Contractor exodus would add to Government's Brexit staffing crisis

by Susie Hughes at 11:19 17/11/16 (News on Business)

The public sector could face an exodus of more than half of its contractors if the controversial changes to the IR35 small business tax come into place.

Furthermore, four in 10 have said that they will demand an increase in their pay rate if they stay. The Government has proposed to change IR35 to tackle the so-called ‘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. Many business organisations are warning Government of the potential for disaster on the delivery of public services if the measures are pushed through. Deeply concerned Freelancer group IPSE, who conducted the research, is deeply concerned that freelance contractors leaving the public sector will further complicate the UK’s negotiations to leave the EU. Advertisement 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, said: “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.” Autumn Statement Philip Hammond, the Chancellor of the Exchequer, will deliver his first Autumn Statement on Wednesday November 23, 2016 at 12:30pm. Shout99 will provide comprehensive coverage; reactions and expert comment on all issues relating to freelancers and small businesses. Tweet -- If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'. - Susie Hughes © Shout99 2016

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