A new study by the Association of Independent Professionals and the Self Employed (IPSE) and the Chartered Institute for Personnel and Development (CIPD) exposes serious damage in the public sector caused by the changes in self-employed tax law (IR35) introduced last April.
The research polled 867 public sector contracting professionals and 115 hiring decision-makers, the majority (84%) of whom were based in NHS Trusts. The findings show that over half (51%) of the public sector hiring managers reported that they had lost skilled contracting professionals as a consequence of the rebooted IR35 rules. 71% reported that they were currently struggling to retain contract staff.
Of the public sector contracting professionals surveyed in the study, 40% reported that they had seen projects delayed and 35% reported that costs had risen since the reforms were imposed. More managers (52%) reported rising costs and delays, and even wholesale cancelation of projects.
There was also a worsening of the administrative burden brought by the IR35 reforms, which made public sector bodies and recruiters responsible for determining a contractor’s tax status.
A huge 80% of hiring manager respondents reported major workload increases involved in engaging and paying contracting professionals after the reforms. There are further problems in the pipeline: three quarters (75%) of the hiring managers polled reported that it was now more difficult to recruit contractors. In light of the findings, which expose the extent of the damage to the public sector, IPSE is calling on the government to abort its plans to extend the same IR35 reforms to the private sector.
IPSE’s CEO, Chris Bryce, described the results of the study as a ‘resounding retort’ to seriously flawed research from HMRC, which has minimised the true impact of IR35 in the public sector. Bryce said that the new findings corroborate what he and his colleagues had heard anecdotally since the changes were imposed more than a year ago – that they are not working. He said that they had caused major damage across the public sector, delaying important TfL projects and contributing to the severity of the NHS staffing crisis.
Explaining that the public sector was a ‘fraction of the size of the private sector’, Bryce warned that the consequences would be far worse if the government, defying all reason, proceeded with its plan to impose new IR35 rules there, too.
Bryce summarised: “It would be nothing short of a disaster. For the good of the self-employed, for the good of businesses across the UK, and for the good of the economy, the Government must take heed and reverse these dangerous, reckless plans.”