Self-employment

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 10th March 1988.

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Photo of Mr Patrick Ground Mr Patrick Ground , Feltham and Heston 12:00 am, 10th March 1988

To ask the Chancellor of the Exchequer what has been the increase in self-employment in the British economy since 1979.

Photo of Mr John Major Mr John Major , Huntingdon

Self-employment fell between 1974–79, but has since risen in every year. The total increase since 1979 is nearly 1 million.

Photo of Mr Patrick Ground Mr Patrick Ground , Feltham and Heston

Does my right hon. Friend agree that the striking increase of more than 50 per cent. shows that substantially more people — [HON. MEMBERS: "Reading".]

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. I think that the hon. and learned Gentleman is referring to his notes.

Photo of Mr Patrick Ground Mr Patrick Ground , Feltham and Heston

Does my right hon. Friend agree that the striking increase of more than 50 per cent. in the number of people in self-employment shows the substantial interest of many people in the freedom and independence provided by self-employment? Will he agree to ensure in the monitoring work being carried out by his Department that no pressure is exerted on self-employed people to become employed and that no one is deterred from self-employment by pressure from his Department?

Photo of Mr John Major Mr John Major , Huntingdon

On the first point, I entirely agree with my hon. and learned Friend. On the substantial point about the Inland Revenue, I note my hon. and learned Friend's concern, but whether an individual is self-employed is a question of fact and general law. Essentially, the test is whether someone is in business on his own account. If he is, the Revenue will treat him as self-employed.

Photo of Mr Roland Boyes Mr Roland Boyes , Houghton and Washington

The enterprise allowance scheme has allowed a number of people to become self-employed. However, my research shows that a number of them could have survived in business had an allowance been available to them in the second and even in the third years. Some are failing unnecessarily at the end of the first year. Will the Minister consider examining the enterprise allowance scheme with a view to funding people for a second year?

Photo of Mr John Major Mr John Major , Huntingdon

I note the hon. Gentleman's point. I think he will agree that the enterprise allowance scheme has been very successful. The number of entrants has increased by about 70 per cent. since 1985. Of those who remained on the scheme for more than a year, more than 60 per cent. were still trading two years later and in most cases had employed further staff by then. It has been an exceedingly successful scheme.

Photo of Mr Peter Thurnham Mr Peter Thurnham , Bolton North East

Does my right hon. Friend agree that it is a sign of the health of our economy that more and more people are self-employed, whereas under the last Labour Government the self-employed represented a declining proportion of the total?

Photo of Mr John Major Mr John Major , Huntingdon

My hon. Friend is quite correct. Self-employment has grown in every region in the country in recent years, whereas, as my hon. Friend said, it fell between 1974 and 1979. It now stands at its highest level since 1950.