Prime Minister Andy Burnham is facing fresh calls to overhaul maternity pay and financial protections for the self-employed, with a leading think tank urging immediate action. Bright Blue, a right-leaning independent think tank, has published a report arguing that the current system leaves self-employed mothers at a significant disadvantage compared to their employed counterparts.
Key Recommendations for Maternity Pay
The report, authored by Bartek Staniszewski, Head of Policy at Bright Blue, and Dr George Pickering, Researcher at Bright Blue, proposes that Maternity Allowance should be uprated so that self-employed mothers receive 90% of their earnings for the first six weeks, mirroring the support given to employed mothers. Currently, self-employed women receive a flat rate, which the think tank argues is inadequate.
In addition, Bright Blue suggests that self-employed individuals should be allowed to surrender weeks of Maternity Allowance to count towards Shared Parental Pay eligibility. This would give self-employed parents greater flexibility in how they share childcare responsibilities, a change the think tank believes is essential for modern families.
Pension Auto-Enrolment for the Self-Employed
Beyond maternity pay, the report calls on the Prime Minister to auto-enrol the self-employed into a pension scheme through the government's Making Tax Digital initiative. Under the proposal, contributions would start at 1% of earnings and gradually phase up to 4% over six years. The government would also contribute, with its share phasing from 1% to 3% over the same period.
This move would address a long-standing gap in pension coverage, as self-employed workers are significantly less likely to save for retirement compared to employees. According to Bright Blue, auto-enrolment is a crucial step towards ensuring financial security for the growing number of self-employed people in the UK.
Extended Sick Pay and Unemployment Insurance
The think tank also recommends that self-employed workers be made eligible for state-funded Medical Suspension Pay for up to 26 weeks. This would provide a safety net for those who are unable to work due to health conditions, a protection currently unavailable to most self-employed individuals.
Furthermore, Bright Blue argues that the self-employed should be included in the government's proposed Unemployment Insurance scheme. Under the plan, they would receive £138 a week for up to six months, provided they have made three years of contributions. This would offer a crucial buffer during periods of job loss, which can be particularly devastating for those without employer support.
Funding the Changes
To finance these enhancements, Bright Blue proposes a gradual equalisation of National Insurance rates between the self-employed and employees. This would involve abolishing employers' National Insurance, merging Class 1 and Class 4 contributions, and raising Income Tax to compensate. The think tank argues that while the self-employed would pay more tax overall, employees would see no increase, and under a fiscally neutral model, they could actually pay less.
According to the report, this approach would achieve fiscal neutrality rather than revenue raising, ensuring that the cost of the new protections is distributed fairly. The self-employed would contribute more, but they would also gain access to a comprehensive safety net that currently eludes them.
Reactions and Context
Bright Blue describes itself as an independent think tank and pressure group dedicated to defending and improving liberal society. Its board includes Diane Banks, Philip Clarke, Alexandra Jezeph, Richard Mabey, and Ryan Shorthouse.
The report comes amid growing debate about the rights of self-employed workers, who have long been excluded from many statutory protections. With the rise of the gig economy and freelance work, the issue has become increasingly pressing. The Prime Minister has yet to respond to the recommendations, but the think tank's proposals are likely to fuel further discussion on how to modernise the UK's social security system.
If implemented, these changes would mark a significant shift in policy, offering self-employed workers a level of security previously reserved for employees. However, the financial implications and the proposed tax reforms are likely to be contentious, sparking debate among policymakers and the public alike.
