4 - Disabled self-employed people and the UK welfare state

Summary

Introduction

Welfare support can play a vital role in creating conditions for disabled people to enter and remain in work through self-employment and entrepreneurship. Social security schemes are key mechanisms for promoting and supporting ‘inclusive entrepreneurship’ (OECD/European Union, 2019) – that is, when all are given an opportunity to start and run a business – by providing financial and non-financial assistance to people who face additional risks or uncertainties (Kitching, 2014). For example, complete financial independence from welfare may be unachievable for some entrepreneurs with severe impairments or fluctuating conditions (Kašperová and Kitching, 2021). Yet, the role of welfare support in facilitating inclusive entrepreneurship is largely under-studied.

Although entrepreneurship has been encouraged by successive UK governments in addressing unemployment and social exclusion (Rouse and Jayawarna, 2011; Xheneti, 2021), policies seeking to increase the quantity and quality of enterprise among disadvantaged and under-represented groups have generated relatively modest results (Arshed et al, 2019). It is believed that such policies have even perpetuated welfare dependency (Smith et al, 2018), as this chapter refers, possibly because of failure to provide adequate investment to deal with the underlying barriers faced by socially excluded groups (Rouse and Jayawarna, 2011).

There has been a significant increase in non-traditional forms of work, particularly solo self-employment, both in the UK (Giupponi and Xu, 2020) and elsewhere (OECD, 2019). Much of this increase has been described as ‘false self-employment’ driven by the on-demand or gig economy (Gregory, 2017). The gig economy is believed to have generated a class of low-paid self-employed, many of whom rely on social security for survival, prompting questions about whether self-employment is a viable route into decent work (Williams and Lapeyre, 2017). These developments bring into question the role of the welfare state in supporting the growing number of vulnerable self-employed (IPSE, 2019). This is particularly pertinent considering the impact of COVID-19 on self-employed people and small business owners, many of whom have relied on Universal Credit and other state-backed financial support schemes for survival (Rouse et al, 2020).