Following hints in the Financial Times from a senior Treasury official that recently reformed public sector “off-payroll” IR35 rules may soon be extended to the private sector, recruiters have rounded on the proposal, describing it as an assault on flexible working and “a logistical nightmare”.
Financial secretary to the Treasury Mel Stride told the FT that extending IR35 to the private sector was now an “issue of fairness”. He claimed that it had been effective in the public sector by promoting compliance and drastically increasing the number of contracting professionals who were now being taxed as employees.
His assertions immediately met with trenchant rebuttals. Sam Hurley, Director of Operations at the Association of Professional Staffing Companies (APSCo) and Seb Maley, CEO of Qdos Contractor, both underlined that it was a mistake to interpret the increase in employee-style taxation as evidence of compliance.
The increase masked the fact that the market had adjusted to the new rules by handing the additional costs of increased income tax and NICs to the public sector, so that the same service now cost considerably more.
Other voices from the staffing industry have now joined the fray. Tony Goodwin, founder and CEO of Antal International, told Recruiter magazine that contractors and temps had made a lifestyle choice and could not be characterised solely in terms of the caricature promulgated by unions and centre-leftists that all flexible models of engagement amounted to the exploitation of workers on zero-hour contracts. The UK, he said, had one of the greatest flexible workforces in the world next to the USA, adding:
“Woe betide a government that tries to go against the market. If people want to work flexibly or freelance — the other word they use instead of contracting — let’s start talking about flexibility and freelancing, rather than contractors and temps, and maybe the government and other left of centre people start to realise this is what the market wants.”
Matt Collingwood, MD of VIQU, told Recruiter that his recruitment consultancy had witnessed a 30% fall in the number of contracting professionals working in the public sector in the run up to the new rules. He continued:
“I think your contractors will engineer it that they are deemed to be falling outside of it, and they will work with the clients around that because they can almost force the clients to handle it. I’ve seen examples of that in the small amount of public sector work that we do — the contractors have seen close to a 20% increase on their salary and they [employers] might have been paying that just to keep them.
“It’s a logistical nightmare for all concerned.”