The series of welfare reforms instigated by the coalition government last year has led to the number of people entering into self-employment soar, helping to create a promising generation of entrepreneurs, the Bank of England has identified.
In its latest analysis of employment levels in the country, the Bank compellingly found that a monumental 4.5 million are now self-employed in the UK, representing a substantial rise of 600,000 people since 2010 and contributing to over a third of the 1.5 million new employment opportunities created in the past four years.
The Bank argued that a key contributor to the recent resurgence in self-employment were the welfare cuts made last year, such as the ëbedroom taxí and the benefit cap of £26,000, which they attributed to prompting a multitude of previously unemployment individuals to actively seek world.
The governmentís radical overhaul of key elements of the welfare state last year has been the subject of much controversy in recent times, with critics arguing that they were ill-timed and have considerably impacted the financial stability of a plethora of vulnerable individuals during a post-recession era.
In particular, the decision to simplify a number of previously individual welfare entitlements into a single Universal Credit scheme, and cap the total amount an individual and family can receive each week in welfare payments has been heavily scrutinised, with many opposition politicians and charity groups citing that the maximum £500 payment for families and £350 for individuals is not sufficient to help householdís cope with the cost of living at present.
However, the government has remained resolute in their backing of the policy, and have now pointed to the soaring levels of employment in the country as evidence that their reforms are beginning to have the impact they intended to achieve.
Iain Duncan Smith, the Work and Pensions Secretary, has praised the impact of the reforms, arguing that they have contributed to renewing the ëentrepreneurial spirití in the UK and bolstering the labour market.
He said: ìEvery one of our welfare reforms has been about getting Britain working, so itís encouraging to see the Bank of England explicitly linking our reforms with the strength of the UK labour market.
ìThis country has a great history of entrepreneurship and small businesses are in many ways the backbone of the UK economy. The growth in self-employment is both a sign and a result of the economic recovery this Government is delivering. We should welcome this sign that the entrepreneurial spirit is alive and well in the UK.î
The Bankís monetary policy committee has also issued their own praise over the impact that the welfare reforms have had in encouraging people to get into work, particularly in the private sector where numbers have soared in recent times.
Minutes from their latest meeting state: ìSelf-employment had risen by over 200,000 in the three months to January at the same time as there had been a fall in the number of employees. And self-employment had accounted for almost half of the rise in employment since 2010.
ìIt was possible that some of the increase had come about in reaction to benefit caps, changes in pension entitlements and rules surrounding access to in-work benefits.î
The committee also rebuffed remarks made by a number of trade unions that attributed the soaring numbers of self-employed individuals to people simply being unable to acquire a suitable job for their finances , arguing that the rise is part of a ësecular trendí, rather than a reaction to a ëlack of opportunitiesí.
The minutes state: ìPart of the rise in self-employment appeared to be a continuation of a longer-term secular trend, rather than a cyclical response to a lack of other employment opportunities.
ìConsistent with that, higher self-employment did not appear to have been associated with inflows of people recently made redundant. Second, survey evidence suggested that the self-employed were only slightly more likely to be looking for a job than were other employees.î
They also pointed out that a number of individuals are now opting to become self-employed in their later years rather than entering into retirement, highlighting recent figures from the Office for National Statistics that indicated that over 70% of the people who have made themselves self-employed since 2008 have been over 50.
Earlier this week the Office for National Statistics revealed their latest unemployment figures for the three months to February, identifying that they had reached a five year low of 6.9%.