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Benefit Cuts Creating New Generation Of Entrepreneurs, Bank Of England Suggests

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Telegraph 23/4/14

'Benefit cuts are pushing more people into self-employment and helping to create a new generation of entrepreneurs, the Bank of England has suggested.

The Bank announced that one of the most “striking” features of the economic recovery has been the record 4.5 million Britons who are now self-employed.

According to official figures, the number of self-employed workers has risen by more than 600,000 since 2010, accounting for more than a third of the 1.5 million new jobs created since then.

The Bank said the trend was partly down to government welfare reforms, such as the £26,000 benefits cap, pushing people back into work. Iain Duncan Smith, the Work and Pensions Secretary, claimed that the figures were evidence that the Coalition was reviving Britain’s “entrepreneurial spirit”.

He told The Telegraph: “Every one of our welfare reforms has been about getting Britain working, so it’s encouraging to see the Bank of England explicitly linking our reforms with the strength of the UK labour market.

“This 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.”

Under the welfare reforms, households can claim no more than £500-a-week, or £26,000 a year, in benefits. When the policy came into force last July, ministers said it would encourage thousands of families on benefits to look for work.

Minutes released by the Bank’s monetary policy committee, which sets interest rates, appear to confirm that the policy has worked. They state: “Self-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.

“It 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.”

The committee disputed claims made by unions that the rise in self-employment was down to people being unable to find jobs or being made redundant.

The minutes state: “Part 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.

“Consistent 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.”

The committee also highlighted a growing number of people choosing to become self-employed instead of going into retirement. According to the Office for National Statistics, those aged 50 and over have accounted for more than 70 per cent of the increase in the number of self-employed since 2008.

However, the committee added that it was “possible” that some self-employed people could be more productive if they joined existing businesses as employees.

The number of people who are in work has risen by 1.5 million since 2010 to 30.3 million, driven by a 621,000 rise in the number of self-employed workers. The Bank upgraded its growth forecasts for the second time in as many months, saying that it expected households and businesses to enjoy cheaper borrowing costs on loans and mortgages.'

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Telegraph 23/4/14

'Benefit cuts are pushing more people into self-employment and helping to create a new generation of entrepreneurs, the Bank of England has suggested.

The Bank announced that one of the most “striking” features of the economic recovery has been the record 4.5 million Britons who are now self-employed.

According to official figures, the number of self-employed workers has risen by more than 600,000 since 2010, accounting for more than a third of the 1.5 million new jobs created since then.

The Bank said the trend was partly down to government welfare reforms, such as the £26,000 benefits cap, pushing people back into work. Iain Duncan Smith, the Work and Pensions Secretary, claimed that the figures were evidence that the Coalition was reviving Britain’s “entrepreneurial spirit”.

He told The Telegraph: “Every one of our welfare reforms has been about getting Britain working, so it’s encouraging to see the Bank of England explicitly linking our reforms with the strength of the UK labour market.

“This 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.”

Under the welfare reforms, households can claim no more than £500-a-week, or £26,000 a year, in benefits. When the policy came into force last July, ministers said it would encourage thousands of families on benefits to look for work.

Minutes released by the Bank’s monetary policy committee, which sets interest rates, appear to confirm that the policy has worked. They state: “Self-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.

“It 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.”

The committee disputed claims made by unions that the rise in self-employment was down to people being unable to find jobs or being made redundant.

The minutes state: “Part 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.

“Consistent 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.”

The committee also highlighted a growing number of people choosing to become self-employed instead of going into retirement. According to the Office for National Statistics, those aged 50 and over have accounted for more than 70 per cent of the increase in the number of self-employed since 2008.

However, the committee added that it was “possible” that some self-employed people could be more productive if they joined existing businesses as employees.

The number of people who are in work has risen by 1.5 million since 2010 to 30.3 million, driven by a 621,000 rise in the number of self-employed workers. The Bank upgraded its growth forecasts for the second time in as many months, saying that it expected households and businesses to enjoy cheaper borrowing costs on loans and mortgages.'

