is partly down to a decline of deference for the elite. If anything, I think large parts of society are in danger of becoming more docile and revering. As Nick Cohen put it not long ago, ‘the British have no fight in them anymore’.

True, the approval ratings of politicians have plummeted over the last few decades, and it’s hard to see how they could get any worse. Likewise, we know that the religious clergy have lost much of their influence, with ever dwindling numbers turning up to church each week (though the story may be different for non-Christians). Scotland Yard and Fleet Street have also lost huge amounts of respect, in large part due to never-ending scandals. Even big business is seeing its authority undermined. Surveying by Ipsos Mori has found that only 34 per cent of people believe business leaders can be trusted. Read more

Long live the maker revolution

October 2, 2014 by · Leave a Comment
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This is a guest blog by Helen Kemp, Founder of Just Got Made. JGM is a directory that links creative small businesses with hand-picked suppliers and producers. Find out more at www.justgotmade.com

We are at the forefront of a Maker Revolution! This time around it’s not about large factories but involves thousands of talented individuals; craftspeople, designers, artists and makers, working from their dining room table or studio desk.

There needs to be a new way for companies to connect, to reach each other in this new landscape of cottage industries working on a global scale. And that’s where Just Got Made fits in. We are part of the toolkit for the next generation of makers.

I grew up in the London suburbs, obsessed with the 90’s grunge scene and immersed in the alternative cultures running through music, fashion, photography and art. The DIY ethos of independent culture got into my blood and instilled in me the conviction that independence is a powerful driver of creativity.

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Why the self-employed need to wake up to the threat posed by Universal Credit

September 25, 2014 by · 6 Comments
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In theory Universal Credit is a dream policy. The idea has been to streamline the welfare system, rolling six means-tested benefits into one so that work will always pay. UC is also intended to make the transition in and out of benefits more seamless, and as such accommodate workers whose income fluctuates and who find themselves flitting between jobs. In 2012 DWP estimated that an extra 300,000 more workless households would move into employment as a result of UC, and that it would save £38bn over 12 years from its inception.

Yet as we all know, the hype has not lived up to reality. Universal Credit has proven to be something of a nightmare. Indeed, it is hard to overstate the problems that have beset this flagship welfare scheme. IT failures, civil servant departures and a lack of departmental resources are just a few of the reasons for Universal Credit’s woes. Such are the challenges facing the £2.4bn scheme that the Major Projects Authority in Whitehall decided it needed to be ‘reset’ in 2013, while £34m of new IT assets had to be written off as a result of unexpected difficulties. To top this off, a damning National Audit Office report noted that ‘throughout the programme the Department [DWP] has lacked a detailed view of how Universal Credit is meant to work’.

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Cash-poor, asset-rich: are the self-employed better or worse off?

August 29, 2014 by · 6 Comments
Filed under: Enterprise 

Last week I argued that the concerns over shrinking self-employed earnings may be a little exaggerated. Coincidentally, at the same time the blogger Flip Chart Rick convincingly proposed the opposite: that we aren’t half as worried as we should be.

Clearly the jury is still out. So while we’re in the debating mood it might be worth adding another layer to the debate – that of wealth and asset ownership.

As part of our new project with the Joseph Rowntree Foundation, we’ve been looking at the data on earnings, wealth and debt. And while some of the findings are unsurprising, there are a few curveballs in there too.

Here are a few initial observations to chew over:

#1 – The full-time self-employed earn around 20 per cent less than their employed counterparts, and their income has fallen by 10 per cent in real terms since 2000

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