Average hourly rates for contractors have fallen in the past year, according to research from umbrella firm Parasol.

The research shows the average hourly rate for umbrella contractors has fallen in the last 12 months from £34.41 to £33.12; however, contractors over 35 are typically £10 an hour better off then their younger counterparts.

Meanwhile, the difference in rates between male and female contractors has increased to £3,225.38 a year.

Highest average rates are to be found in greater London and the South-East, while lowest average rates are in the East Midlands, followed by Northern Ireland and the North-West.

Rob Crossland, chief executive of Parasol, says: “Contractors, like the majority of workers in the UK, have seen a squeeze on their hourly rate in the last 12 months. When you look at this in addition to the competition that is out there for each contract then the basic laws of supply and demand mean rates have suffered as a result.

“We firmly believe though that contractors have a massive role to play in the UK’s economic recovery and in the last two months we’ve seen an increase in the number of contractors enquiring into our service, so prospects are picking up.

“I’d also advise all umbrella contractors to make sure they are claiming for all of the legitimate business expenses they can in order to maximise their take-home pay.”