Hahaha. Hilarious. The bank of goebbels propaganda team is working overtime again I see.

If you want to know whether this change is due to entrepreneurship or desperation I suggest you look at the incomes of the self-employed. If it's the former we should see fairly stable self-employment incomes. If it's the latter then those incomes will be falling rapidly, as people enter self-employment in desperation but with little hope of making a living (outside of benefit top ups). Now, the data we have suggests it's overwhelmingly the latter -

Screen-shot-2013-12-02-at-15.23.27.png

Edited by alexw

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Maybe they mean the people growing cannabis in their spare bedroom in order to pay the bedroom tax? That's pretty enterprising.

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The fed in the US has been saying the same thing. Cuts to food stamps and EUC have boosted employment apparently.

I think its a bit optimistic to presume entrepreneurs are being created, but its quite clear people will find some sort of work rather than starve when pushed.

Edited by Executive Sadman

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Hahaha. Hilarious. The bank of goebbels propaganda team is working overtime again I see.

If you want to know whether this change is due to entrepreneurship or desperation I suggest you look at the incomes of the self-employed. If it's the former we should see fairly stable self-employment incomes. If it's the latter then those incomes will be falling rapidly, as people enter self-employment in desperation but with little hope of making a living (outside of benefit top ups). Now, the data we have suggests it's overwhelmingly the latter -

Screen-shot-2013-12-02-at-15.23.27.png

Yes. The fact is you get tax credits when self employed. Similar to jobseekers allowance but dont have to have some moron in the job centre interogate you. Most claim their £3k credits and might get another 5 or 6 grand doing 'man with van' type stuff.

Pretty subsistence lifestyle (i did it for a while) but with housing benefit and council tax benefit, you can get by outside of London.

Edited by Executive Sadman

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Is this where you can still claim benefits, but without having to deal with the jobcentre cretins?

Yep. Hence the rise in cake decorating/dog walking or grooming businesses, mobile hairdressers etc.

Few if any will pay any tax. All will claim working tax credits.

Its along the same lines as 'if they register as disabled they wont register as unemployed' in productive terms.

Vile propaganda from the telegraph. Its a national disgrace. Most are probably grossing under minimum wage.

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Yes, I have a friend who is a personal trainer, but despite being very knowledgeable and good at coaching he's not terribly good at selling his services due to lack of confidence. He scrapes by and gets less hassle on this new scheme so it suits him.

More and more I regard this stuff as effectively a citizen's income.

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Yes, I have a friend who is a personal trainer, but despite being very knowledgeable and good at coaching he's not terribly good at selling his services due to lack of confidence. He scrapes by and gets less hassle on this new scheme so it suits him.

More and more I regard this stuff as effectively a citizen's income.

Indeed. After taxes if you're also claiming HB and CTB even as a single man I dont see why people work at jobs under £20k a year (most of them, given the mean wage is nearer £21k than the average of £28k) It simply doesnt stack up.

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Self-employment has become a bit like disability was in the 80s, a way of getting people off the dole and making the figure look better. At some point it will be reigned in and these 'entrepreneurs' found out.

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Its probably not a bad system if it at least gets people thinking about becoming self employed rather than lounging on the dole and being sent on pointless workfare schemes.

Of course unlike a proper Citizens Income, if you do start earning, you have a hefty benefits trap to overcome, especially if you are claiming landlord benefit.

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Seems rather silly to insist on either/or.

Doubtless the rising numbers of self-employed are on a spectrum. At one end, the entrepreneur who'll be the Jack Cohen of his/her generation. At the other, people barely scraping by. With the majority somewhere between.

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Although wouldn't you expect that new "entrepeneurs" would make very little money in the first few years? - so if there are a lot of new ones then surely this would also bring the average self employed earnings down. I don't really believe this is the case. But do these figures necessarily disprove what the BoE are suggesting?

Hahaha. Hilarious. The bank of goebbels propaganda team is working overtime again I see.

