Hewitt defends fast track visas and IR35 in BBC question session
Two contractors got questions into Patricia Hewitt's BBC discussion session. The first addressed Fast Track visas, the second, IR35.
Full transcript here.
Simon Burns, Wales:
At a time when the economy is slowing and many people in hi-tech businesses and elsewhere are being laid off, why are so many firms still able to import cheap foreign labour on the so-called "fast track visa" system? Isn't it about time this policy was reviewed?
Answer:
Where there are skills shortages for example in health, information technology and education we've made it much easier for employees to recruit from abroad without having to spend months waiting to fill the vacancies here.
Once the work permit application is made, for any job, the Home Office deals with them very quickly - 6% within 24 hours and 95% within one week.
Workers coming from abroad, of course, have exactly the same employment rights as everyone else.
Andrew McKay, Bracknell, UK:
As a small business owner trying to develop and grow a small fledgling business by designing new software products, how can I ever hope to invest if IR35 applies?
Answer:
Service company workers who are genuine small businesses taking risks, creating wealth and employment will not be affected by the new IR35 legislation. IR35 legislation ensures that workers who meet the accepted definition of an employee will no longer be able to avoid paying tax and national insurance contributions on the same basis as other employees, by using a limited company to sell their services.
The practice of using service companies in this way has become common for IT contractors, but also happens in other industries eg engineering, construction.
Service company workers currently earn an average of £50,000 a year, but, before our legislation, they paid about 21% on average in tax and NICs, compared with 35% for an employee earning the same amount.
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The Editor