New e-Minister has chequered history with IT contractors

The new e-Minister, Stephen Timms, has had a chequered history with contractors in the IT field through his involvement in introducing IR35, his shareholding in Ovum and his connections with 'big business'.

Mr Timms, the former Financial Secretary to the Treasury, came under fire from the Conservatives when he moved a 3.7 per cent holding he had in Ovum Ltd., an analyst and consulting company, into an arms-length trust "in order to avoid any possible conflict of interest" at the same time questions were being asked about it.

At the time, The Times reported the possible conflict of interest when Mr Timms was Financial Secretary to the Treasury in December 1999 and IR35, the so-called stealth tax, which small consultancy businesses argued gave larger consultancies an unfair advantage, was a controversial plank of his Department's legislation. The article claimed (Times, December 24, 1999) that Mr Timms was 'embroiled in an embarrassing row over a potential conflict of interests after he was accused of standing to benefit from a tax change he has been championing.'

At the time, the Treasury said that Mr Timms had 'issued instructions in March 1999 (when he was in the Department of Social Security) to divest himself of his shareholding,' but revealed the shares were still held in his name ten months on.

Francis Maude, then Shadow Chancellor, said the revelation raised "serious questions about Mr Timms' involvement with closing the tax loophole."

Its then Political Director, David Ramsden said: "At the last General Election, the majority of the membership of PCG voted for New Labour. They were attracted by the bright new vision for Britain portrayed by Tony Blair and fed up with the constant revelation of sleaze by Old Tory. This latest revelation indicates that New Labour are no better.

"We believe that IR35, which will damage if not destroy many small IT and engineering consultancies, has been lobbied for by big business, like Ovum."

As a Treasury Minister, Mr Timms played a significant role in the House of Commons debate which re-introduced IR35 to the legislation after the House of Lords had voted to remove it. That debate took place on what has since become known as 'Contractor Wednesday,' when more than 700 members of the Professional Contractors Group lobbied their MPs in Parliament in a 'Green Card' to express their views on IR35. During the IR35 debate that evening,

Mr Timms told the Commons: "Hundreds of millions of pounds" were at stake and that the Government "are not going to back down [over IR35].

Mr Timms later explained his position in a letter to the Parliamentary Commissioner for Standards in which he denied Ovum stood to benefit from IR35.

The letter said: "Ovum does not work on the development of software or telecommunications systems, it is a marketing consultancy. The Managing Director of Ovum, Julian Hewett, told me that he had not heard of IR35 until the article in the Times on 24 December. He does not believe that Ovum will be affected for better or worse by IR35.

"A small part of Ovum's business comprises publication of highly specialist evaluations of software testing tools, but Ovum does not itself test any software."

After his recent appointment as e-Minister, a Conservative Party spokesman told UKTECH: "The irony of Mr Timms' appointment will not be lost on anyone in the IT industry. After helping to introduce a new tax that hit contractors hard, he has now gone to be the Minister in charge of e-commerce. Let's hope he is more concerned about the state of the IT industry in this post than he was in his last."

UKTECH asked the DTI press office for a comment from Mr Timms over his views on small consultants in the IT sector and his plans for the future.