Budget 2016: Work doesn’t pay in Osborne’s Britain

Job insecurity is increasing as zero hours contracts and self-employment extend across the economy, while full-time jobs decline dramatically

Chancellor George Osborne has been busy dampening expectations for his seventh Budget on Wednesday. He has already dropped plans for a radical reshaping of pensions. Other government policies are being watered down – think ‘Pay to Stay’ in the Housing Bill – or postponed ahead of the Brexit vote in June.

As dark clouds for the international economy gather on the horizon, an £18bn black hole in the public finances has emerged only four months after Osborne was boasting that cuts in Tax Credits were not needed because of a windfall in Exchequer revenues. So much for long-term economic planning.

The Chancellor’s boasts that he has turned around the British economy, is re-balancing the economy between north and south, and between manufacturing and services, ring hollow as the Budget approaches. Yet perhaps one of the Chancellor’s most unsettling claims is that he is making work pay.

The reality is growing job insecurity as zero hours contracts and self-employment extend across the UK economy while full-time jobs decline dramatically, as the chart from the Office of National Statistics reveals.

employment chart

ONS figures show that the number of people working on zero hours contracts grew between 2014 and 2015 by 104,000 to stand at 801,000 – a spike of 15% in a year. This fits with wider and spreading jobs insecurity with 1.7m workers currently on temporary contracts.

The growth in self-employment can also be seen as a sign of rising insecurity in the UK’s jobs market rather than a flourishing of the entrepreneurial spirit.

A 55 per cent rise in the number of small businesses in recent years, while the proportion with no employees has fallen from a third to a quarter, evidences this.

Rather than burgeoning entrepreneurship and creation of new companies, there has been a 73% rise in self-employment and sole trading. Within this self-employed group there are those for whom self-employment is negative, undermines their quality of life, and may be exploitative.

Many of those becoming self-employed since 2010 have been those made redundant from public service – especially local authorities and the NHS. Turning to self-employment was seen as better than drawing the dole, which explains its growth while full-time, secure jobs have been lost.

It also allows the Government to double count: those losing their jobs and moving into self-employment do not show up on the unemployment count but are also judged to be new small businesses.

There is much the Chancellor could do in Wednesday’s Budget to reduce jobs insecurity, including outlawing zero hours contracts, strengthening employment law for the low paid, and offering support to the growing number of self-employed. But he won’t.

Kevin Gulliver is Director of Birmingham-based research charity the Human City Institute, former Chair of the Centre for Community Research, and part of the SHOUT save social housing campaign. He writes in a personal capacity.

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