PCG warns of IR35 harm at Institute of Directors seminar
The Professional Contractors Group highlighted the damaging effects of IR35 on the UK's flexible workforce at a recent 'Question Time' seminar for the recruitment industry at the Institute of Directors.
The 'Question Time' panel featured: Lord Haskins, Chairman of the Better Regulation Task Force; Philip Hammond MP, Opposition spokesman for Trade and Industry; Patience Wheatcroft, City Editor at The Times; Richard Donkin, Employment Correspondent at the Financial Times and Ann Swain, Chief Executive of ATSCo.
The panel came under scrutiny from a senior group of delegates from the top 100 recruitment agencies in the UK, as well as industry representatives.
"I think you're quite a vocal lot and have seriously terrified figures in Whitehall. This issue has been taken very seriously." - Lord Haskins addressing the PCG in front of representatives from the UK's top 100 recruitment agencies
Philip Ross, PCG Public Affairs Advisor, told the panel: "I represent the Professional Contractors Group, we're almost like the modern trade union for freelance workers. We were founded over two years ago and have got 14,000 members. We told the Government when we met with Alan Johnson, Minister of Employment Relations, at the DTi recently: 'We're not temporary workers, we are professional contractors.' The aim of our members is not actually to find full-time employment in the long-term - it is to stay as freelance workers. We have been asking the DTi to try to recognise this as well as to support the role of agencies as acting on our behalf by treating us as their clients and marketing our skills for us."
Lord Haskins replied: "I think you're quite a vocal lot and have seriously terrified figures in Whitehall. This issue has been taken very seriously.
"You've highlighted a very serious problem in the regulations. Amongst this perfectly legitimate part of the employment market, it's beginning to be recognised you're offering businesses choice with regards to working practices. What we mustn't do is allow it to get too flexible so holes develop in the ability to control it - that would be my main concern.
[Lord Haskins issued the following statement to clarify what he meant by this after UKTECH.com readers requested further information: "What I meant to say was: 'It is wrong for employers to take people on as contractors so as to avoid their obligation as employers.'"]
"Another concern is what is going to happen to this market [of contractors] in the economic downturn."
Mr Hammond said: "If the workforce is to become more flexible we will have to start supporting individual workers to manage and drive their own training. If people spend a small amount of time at each business, then move on, it would be unrealistic to expect them to invest substantial sums in training them. We have to facilitate and support individuals to treat their skills as part of the equipment that they use for their daily work. They have to maintain and upgrade their skills routinely and I think we should support them via the Employment Bill and tax system."
Philip Ross said: "When you have skills, they depreciate, and one of the tragedies under IR35 is that you could not invest in skills under untaxed income which puts you at an immediate disadvantage compared to larger employers - you're actually de-skilling the flexible labour market."
Widget Finn, a freelance journalist, asked the panel whether it thought the recruitment industry was doing enough to improve its image in the eyes of politicians and the media. Ms Finn had asked the same question at a recruitment conference held at the IoD four months previously, eliciting much the same response.
Ms Swain replied: "No, there is lots more work to do. We are being left behind in the political arena and in the eyes of the public. We need to increase general understanding and the reputation of our industry. We need to make sure our opinions regarding issues such as flexible workers are heard by those who shape the regulations that govern us."
Ms Wheatcroft added: "I don't think you even have a voice. We get opinions on subjects from all manner of industry bodies but are very rarely bothered by the recruitment industry. It is an industry that is struggling to get its message across."
Mr Hammond said he believed one of the main reasons for the industry's low profile was due to: "The legislation that prevents the person seeking work as being seen as a client of the agent... If you could charge fees to flexible, highly-skilled workers who choose to adopt flexible work and work through agencies - I wonder if it would change the perception of the recruitment industry in the eyes of politicians and the media."
He continued: "The Employment Bill shows that conventional attitudes in politics towards the age-old system of 'employee-employer' run very, very deep. There's still a deep-rooted idea that flexible work isn't really work and that temporary or contract jobs are not 'real' jobs and I'm afraid that some of that agenda filters through into Government legislation."
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Richard Powell, UKTECH