Trade bodies call for proper definition of ‘self-employed’ and delay to IR35 extension

Recruitment trade bodies have called on the chancellor to use today’s Budget to legislate for a proper definition of the self-employed and delay the roll-out of the extension of IR35 rules into the private sector.

The calls come ahead of new Chancellor Rishi Sunak’s first Budget speech in Parliament today.

Outlining her most pressing priorities for the chancellor, Tania Bowers, legal counsel at the Association of Professional Staffing Companies (APSCo), said the roll-out of IR35 in the private sector still has the potential to not only impact individuals who have the entrepreneurial spirit to assume the risks and burdens of self-employment, but also the sectors of the economy that rely most heavily on independent contractors. 

“Therefore, we are calling on the government to allow sufficient time for a full and comprehensive review, which will result in a statutory definition of the self-employed and sub-groups within that definition, including ‘independent professional’. Such a definition would enable those highly skilled and well-paid contractors who operate via PSCs [personal services companies] to be differentiated from those elements of the self-employed workforce who are lower skilled and lower paid, and are potentially more vulnerable.

“APSCo also supports new investment from the budget to improve the quality of apprenticeships – an invaluable route into skilled, high-value professions. In order to make full use of the Apprenticeship Levy, APSCo proposes that the government reforms levy funding so that pots can be used in other ways. This includes providing training opportunities for agency workers to ensure their skills remain in line with those required by businesses, and releasing funds to independent professionals so that they can finance their own continued professional development and skills expertise

“Finally from the new budget, APSCo would like to see further commitment from the government to develop the work of the Industrial Strategy to ensure that all regions of the UK contribute to future success. This means continued public investment into these regions in order to address the skills shortages and a lack of funding in infrastructure that prevent certain areas from thriving. A renewed focus on technical higher education and in-work training and development will improve the domestic skills base across all sectors.”

Meanwhile Tom Hadley, director of policy at the Recruitment & Employment Confederation, says the chancellor’s over-riding priority for the Budget should be to maintain stability. 

“Coronavirus is causing unprecedented levels of uncertainty and angst for businesses. Meanwhile Brexit and the new immigration system leave big questions unanswered for industries like healthcare, agriculture and logistics about how to address major skills shortages. Jobs are the bedrock of society, providing the Treasury with two thirds of its revenue and a means for people to fund their lives, care for loved ones and display their skills. Great work is good for the economy, health and happiness.

“Against this concerning backdrop, in our submission to the Treasury we called for a good Budget for jobs, which does not put at risk the UK’s dynamic, entrepreneurial and flexible labour market, particularly at this time of growing uncertainty for UK employers, workers and jobseekers. 

“The IR35 rules are not fit for purpose and are already having an adverse effect on flexible jobs, which have been in decline for the first time since April 2013. The chancellor should use the budget to delay rolling out IR35 into the private sector to April 2021. The budget also needs to address one of the economy’s biggest challenges – skills shortages. The chancellor should transform the Apprenticeship Levy into a broader training levy that benefits agency workers and facilitates progression routes in key sectors which struggle to attract UK workforce.”

Adrian Marlowe, chairman of the Association of Recruitment Consultancies, called on the chancellor take the bull by the horns and address the most pressing issues that emerged at the time of the last election, including the post Brexit deal and the arrival of the coronavirus.

“There has been talk about a corona budget but there are fundamental issues that need attention.

“First the retention of flexibility in the workforce should be underpinned by positive government policy. Government seems to be working hard to destroy flexibility by wishing to tax all deployed workers as employees, the proposed new IR35 rules being the most obvious and recent example. There should be a tax give away reflecting the fact that self employed workers who are supplied do not generally have employment rights and accept greater risk, for example work security, than employed workers.

“Second, adjustments to the apprenticeship levy to make a more obvious and desirable connection between training in the areas we need in this country and future employment for our own workers. Third the retention of incentives for entrepreneurs to create employment, countering the recent erosion of tax reliefs on dividends and providing reliefs for entrepreneurs rather than just pure investors.

“Fourth investment into infrastructure programmes that drive homegrown manufacturing and innovation at a time when the corona virus has graphically exposed our inordinate dependency on China, the effect on the environment of globalisation in terms of shipping goods around the world, and the need to reduce emissions.

“The chancellor has much to grapple with, but the above we believe would strengthen our economy in both the short and the long term.”

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