The number who changed from reporting themselves as self-employed to an employee was 277,000 in Q3 of this year, the highest level since records began.
Responding to the new figures, Mike Cherry national chairman of the Lancashire based Federation of Small Businesses, said the analysis was concerning as self employed people played a major role in the economy.
He said: “Our self-employed community was fundamental to our recovery from the last recession. If we want it to play that same role again, policymakers must do more to support it.
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“The economy will be permanently changed by Covid, and we need to encourage more of those who are leaving jobs that will not return to launch enterprises that will be here for years to come.
“We’ve successfully worked alongside government on the Enterprising You initiative in Manchester – exploring new ways to increase the take-up of training opportunities among the self-employed. It’s now time for the pilot to be rolled-out more widely.
“Universal credit also needs to be permanently reformed so that it reflects the realities of starting a new business – not everyone can be blessed with ready access to start-up capital. The Government listened to us where the Minimum Income Floor is concerned – delaying its reintroduction – but there is more work to do, especially where the start-up period is concerned.
“Too many independents are falling through cracks in the current business support landscape – not least new business owners, sole traders earning more than £50,000 and company directors – that urgently needs to change if we want more people to take the start-up plunge and become the employers of the future.
“Policymakers must do more to encourage those who are out of work to strike out on their own – a Kickstart Start-Up initiative could be one way forward, building on the success of the New Enterprise Allowance and Start-Up Loans programmes.
“We’re working closely with unions to find constructive ways forward in this space and will be presenting further recommendations around how to arrest this incredibly concerning drop in self-employment in the very near future.”
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