Contribution
My Lords, Amendment 167 is in my name and that of the noble Lord, Lord Londesborough, whose support I am extremely grateful for. I will also speak to Amendments 177 and 178. Many of my points are likely to coincide with those to be made by the noble Lord, Lord Moynihan of Chelsea, on his Amendment 184A. However, his amendment takes a much broader view of the employment landscape than I do. I look forward to hearing his speech, and that of the noble Lord, Lord Clement-Jones, who will revisit the definition of the independent contractor.
Amendment 167 is a probing amendment that draws attention to the lack of consistent and widely accepted definitions of “freelancers”, “self-employed persons” and “sole traders”. These terms are often used interchangeably but carry distinct legal and practical implications.
A helpful approach would be for the Government to adopt a three-tier taxonomy, defining “freelancer” as a person who provides services on a project or contract basis, often to multiple clients, without being an employee. Amendment 161 from the noble Lord, Lord Clement-Jones, serves as an effective model for this, notwithstanding the comments by the noble Lord, Lord Hendy. The annexe in the draft terms of reference for the freelance champion, which I have seen, like the noble Earl, has also attempted to define a freelancer, which is a useful first step but by no means definitive.
A self-employed person is someone who runs their own business and is responsible for its success or failure, typically registering with HMRC for tax purposes. According to July’s House of Commons UK Labour Market Statistics report, self-employed people make up approximately 13.5% of the labour market, which currently has 4.43 million self-employed individuals.
A sole trader is a specific legal and tax classification in which an individual runs a business in their own name without forming a limited company. Although all sole traders are self-employed, not all self-employed persons are sole traders, and some may operate through partnerships or limited companies. Freelancers may span both categories, depending on their business structure.
The amendment also asks for
“an assessment of how the categories … may be impacted differently by the provisions of this Act”.
This provides an opportunity to examine disparities in access to employment protections, financial services, taxation and eligibility for public support. For instance, while a sole trader may more easily access certain types of finance or insurance, freelancers working intermittently across sectors often face barriers in securing mortgages, pensions, sick pay and other forms of welfare.
A government report could use illustrative case studies to clarify the lived experience of these categories—for example, contrasting the experience of a freelance illustrator, a self-employed plumber and a sole trader café owner. To ensure fair and equitable treatment across these groups, the Government may wish to explore options for harmonising entitlements and protections where possible. This might include developing portable benefits for freelancers, expanding access to contributory social protections or encouraging the adoption of freelance codes of good practice. The Creative Industries Council’s freelance toolkit is one model that could be promoted across sectors.
Amendments 177 and 179 raise closely related concerns regarding the visibility and classification of workers in the visual arts and craft sectors. These sectors often involve individuals working across multiple roles, such as creators, educators, curators and consultants, and frequently combine freelance and part-time employment in complex ways. Employment and legal status in these fields is therefore especially difficult to define clearly, which can leave individuals underprotected or misrepresented in government data and support schemes.
The Government could respond by convening a time-limited working group with representatives from relevant sector bodies, such as the Artists Information Company, the Crafts Council, Heritage Crafts, CVAN, DACS, the Cultural Policy Unit and Creative UK, to develop practical guidance on employment classification in the arts and crafts sectors. This could be an initial task for the creative freelance champion to prioritise early in their role.
Both amendments also highlight the significant limitations in how current standard industrial classification, SIC, and standard occupational classification, SOC, codes capture creative labour. For example, SIC code 9003 for “artistic creation” groups together visual artists, authors, composers and digital designers, obscuring the distinct needs and contributions of each group. SOC codes similarly fail to disaggregate fine artists, applied artists and craftspeople.
I understand that government departments may use a threshold of approximately 4,000 practitioners as a cut-off point for counting people working in various sectors—if the Minister could clarify this, it would be most helpful—as this approach would exclude virtually all heritage craft makers from official statistics. The Red List of Endangered Crafts includes 285 crafts, but not all of them are covered by the current SIC and SOC codes.