The amendment would require umbrella companies to be overseen by a licensing authority nominated by the secretary of state for the Department of Business and Trade (DBT).

Speaking by video last week to the Freelancer and Contractor Services Association (FCSA) in Manchester, Lord Holmes said he had introduced the amendment after “great consultation and conversation through FCSA” but that the clause was withdrawn when fellow Parliamentarians “saw this as bringing in an early, burdensome approach seeking to bring yet another entity, another quango into being. But the truth is, it’s nothing of the sort”.

The amendment says: “After section 5(1) (ec) of the Employment Agencies Act 1973, insert – ‘(ed) requiring employment businesses participating in employment arrangements to be subject to a licensing authority nominated by the Secretary of State’.

“Essentially,” Lord Holmes said, “this brings umbrellas into the bill. That’s the way to remember it. But what I wanted to ensure was that there was a level playing field, there was consistency, clarity, fairness for all organisations now brought into scope, which, as the bill is currently drafted, isn’t the case.” 

The amendment would allow “licensing of a nominated entity (to) be brought into being, not doing anything fancy, nothing novel, merely enabling fairness and a level playing field, and reflecting largely what is the case in almost any other sector of the economy that you could choose to look at”.

The former Olympic medallist said he will resubmit the amendment and meet with ministers and others to “hopefully have them accept it at report stage. If they don’t, then it’ll be for me to work with colleagues and to consider whether we push it to a vote to try and win that, to get it into the bill”. He reiterated: “It really isn’t anything exciting or exceptional; it’s simply seeking to bring that clarity.”

Work on the ERB so far has led the government to aim to shift from the umbrellas the PAYE liability for failing to properly address taxes for money earned by umbrella workers to recruitment agencies. However, in a call two weeks ago with recruitment industry leaders and others with interests in the sector, HM Revenue & Customs leaders suggested that the new “direction of travel” could be adopting joint and several liability to spread potential responsibility for ensuring compliance.

The phrase ‘joint and several liability (JSL)’ means that multiple parties who owe a debt or obligation are held responsible both together (jointly) and individually (severally). This means a creditor can pursue any one of the liable parties for the full amount owed, or they can pursue all of them together.

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