Infrastructure for independent working: boosting workhubs, broadband & mobile coverage www.ipse.co.uk
Introduction About IPSE IPSE, the Association of Independent Professionals and Self Employed, has 22,000 members and represents the estimated 4.6 million individuals working independently in the UK. Independent professionals are highly skilled specialists supplying their expertise on a flexible basis to a variety of businesses - from large companies to SMEs. We campaign on behalf of independent professionals and the self-employed, while providing advice, support, insurance products and networking opportunities. About the self-employed and independent professionals One in seven UK workers is self-employed. This is up almost 40% since 2000, and we expect that by 2016 the self-employed will outnumber public sector workers. The selfemployed can be found across all industries working at all levels, from the boardroom down. What unites them is the way they work and the choice they have made to go it alone. They are neither employees nor employers, and they have their own unique set of needs. A subset of the self-employed is independent professionals. They work in higher level professional and technical occupations, and primarily in a business-to-business way. Also known as consultants, contractors or freelancers, they are a key feature of the UK workforce. Businesses rely on these 1.7m workers to provide expertise at short notice on a flexible basis they play a vital role in encouraging innovation and entrepreneurship. Our proposals: Workhubs This document sets out what needs to be done to provide the infrastructure that will support this independent way of working expanding access to workhubs and broadband and mobile coverage. Access to the appropriate infrastructure is imperative to the success of any economy, and the self-employed economy is no different. Issues around tax and regulation are commonly cited as the key obstacles to working independently, but the self-employed simply will not be able to exist and prosper as businesses without collaborative working space, superfast broadband and widespread mobile coverage. Workhubs are flexible workspaces for microbusinesses and mobile workers, typically consisting of hot desks, meeting rooms and high speed broadband. They also offer services such as IT and business support and other training programmes. The lack of collaborative working space is a particular issue for younger freelancers. Workhubs are hugely beneficial for those looking to develop their career as an independent professional. Although one of the key benefits of this way of working is the independence it affords, sharing knowledge, ideas and contacts remain vital to building a successful and satisfying career in self-employment. 1 Infrastructure for independent working The ipse Manifesto
This collaborative way of working provides a motivating environment, as well as excellent networking opportunities however it is difficult, and often financially prohibitive to open and run premises. To support the rollout of workhubs, action at both the national and local level is needed in four key areas: Cut business rates for workhubs Incentivise the use of empty properties as workhubs Extend Permitted Development rights to allow empty premises to change their use Expand support for rural workhubs Broadband & connectivity It is also key for there to be quick reliable broadband and mobile coverage to allow independent professionals across the UK to work in the flexible way they need to. Evidence from Comres has shown this is an important reason why the freelancing sector has struggled to diversify from London and the South East. Indeed a fifth of self-employed people in Scotland and Wales have stated they have struggled to work to their full potential due to broadband issues, almost double the number in London. Ofcom s annual report on communications infrastructure, published in December 2014, also found 42% of the UK s microbusinesses lack access to superfast broadband, far greater than the 25% for UK premises overall. 1 The picture in rural areas is even more worrying a massive 85% of microbusinesses here do not have superfast broadband coverage. Patchy mobile coverage also means that working independently in certain areas is tricky, hampering the ability of freelancers to contribute as fully as possible to our economic growth. To address these problems government should: Commit to 100% access to broadband by 2020 Guarantee new housing developments have fibre-optic broadband Accelerate the rollout of 4G Coverage Ensure rail franchising agreements include a commitment to enabling WiFi across their networks *These proposals are featured in our manifesto, Britain s Secret Weapon, available at ipse. co.uk/manifesto* The ipse Manifesto Infrastructure for independent working 2
What are the issues with workhubs? Availability: There are an estimated 109 workhubs in the UK today, with 30% of these in London. The remaining 70% are concentrated primarily in other creative hubs such as Manchester and Brighton. Younger people particularly benefit from working in this way, building contacts and sharing knowledge as they look to take their first steps in self-employment. Aside from these hotspots though, there is a drastic lack of appropriate facilities across large swathes of the UK. In many towns and cities, commercial properties stand empty but cannot be used as workhubs due to complexities in the planning system and a lack of joined-up thinking from local government. Rural areas are also severely lacking in these collaborative facilities important pilots are being undertaken but being self-employed in rural areas needs to far better supported. Workhubs will help to tackle the isolation that can be an issue for those working independently in these areas, while driving innovation and economic growth. Cost: Even where workhubs do exist, the cost of using them is often prohibitive for independent professionals and the self-employed indeed one third of 18-39 year olds identify cost as a major reason why they do not use workhubs. Freelancers unfortunately do not benefit from the tax system in the same way most small businesses do. This is because small businesses with premises are exempt from paying business rates, yet those using workhubs are effectively forced to pay them indirectly. This is because they are typically a significant part of the operating cost of many workhubs, which are often run by collectives of self-employed workers. Taking action to improve access to workhubs for the self-employed will ultimately benefit the whole economy, as well as boosting the ability of freelancers to realise their potential. Research has shown that independent professionals allow businesses to promote innovation, maximise performance across peaks and troughs in demand, and create jobs by increasing the level of innovation and efficiency in the economy. 