Executive Summary

  • Those who work independently often find that there is not a level playing field with larger businesses when bidding for Government tenders.
  • Independent professionals suffer because they are not able to easily deal with onerous compliance requirements and complex contracts, which contributes to Government departments not getting value for money for the taxpayer.
  • Government now aims to increase its spending with SMEs to 33% by 2020. This is an ambitious target and we believe that there should also be a commitment on a minimum spend going to microbusinesses.
  • IPSE believes the Government must make the procurement process far more transparent and simple to allow single person businesses to access the process.

What are the issues?

  • Complexity:
    • Requirements placed on microbusinesses can be very onerous
    • Contractual frameworks can impose complex and inflexible requirements on freelance contractors working with the Government
    • Freelancers looking to collaborate as a consortium may need to meet high minimum capital requirements and need to meet rules designed for much larger businesses.
    • Many contractors are required to have insurances with unnecessarily large liability requirements
  • Security Clearance:
    • Sensitive Government roles, particularly within the Ministry of Defence, rightly require individuals to be security cleared
    • Freelancers without previous contracts in Government are unable to obtain security clearance

What are the effects?

  • Government struggles with procurement means that the taxpayer loses out who has to foot the bill for revenue that is at risk
  • Government departments are not getting good value for money for the taxpayer and are losing out on the valuable flexibility and skills which only freelance contractors can deliver
  • The Government is failing to make effective use of flexible expertise that those working independently deliver

IPSE’s policy on procurement

  • Consultation:
    • IPSE believes that a forum should be established to review how ‘Personal Service Companies’ are engaged by the public sector
  • Break up Government contracts:
    • To ensure that the Government realises the benefits of employing freelancers, the Government should aim for a quarter of its 30% SME spend to be allocated to micro-businesses (0-10 employees), including collaborations of independent professionals
  • Simplification:
    • To overcome the Government’s lack of awareness of the issues that hinder independent professionals it should commit to publishing tender documents in an open source format
    • This would allow microbusinesses to suggest revisions and therefore making the bidding process less onerous
  • Large “tier 1” contractors, large businesses, publish details of who they contract with in order to promote accountability and deliver an increase in procurement of freelancers