Income Protection for Micro-entrepreneurs Under COVID-19: Serving Neoliberal Interests or Small Traders?

The Institute of Small Business and Entrepreneurship Conference in Cardiff, October 2021, was a joyous occasion that brought researchers together face-to-face for the first time since the COVID-19 pandemic began. The paper awarded ‘Best in Conference’ analysed UK policy to protect the income of small traders and microbusiness directors during COVID19, asking whether the policy served the interests of small traders or the political-economic system of neoliberalism. The authors were Professor Julia Rouse and Rebecca Weicht (Manchester Metropolitan University) and the ERC’s Professor Mark Hart and Dr Neha Prashar.

The genesis of this paper was the ERC’s rapid analysis of the Self-Employment Income Support Scheme (SEISS), identifying the groups of self-employed workers excluded from the scheme (link here). We estimated that 750,000 were excluded from any income protection from the SEISS policy and pointed to the much weaker support made available by Universal Credit.

We recognised that the SEISS was a bold policy move that provided relatively high levels of protection to the majority. And, that crisis policy making inevitably involves rapid decision making and operational constraints. Nevertheless, we – and many business small providers – were faced with the stark consequences for the large minority excluded from any support under the SEISS policy. It soon became apparent that small traders working as directors of microbusinesses were also excluded from income protection; their only option was to furlough themselves, but this prohibited trading and compensated for the employee element of their income, not dividends.

Entrepreneur distress propelled us to take an Engaged-Activist Scholarship approach (Rouse and Woolnough, 2018)[1] to gaps in support. Professor Rouse and Professor Hart moved from informing and advising Government to actively helping to build movements that would lobby for change. We particularly worked with the All-Party Parliamentary Group for Gaps in Support[2], the Federation of Small Business, IPSE, fellow academics and metro mayors to keep raising the issue with Government. Ultimately, a generation of new traders were included in the 2020 Budget announcement, but our other calls for policy change were ignored. People who entered self-employment (or profit) during the pandemic, hybrid entrepreneurs and traders earnings over £50k remain excluded.

How can we explain an enterprise-loving Government turning their backs on people they tend to hail as heroes: new venture creating entrepreneurs and ‘hard-working families’ combining employment with entrepreneurship? That question propelled our ISBE Conference award-winning paper.

First, we need to tell you what we mean by neoliberalism. We draw on political economy theory to present neoliberalism as a version of capitalism that promotes economic competition as the founding principle of society. It is a political project that, through particular institutional and regulatory arrangements, fosters market competition and establishes the inevitability of this market logic as ‘common sense’. It is not simply the idea of ‘free markets’ and the rolling back of the state, but the active use of a small state to create markets and enable the holders of capital to compete and accumulate more capital.

Our paper argues that the SEISS package was a fix to secure neoliberalism as the prevailing system during the very real threat posed by COVID-19. Pandemic measures called on us to see our interdependencies and to collaborate, making personal sacrifices to help wider society. Neoliberal logic had little utility at this time: instead of competition and individual interest, we needed to hail key workers and collective interests to survive the virus.

We argue that the SEISS policy operated as a partial compromise that preserved neoliberal logic as the UK’s primary ‘common sense’ discourse during the crisis. The Chancellor combined rhetoric around ‘being in it together’ and ‘not forgetting’ small traders with neoliberal logic in announcing the SEISS: he was being generous with our entrepreneur heroes, but was unable to save all businesses. This ultimate reversion to the common sense of market competition obscured debate about why particular businesses should be abandoned, and whether exclusion was falling hardest on the most vulnerable.

Gaps in support also arose from a history of neoliberal policy making that co-opted the voices and interests of micro-entrepreneurs (erroneously aligning them with the holders of big capital). We know that the policy departments of small business representing bodies worked tirelessly to campaign for small businesses under COVID, and ExcludedUK arose as a social-media based interest group. However, there was weak mainstream political objection to the gaps in support and, ultimately, lobby groups compromised on policies to protect a core majority. Most of the vulnerable self-employed and microbusiness directors had poor collective voice because, we argue, neoliberalism has co-opted their voices and interests so that more radical objection and alternatives are delegitimised.

Lastly, we consider the technical problems faced in developing a better crisis policy. The neoliberal move to deregulate entrepreneurship meant that many traders and their right to social protection could not be validated by the UK government. This reflects the messiness of their rights that was critiqued prior to the crisis – not least in the Government-sponsored Taylor Report (2017)[3]. The rights of hybrid entrepreneurs have not been subject to debate and were easily (and wrongly) marginalised as ‘hobbyists’.

Under-investment in e-governance systems by a neliberal small state also prevented more complex policy making. As Self-Assessment, business taxation and Universal Credit systems do not ‘talk’ to one another and are confused in taking the household, business and individual as the subject of taxation, automating fair policy in a crisis is not possible. It would require paper-based checks that a small neoliberal state can present as disproportionate effort. Nimble and fair policy making clearly relies on regulatory reform and better e-governance.

Finally, we set our paper in the broader context of crisis policy making. The climate crisis makes it likely that further crises will shape entrepreneurship policy making. It is encumbent on us as researchers to learn from the uneven and unfair COVID-19 policy making and to think ahead: what policies should we advocate next time? More deeply, we should all consider this: how far do we want to support a neoliberal enterprise culture and policy? For example, should we include warnings about social protection, inside and outside crisis, in enterprise education and enterprise support? More optimistically – what kind of enterprise culture can we imagine, and what exists elsewhere? International comparative work on this issue is urgent, as is creative commitment to thinking differently in research that makes itself accountable to the real vulnerability of many small traders.

We hope our paper will be available via publication in a peer reviewed journal in 2022.

Professor Julia Rouse

[1] https://journals.sagepub.com/doi/pdf/10.1177/0266242617749688
[2] https://www.parallelparliament.co.uk/APPG/gaps-in-support
[3]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/627671/good-work-taylor-review-modern-working-practices-rg.pdf

Please note that the views expressed in this blog belong to the individual blogger and do not represent the official view of the

Enterprise Research Centre, its Funders or Advisory Group