2 3 Infrastructure for independent working The ipse Manifesto
1. Enabling growth through workhubs: The Solutions A) CUT BUSINESS RATES FOR WORKHUBS Small businesses with a rentable value up to 10,000 are eligible for 100% business rate relief extending this to workhubs would ensure independent professionals are also effectively incentivised to develop and grow their business. Such a change would fit with the government s ongoing reform of business rates, which saw 1,000 business rate discounts for 300,000 small retailers outlined in the 2013 Autumn Statement. This solution would eliminate the risk of government subsidising workhubs that would have been built anyway or wasting money on projects where there is simply no demand. Cutting business rates is a simple way of clearing the path for entrepreneurs to develop new workhubs where there is demand for them. As stated earlier, business rates are a significant part of the operating costs of many workhubs, which are often run by collectives of self-employed workers our smallest microbusinesses are currently therefore effectively forced to pay business rates indirectly. Passing on cost savings to independent professionals will reduce costs for these workers, encouraging greater collaborative working. B) INCENTIVISE THE USE OF EMPTY PROPERTIES AS WORKHUBS Local authorities can also act to incentivise the development of workhubs, with minimal spending commitments needed. Empty properties are a blight on communities, diminishing the vibrancy of high streets and neighbourhoods and a waste of a precious resource. Councils could easily address this by publishing on their website interactive maps of disused buildings in the area. This would include the dimensions of the property, its rateable value for business rates, its previous use and any other information relevant to future planning permission. This will help to boost economic growth in communities across the UK, supporting the growth of new knowledge based industries where traditional sectors may be in decline. C) EXTEND PERMITTED DEVELOPMENT RIGHTS TO ALLOW EMPTY COMMERCIAL PROPERTIES TO CHANGE THEIR USE Identifying a site is one thing, but getting planning permission for workhubs can be a difficult cumbersome process. Reclassifying retail properties as office space has proven difficult for a number of workhub developers. The ipse Manifesto Infrastructure for independent working 4
Government s extension of permitted development (PD) rights in 2013 has played a notable role in our economic recovery, with agricultural buildings up to 500m² and retail premises up to 150m² able to reclassify as office space without having to go through the rigmarole of planning permission. The impact of these changes of course needs to be fully monitored and evaluated, but there is a clear case to gradually extend PD rights to larger buildings. Government should explore allowing empty retail premises (A1, A2, A3 & A4) over 500m² to be reclassified as B1 office space under PD rights, as well as extending current PD rights in agricultural areas beyond the current threshold of 500m². 3 D) EXPAND SUPPORT FOR RURAL WORKHUBS Rural areas in the UK have experienced huge change in recent decades. Traditional rural industries such as farming and forestry have declined, with the Commission for Rural Communities having highlighted that the rural economy bears much similarity with the national economy, with property and business services and manufacturing the key employers. But the infrastructure which is necessary to underpin this transition to a more knowledgebased economy still lags far behind that in cities, and this must change. As previously noted, workhubs are for the most part based in London and other centres of creativity such as Manchester and Brighton. Facilities in rural areas are sparser, limiting the opportunities for freelancers to share knowledge, ideas, contacts and aspiration. But government has taken important steps to change this, particularly with regard to its 2012 15m pilot programme of five rural growth networks in Devon & Somerset, Durham & Northumberland, Cumbria, Wiltshire and Warwickshire. This has supported the rollout of workhubs typically in underused business parks, brownfield sites, or locations which already have outline planning permission. Early signs from these schemes are overwhelmingly positive - the ability to mirror the benefits that come from clustering businesses in cities seem to be a clear benefit. Echoing this point, a report last year into home working found The added value an enterprise hub can bring to the rural economy is in the way it can help the businesses operating from the hub to gain access to a variety of knowledge networks. 4 Working with councils and Local Enterprise Partnerships, government should back the rollout of Rural Enterprise Hubs in rural areas across the country. Learning the lessons from the five pilot hubs, this will provide a real fillip for those working independently outside big cities as well as contributing to the prosperity and regeneration in areas which have often struggled to diversify their economic profile. 5 Infrastructure for independent working The ipse Manifesto
