Scheme offers self-help for sick workers on the breadline

A scheme providing a form of sick pay to the self-employed is being pioneered in the UK by members of the co-operative movement.

Bread Funds, which provide a new way for people to support each other if they become unable to work through illness or injury, have already proved a big success in the Netherlands, where they were first launched in 2006.

Ten years on, there are more than 200 groups providing local support to 9,000 people. Under these community-based initiatives, clusters of 25 to 50 people contribute an agreed sum of money each month into a fund to support members.

Contributions to funds and payments to members are in the form of gifts, with different levels of contributions related to the level of income at times of illness. Membership is drawn from people who live or work in each area and have been self-employed or freelance for at least a year – new members must be accepted by existing members to join and each group runs on co-operative principles of mutual trust and solidarity.

Backers of the project are hopeful that, at a time when the number of self-employed people in the UK is currently at its highest ever level – some 15% of the workforce  – their plans have more than a good chance of success.

With £30,000 in grant funding from the Esme Fairbairn Foundation, they recently carried out a feasibility study, commissioning market research into the level of interest by possible members as well as looking into all the practicalities involved.

Radical Routes, a Leeds-based network of housing and worker co-operatives which has been in business since 1991, has lent over £573.000 to fledgling member co-ops in the past 25 years.

Radical Routes director Cath Muller is offering administrative support for the scheme.

She says: “Bread funds have worked in the Netherlands because they offer a mutually supportive social network which can help keep businesses going and help people out at times of great difficulty.

“At the moment we are looking after the grant funding from the Esme Fairbairn Foundation and facilitating the bread funds project by creating an administrative environment in which it can flourish.

“Lots of people are really interested and we are going to be stepping up our marketing of the project in the coming period. We have already been personally promoting bread funds at our regular ‘Gatherings’ of like-minded co-operators, which are held four times a year. We are also doing as much as we can on social media and it is up to people like us to spread the word.”

The project is headed by community development financial consultant Stuart Field, a long-time associate of Radical Routes and its Netherlands equivalent. He spent some years working in the Netherlands before returning to the UK a few years ago.

The parent bread funds project, BroodFondsMakers, is offering guidance and support for his plans to bring them to the UK. So how and why did the concept come about?

“Until 2004, people in the Netherlands who were self-employed got proper sick pay, then it was abolished by the government and people were told to get private insurance.

“I personally heard about bread funds when a particular group in Amsterdam asked me to translate their publicity materials and I thought we could set up something similar here.

“They started small in 2006 but in the Netherlands there are now 204 groups with 8,700 participants in major cities to small villages, all based on mutual trust and working together.”

Under the current model, each fund will be a company limited by guarantee with mutual trading status. In the UK, the project is still at a very early stage but it is hoped a pilot scheme in Nottingham will be up and running before the end of the year.

“Schemes like this are urgently needed,” said Mr Field, “because the system is not supporting the self-employed like it used to and the old safety nets have gone so people are looking for other things they can do to protect each other.

“Our market research which asked people in Newcastle and London showed that a lot of them like the idea of supporting one another in this way.

“We are now ready to go, in the sense that to get regulatory and legal approval we had to set up a dormant model company. So the structure is all there but it is only possible once you get the minimum number of people which is 25.

“An initial payment of £100 is also necessary because it has to be financially sustainable and we do not want to let people down.”

He added: “Part of the problem is people in this country have been struggling financially for a very long time but we are nearly there and we hope to set another pilot up in London as soon as we can. At the moment all the pilot groups will be experimental and the terms and conditions might change so people have to be flexible.”

Mr Field points out that the vast majority of people in the UK have very few options when things go wrong and they are suddenly left without an income. Only 8 per cent of the UK population have income protection insurance – compared with 29 per cent who have pet insurance.

And he is optimistic at the project’s chances of success in plugging that gap.

“I hope that in a year’s time the pilots will be up and running and we are working towards a full launch in 12 months’ time. It is all about people supporting each other.  Instead of dealing with bureaucracy and loss adjustors you are dealing with people who want to help with practical on-the-ground support.

“In some cases in the Netherlands they have been able to complete work for other members so their businesses can survive and they all offer a kind of moral support which insurance companies can’t do.   

“They are locally based, revolving around trust and co-operation instead of commercial competition. They can offer practical as well as financial support to get your work back on track as you recover from illness.

“Our pilot groups will give people in the UK the chance to join the growing number of self-employed people in the Netherlands who support each other.”

One of the new recruits to the idea is renewable energy consultant Tom Dixon, who is helping set up the pilot scheme in Nottingham.

“Stuart came and spoke to us about bread funds and we thought it sounded a pretty great idea,” he said. “We started exploring the idea by having a few meetings and there are currently 15 of us so we are looking to swell our numbers to 25 and get things going as soon as we can.

“Bread funds offer people financial security and a sense of community at a time of austerity and lack of support from the state. We are hoping to get it all up and running by the end of the year.”