With a majority Tory government now in place following last week’s emphatic general election result, several major recruitment trade bodies are seeking clarity on key policy areas that will affect the industry.
The Recruitment and Employment Confederation (REC), Association of Professional Staffing Companies (APSCo) and the Association of Recruitment Consultancies (ARC) have all called for the new government to make its position clear on policies such as IR35 reform, immigration policy and confirmation that a no-deal Brexit will be avoided.
During the election campaign, chancellor Sajid Javid promised a review of proposed IR35 reforms that have had the contractor sector profoundly concerned.
Adrian Marlowe, head of Lawspeed and chair of the Association of Recruitment Consultancies, has requested that the government move forward with this IR35 review as soon as possible in order for business to know for certain whether the IR35 reforms will apply from the proposed April 2020 implementation date, but also to follow up on a wider review of the IR35 concept of employment status in law as proposed in a report published by the Department for Business, Energy and Industrial Strategy (BEIS) last December:
“However, we call for this review to be in conjunction with reform of employment status. In February 2018 it was recognised that ‘employment status is the core of both employment law and the tax system’, but that ‘it often fails to provide the clarity and certainty that individuals and businesses need’. The Good Work Plan in December 2018 promised to review IR35 employment status, yet little action to provide that clarity has yet been taken.
“IR35 relies on determination of employment status and many businesses affected will not only suffer from lack of certainty but may be forced to undertake unnecessary administrative change and pay inappropriate levels of tax as a result. It makes little sense to proceed with the IR35 change without reviewing the employment status rules.
“We welcome investment in the NHS, education and climate change policy, particularly as the UK aspires to lead on climate change technology. Each demands policies for staff supply that promote work in the UK to those we need from home and abroad to address the highlighted shortages. Recruitment and employment specialists will inevitably remain key … At the same time, we would welcome greater investment in national training in the areas that are really necessary – for example, health, education and green technology, and believe a sharper focus for the apprenticeship levy into these areas is compelling.”
His calls were echoed by Seb Maley, CEO at IR35 experts Qdos: “The government has an opportunity to finally deliver for the self-employed who, after years of neglect, remain sceptical of the Conservative Party’s commitment to them. The likelihood is, many freelancers and contractors will have voted Conservative based on the party’s IR35 promise. The government now has a responsibility to honour its pledge to hold a genuine review of IR35 reform.
“While a review is a sign of progress, it doesn’t mean the changes will be scrapped. Therefore, contractors, recruitment agencies and end-clients must continue their preparations.”
Neil Carberry, chief executive officer of the Recruitment and Employment Confederation, called for an immediate delay to the IR35 reforms in order to allow for a more thorough review, in addition to a revision to planned post-Brexit immigration policy:
“The biggest challenge to growth is skills shortages. The nation’s productivity hinges on government’s ability to address this. One huge opportunity is to open up the Apprenticeship Levy to the millions of people who choose flexible work. But for the sick to be treated, for homes to be built and for food to be produced, the UK also needs an immigration system that meets employers’ needs for skills at all pay-levels – not just ‘the brightest and the best’.
“Few things matter more to people’s daily lives than the work that they do – the government must act now to underpin the jobs of the future. While we welcome the Conservatives’ promise to review the IR35 tax reform, it is wholly unfit for purpose and implementation must be delayed.
“Our message to the incoming government is to work with us to rev up the UK’s jobs machine and make great work happen.”
Tania Bowers, general counsel at the Association of Professional Staffing Companies, also warned of the dangers of a points-based immigration system to the flexible workforce, as well as the risks of a damaging no-deal Brexit given the tight eleven-month Brexit transition period:
“We believe this increases the risk of no free trade agreement – effectively creating a ‘no-deal’ scenario – which will not be favoured by the majority of our members.
“Although not mentioned in the party’s manifesto, since the document was published, Chancellor of the Exchequer, Sajid Javid has promised a review of how the government could further help the self-employed, adding that ‘one thing in particular’ he wants to look at is the proposed changes to IR35. We welcome this commitment whole-heartedly.
“In terms of future migration policy, our members will welcome the government’s commitment to ‘attract the best and brightest from all over the world’. Although an ‘Australian-style’ points-based system would, in theory, remove barriers for highly skilled professionals, APSCo maintains that we need a system which is sufficiently flexible to enable those without a permanent job offer to live and work in the UK.
“APSCo also welcomes the Conservatives’ commitment to improve the Apprenticeship Levy but we believe they could do more to ensure that the system works effectively. With recent figures revealing that employers have lost £133m from Apprenticeship Levy accounts due to funds expiring, there is clearly need for reform.
“Overall, I believe our members will be encouraged by the policies put forward by the incoming government, and we look forward to working with the new government to ensure that the voice of the professional recruitment sector is heard at the highest levels.”
Chief executive officer of The Freelancer & Contractor Services Association (FCSA), Julia Kermode, also called for a delay into IR35 reform: “We must now hold [Javid] to account and press him to conduct that review, and with only just over three months to go before the legislation is due to be rolled-out in the private sector, surely that must mean a postponement?
“We are already seeing the very real impact of this damaging legislation on businesses and thousands of professionals. If they don’t delay then the promise was nothing short of an arrogant and disingenuous move to secure votes.
“We have also learned today that the budget is now being planned for February/March, which is simply too late for the off-payroll legislation to be properly implemented. Many businesses have already invested heavily in preparing for the changes and given the legal requirement for reasonable care it is unrealistic to press pause for a potentially meaningless review to take place. If the government wants to avoid utter chaos and shambles, businesses need clarity now.
“I would also hope that the government uses its mandate to deliver on the Good Work Plan. One of the commitments was to regulate umbrella firms from April 2020 and we are yet to see any draft legislation and time is running out. And, with many sham ‘umbrella’ firms opening up in business with the specific aim of cashing in on the off-payroll reforms it should be a priority for Mr Johnson, lest we will see a slew of tax avoidance schemes wreaking havoc once again on the lives of innocent people along the lines of what we have seen with the loan charge.”
17th December 2019.