2. Delivering top class broadband and mobile infrastructure: The Solutions Many of us take good broadband and mobile coverage for granted, but there are still areas in the country where coverage is patchy at best. This hampers the ability of the self-employed to do business and therefore the UK economy to realise its potential. It is imperative government takes action to tackle this, ensuring all communities are properly connected and access on the move is far more extensive. The following steps would provide a real boost to freelancers and the wider economy: A) COMMIT TO 100% ACCESS TO BROADBAND BY 2020 To cement the UK s place as one of the world s leading knowledge economies, the government needs to commit to 100% access to broadband by 2020. On top of this, a maximum ratio between the fastest and slowest speeds would help to address the urban/ rural economic divide. Government should also explore extending the Broadband Connection Vouchers scheme, currently in place in 22 cities to provide vouchers of up to 3,000 to deliver better broadband for businesses. Microbusinesses would really feel the benefits if the scheme was extended to rural areas where coverage is often very poor. B) GUARANTEE THAT NEW HOUSING DEVELOPMENTS HAVE FIBRE-OPTIC BROADBAND Our housing stock desperately needs expansion, with government making significant commitments in the 2014 Autumn Statement to new developments. Through the Homes and Community Agency, which will also decide on the infrastructure needed, a new town with 10,000 homes will be built on a former RAF base at Northstowe, Cambridgeshire. Government will also be backing the development of a new garden city in Bicester, Oxfordshire, which will include 13,000 homes. The Government must use this opportunity to ensure these significant housing projects have broadband fit for the modern economy working with housing associations, or through the Homes and Community Agency when projects are directly commissioned. Fibre-optic broadband offers far greater speeds than standard broadband, with Virgin Media offering up to 152Mbit/s and BT 76Mbit/s. Guaranteeing this infrastructure is in place sooner rather than later will ensure the UK is well placed to be a leading digital economy. C) ACCELERATE THE ROLLOUT OF 4G COVERAGE 4G technology has allowed millions of people to be more productive on the move, including the self-employed. Unfortunately, rollout remains slow government should work with providers, especially in rural areas, to consider mast sharing, also known as onshore The ipse Manifesto Infrastructure for independent working 6
roaming, to help expand coverage. Plans announced in November 2013 by Culture Secretary Sajid Javid MP to move towards mast sharing are a clear step in the right direction. Work should also be undertaken by Ofcom to publicise information on where people can access coverage and where they cannot, using crowdsourced information about mobile not-spots. D) ENSURE THAT RAIL FRANCHISING AGREEMENTS INCLUDE A COMMITMENT TO ENABLING WIFI ACROSS THEIR NETWORKS Eleven of the sixteen current franchising contracts expire in the next two years. As part of the negotiation of new contracts, government should ensure all trains are equipped with free WiFi, in standard as well as first class. By 2020, no commuter or inter-city train service should be without WiFi in the UK. Independent professionals often need to work on the move, and a dearth of good WiFi on trains can be frustrating and a real drain on productivity. Local metro networks such as Manchester Metrolink, London Underground, and Merseyrail would also benefit from this policy. Conclusion These proposals provide a clear blueprint for providing the physical and digital infrastructure that will not only support those working independently, but also boost economic growth and connectivity across the board. Our proposals will: Be easy to implement changes to business rates, the planning system and broadband connections are already well underway only small tweaks to these policy areas are needed to take account of the changing face of the labour market Be cost neutral Big spending commitments are not what the self-employed economy needs, but a policy process which takes into account that 4.6 million people are now working in this way Deliver big benefits Workhubs have been proven to increase the ability of independent professionals to maximise their potential and deliver economic growth. Improving broadband and mobile infrastructure will clearly make it simpler for all citizens to do business and get on with their lives 7 Infrastructure for independent working The ipse Manifesto
References 1. Superfast broadband is taken to mean download speeds of greater than 30Mbit/s. 2. Burke, 2012, The Role of Freelancers in the 21st Century British Economy. 3. A1, A2, A3 & A4 buildings refer to different types of retail premises, including shops, cafes and banks. 4. Graham, 2013, North East (Rural) Home Based Research Professional Contractors Group Ltd trading as IPSE (The Association of Independent Professionals and the Self Employed) September 2014 Registered in England and Wales, number 03770926, Registered office: Heron House 10 Dean Farrar Street, London SW1H 0DX. This document is not intended to constitute legal or professional advice, and neither IPSE nor the document s authors accept any liability for any action or inaction taken on the basis of this document. This document is intended for general guidance and information purposes only. It has been prepared in good faith and represents IPSE s own interpretation of the law; reasonable efforts have been made to ensure accuracy. Whilst this document has been prepared with the help of advice and research, its content is of its nature generalised and it is no substitute for specific legal advice. Individual circumstances will always vary, and specialist professional or legal advice should be sought where required. The ipse Manifesto Infrastructure for independent working 8