Self-employment is growing – but is it damaging our public services?

PUBLISHED: 12:55 01 August 2019 | UPDATED: 12:30 02 August 2019

The amount of self-employed people in Norfolk is rising. Insert: Aaron Widdows of Price Bailey. Picture: Getty/Price Bailey

The amount of self-employed people in Norfolk is rising. Insert: Aaron Widdows of Price Bailey. Picture: Getty/Price Bailey

Picture: Getty/Price Bailey

An increasing number of people in Norfolk are ditching the office and becoming self-employed with more than 6,000 switching in recent years.

But finance experts have warned that this should be "concerning" for the county as revenue for public services created by income tax has fallen.

Over a period of three years those who were self-employed in the county grew from 48,000 people to 54,000 people.

This meant the percentage of the county's workforce who work from their homes grew from 16% to 18% between 2013/2014 and 2016/2017 (the most recent figures).

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The data was collected from HM Revenue and Customs by Norfolk accountants Price Bailey.

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Aaron Widdows, partner at Price Bailey, said: "The origins of this process go back many years, but became more prevalent with the financial crisis of 2008 when many people were made redundant and re-entered the workforce as contractors."

He continued: "There is also a generational factor in that younger people entering the workforce often want greater autonomy and flexibility. This goes hand-in-hand with the growth of the so-called 'gig' economy as organisations increasingly favour the use of short-term contracts as opposed to the creation of permanent jobs."

However, because more people are working in home offices, the amount of income tax being generated has fallen.

The impact of this is difficult to determine as it is returned to central government and then used to pay for services like the NHS and education system.

Mr Widdows continued: "There is a recognition by the government that the fall in tax paid on incomes is undermining public services. This is a particular concern for largely rural areas such as Norfolk where services are often less well-funded than in urban areas."

Overall the county has made 2.4% less in income tax in 2016/2017 than three years prior.

The largest decline in income tax generation was in north Norfolk, which saw a fall of 15.7%.

However this will be offset to some extent by the fact that median income in the area also fell from £19,200 to £17,600 in the period.

Norwich north saw the highest earnings increase in the self-employed sector, up £12,600 to £13,200.

Despite income rising across Norwich north by 15%, the amount of income tax generated still fell by 0.6%.

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