Contractor exodus would add to Government staffing crisis at a time of Brexit uncertainty
IPSE, the Association of Independent Professionals and the Self Employed, is deeply concerned that freelance contractors leaving the public sector will further complicate the UK’s negotiations to leave the EU.
IPSE commissioned research has found that over half (54%) of contractors will leave the public sector if changes to the IR35 small business tax come into place, and four in ten (39%) will demand an increase in their pay rate if they stay.
The Government has proposed to change IR35 - complex rules designed to tackle ‘false self-employment’ - in the public sector. Currently it is up to the individual doing the work to determine their IR35 status. However, this proposal would shift the liability onto the public sector organisation or recruitment agency which engages the individual’s business. The client/agency will then be responsible for applying employment taxes to those businesses that are deemed to be ‘caught’ by the new rules. In effect, the Government wants to tax these businesses like employees, without offering any employment rights. Many other business organisations are warning Government of the potential for disaster on the delivery of public services if the measures are pushed through.
This comes at a time accountancy firm, Deloitte, reports that the Government is already facing a 30,000 civil service staff shortage to deal with Brexit.
Chris Bryce, IPSE CEO, explained: “Government departments are working on over 500 Brexit-related projects. The public sector has never needed self-employed contractors more, they supply vital specialist skills on a flexible basis. Yet the Government is considering bringing in a measure that will drive these specialists out. This policy must be urgently stopped.
“Our research has shown this measure, if implemented, would force the self-employed out of the public sector altogether, robbing it of a key, flexible resource and damaging the delivery of vital public services. The last thing we need is to put our negotiations to leave the EU at risk due to skills shortages in key areas.
“We have sent our research, along with a comprehensive response to the consultation, to the Chancellor. We urge him to consider this and use Autumn Statement to assure public sector bodies and the self-employed that the Government will abandon this deeply concerning proposal, especially in light of the clear requirement for more resources to handle our exit from the EU.”