2002: Stories that shaped the year
A review of the main news from the freelancing sector in 2002, including IR35; Fast Track Visas; the market; and broadband...
(You can click on any section for the full report)
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IR35
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Following on from an interview with Sarah Walker, architect of IR35, in 2001, UKTECH was the first news-site to get an interview with her replacement, John Hinton, in March 2002.
Some of Mr Hinton's comments caused controversy within the freelancer community, amongst them his now infamous 'duck test' quote that stated: "If you're a true entrepreneur then IR35 is not going to be causing you any problems... IR35 is the duck test - if it walks and quacks like a duck, it's probably a duck."
In the final part of the interview, Mr Hinton said the Revenue had learnt a lot from the furore caused by IR35, but concluded he was confident the legislation was proportionate to those it applied to.
Later that month, the Inland Revenue announced it would introduce a number of employee-style benefits and concessions for freelancers and other businesses hit by IR35.
Case law was the next planned strategy to tackle IR35 after the failure of the judicial review to have IR35 deemed illegal under EU law.
The Conservative Party sparked fears it had done a u-turn on its commitment to repeal IR35, in the event it regained power, after Iain Duncan Smith told UKTECH there was no longer a party policy on the legislation.
His 'lieutenants' later confirmed that Party's commitment to continued opposition to the measure.
Also in April, a UKTECH survey revealed no recruitment agencies would guarantee a contract as outside being IR35. Other firms, mainly umbrella companies, continued to insist they could provide freelancers with IR35-proof methods of working.
In July, drivers who worked for Parcelforce Worldwide, were asked by employers to leave the company, accepting voluntary severance, and return to the company on a self-employed basis.
The drivers would be free to undertake other business but would have to provide cover during sickness and holidays.
It was reported that the Inland Revenue had worked with Parcelforce on this initiative - despite the obvious irony of its resemblance to a Friday-to-Monday scenario which had initially prompted IR35.
In July, an attempt by MPs to add a new section to the Finance Bill to make IR35-caught freelancers' training costs fully tax deductible failed.
In October, IT freelancer, Lisa Fernley and her company, Lime-IT, won its long-running battle against the Inland Revenue following a judgment by the Special Commissioners. Independent tax experts provided exclusive analysis of judgment.
Rounding off the year, IT freelancer John Williams spent around £8,000 of his own money fighting Hewlett Packard over claims of unfair dismissal. In a case that will have implications for many freelancers in the future, Mr Williams was found not to be an employee of HP. Our analysts were present in court and provided a definitive account of events...
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Fast Track Visas
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The year started badly for the Government's backing of employers' claims of critical skills shortages in the IT sector when UKTECH revealed that the Home Office had based its drive to increase foreign workers in 2002 on information collected during positive market conditions in 1999.
The following month the European Commission accepted a plan to increase legal immigration to help cover skills shortages, especially in the IT sector, by up to 1.6 million extra workers.
In March, a senior member of the EU skills planning team in Brussels told UKTECH he was using information submitted by the UK Home Office in 2000 to plan for skills shortages in 2002/3 because he has no other official information to use.
The Minister for Small Business, Nigel Griffiths, denied foreign workers were putting UK professionals out of work, saying: "We don't tend to import cheap labour at a skills level" in an interview with UKTECH in June.
The biggest news of the year was reserved for August, when the Government removed its IT skills shortage list after dossiers of evidence of abuse of the system were collected and handed to the Home Office.
UKTECH subsequently ran an exclusive article written by Philip Ross, the lobbyist and IT freelancer who had successfully planned and executed the campaign to wipe clean the skill shortage list.
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The Market
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The year began with REC's monthly Report on Jobs showing a large increase in the availability of both permanent and freelance workers in the IT sector as redundancies, rates cuts and foreign outsourcing all kicked in simultaneously.
February marked the first time the recruitment industry heard about the EU's draft proposals to give temporary workers the same rights as their permanent counterparts, sparking uproar across the board. This would, of course, later become known as the Agency Workers' Directive.
In the two following months, industry 'findings' would optimistically declare the UK recession over...
... and the growth in demand for freelancers rising at its fastest rate for thirteen months in March.
The rate of decline in demand for IT freelancers has fallen to its lowest level for 15-months in June...
... only for REC, authors of the report, to acknowledge that a lack of demand for IT freelancers had become a serious concern for recruiters the following month.
Meanwhile, a survey by UKTECH revealed the number of IT freelancers who had closed their businesses to go permanent had doubled since June 2000 with the number of freelancers out of work rising more than three-fold in two years.
Our feature in July on China and India showed where most foreign outsourcing work from the West was going.
The following month, recruitment agencies told UKTECH they were being instructed to overlook ex-contractors trying to enter the permanent market because of client's fears they would 'jump ship' when business picks up.
Nick Wells from Jobstats, the IT market statistics service, provided his take on why rare skills were quickly growing in demand in September.
Leading market analysts began warning against false hope of a recovery in the IT market in 2003 in October.
However, in the same month a survey by Gartner put the UK at the forefront of a 2003 IT recovery alongside Ireland and Italy.
One month on, a study by global IT analysts, IDC, officially declares 2002 the worst ever year for the global IT sector.
Rounding off the year, a report from the national IT skills barometer, e-skills UK, shows more than 140,000 skilled workers are unemployed or 'on the bench.'
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Broadband
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OFTEL, the telecom regulator, reported half a million high-speed DSL, satellite and cable internet connections in May.
... which looked insignificant compared to the achievements of South Korea, which led the world in broadband take-up with a total of 9.2 million connections in July.
Stephen Timms took over from Douglas Alexander as e-Minister in May, promising broadband to those outside major cities. A new Government team pledges to increase coverage as BT refuses to upgrade rural exchanges for broadband unless enough customers pre-order the service.
By September BT had changed tack, announcing it would spend £10 million over ten days on an intensive advertising campaign to raise connections to one million by summer 2003.
In October, official broadband roll-out figures were shown to be at odds with the Government claims of success after Internet research company, NetRatings, found the number of UK households with broadband ranked the lowest in Europe.
Statistics from the Organisation for Economic Co-operation and Development (OECD) showed UK broadband take-up at 0.08 per cent, ranking 28th in the world after Portugal and the Czech Republic.
Senior IT directors jumped in, arguing the Government is concentrating on slower ADSL and cable modem connections whilst ignoring funding from the European Union, which other countries were using to provide faster access at lower prices.
In November, Prime Minister, Tony Blair, told delegates at the first e-summit, held in London: "We have deliberately chosen the competitive route in rolling out broadband." Mr Blair announced funding to deliver broadband connections to every school by 2006 as part of a £6 billion Government cash injection into UK IT.
In December, OFTEL, published a report claiming faster broadband take-up in the UK than in other countries. Again, the claims were challenged by campaigners as "apples being compared to pears," according to Richard Nuttall, Director of Better Broadband for Britain.