If you want to know whether this change is due to entrepreneurship or desperation I suggest you look at the incomes of the self-employed. If it's the former we should see fairly stable self-employment incomes. If it's the latter then those incomes will be falling rapidly, as people enter self-employment in desperation but with little hope of making a living (outside of benefit top ups). Now, the data we have suggests it's overwhelmingly the latter -

Screen-shot-2013-12-02-at-15.23.27.png

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Although wouldn't you expect that new "entrepeneurs" would make very little money in the first few years? - so if there are a lot of new ones then surely this would also bring the average self employed earnings down. I don't really believe this is the case. But do these figures necessarily disprove what the BoE are suggesting?

If they're not making money they're not entrepreneurs.

Given that lending to small businesses keeps contracting these me-too franchises and mom'n'pop shops are unlikely to stay solvent for long.

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So by a strange quirk of fate the collapse of the economy has coincided with a totally unrelated surge in entrepreneurial spirit? Yea- I can buy into that- after all what other possible explanation could there be? :lol:

In much the same way that the sinking of a ship might coincide with a sudden upsurge in freestyle swimming among the passengers- the former being in no way related to the latter of course.

How stupid do our masters think we are? Obviously very stupid indeed.

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It's a laugh a minute with the BoE and IDS.

It's so Dragon's Den. For most of the self (un)employed within the category it's about as entrepreneurial as the bankers and their taxpayer bailouts. On the other hand that's the system but the BoE does lay it on a bit thick.

The Bank announced that one of the most “striking” features of the economic recovery has been the record 4.5 million Britons who are now self-employed.

According to official figures, the number of self-employed workers has risen by more than 600,000 since 2010, accounting for more than a third of the 1.5 million new jobs created since then.

Recovery - it's only supposed to have been in so called recovery for a few months, not since 2010.

Edited by billybong

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as I have posted before, I go to an "executive" job club.

18 months ago, when it was started, the members were ex bankers, ex HR, ex this ex that, 40- 50 year olds.

Roll on a year, and its the same group, but with say double the members, but the old guard are just about ALL self employed, offering services to each other and the group ( Now a new co-op of members), none earning much at all and all still looking for those elusive jobs.

I also help out at a local job club, and the council bods running it all repeat that many go self employed to keep their benefits and go on self improvement courses etc etc....this due to benefit traps and really no other route to go.

It seems, and I am looking into this, that although there are some good worrthwhile courses at the local institutes, that the unemployed cant go on them due to benefit losses because the very act of looking after yourself with getting an education is seen to untick the boxes the employment centres need ticked to get you paid.

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If the bankruptog england have tried to redefine what it mean to be an entrepreneur in britain then they are probably right.

Much better to be a rent seeker, forger, debaser and money printer, that is where the money is.

ITV Tonight Man Vs Machines on thi evening, could be interesting, with the cost differential between labour and robots no doubt more entrepreneurs in the pipeline.

Edited by onlyme2

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Lots of real truths in this thread coming from the coal face..... Just goes to show anything can be twisted to say anything...all is not what it may seem.

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yep - all those cupcake makers and sellers are entrepreuners and it is thanks to them we have a recovery :mellow:

the definition of an entrepreneur

The entrepreneur is commonly seen as an innovator — a generator of new ideas and business processes. Management skill and strong team building abilities are often perceived as essential leadership attributes for successful entrepreneurs.

so ebay selling and cake making are innovative? - we can all do that.

not all the self-employed are 'entrepreneurs'

Edited by olliegog

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I'm one of those entrepeneurs. As a supporter of a citizens income I'm happy to take my £50pw no questions asked. Most of my 35hrs per week is spent on deveopment (thinking), it would be hard for an outsider to tell if I'm working or not at any given moment.

However, I'm actually doing a patent application at the moment and will be going into production soon, so I might actually turn out to be a counter example to all the non-entrepeneurial self-employed.

The most 'enterprising' scheme I can think of would be to spend my days renovating the family BTL empire while also claiming working tax credits and housing allowance to live in same.

What's the latest on the assumed minimum income for self-employed? I'm assuming no Govt will have the stomach for the resulting rise in jobless numbers.

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