The Cabinet re-shuffle: Implications for contracting industry
The Prime Minister's Government re-shuffle has broken down some of the bigger Departments whilst transferring existing powers and responsibilities from others and even creating new ones. UKTECH takes a look at the changes set to affect the contracting industry...
In the Treasury, Gordon Brown remains Chancellor. The Prime Minister said Brown is "an excellent Chancellor who had helped to deliver a period of great economic stability which had allowed us to get the extra investment into public services."
Andrew Smith will continue to be Chief Secretary to the Treasury.
The Treasury's Paymaster General remains Ms Dawn Primarolo MP. As one of the foremost architects of the IR35 legislation, Primarolo's continuing position as PMG has many potential implications for the contracting industry as a whole. Her answers to Parliamentary questions in the House over the next couple of months will be an important indication of the Government's stance on the future of the legislation during a second Labour term.
Patricia Hewitt, former E-Minister has become Secretary of State for the Department of Trade and Industry. Hewitt's move to the DTI has important implications for the Employment Agencies Act. Parliamentary sources recently indicated, and agencies continue to hope, that the shift might lead to a redress of the Department's position on the 'quarantine period' for temp-to-third party fees.
Taking Hewitt's place as Minister for E-Commerce is Douglas Alexander - a former parliamentary researcher and speechwriter for Gordon Brown. Alexander's background is largely legal and he was involved in the planning of Labour's election campaign as a general election strategist. Interestingly, Alexander's sister - Wendy Alexander MSP, holds the post of E-Minister in the Scottish Parliament.
Alistair Darling will head up the new Department for Work and Pensions. One of the first issues Darling will have to deal with will be Pension Rights for college lecturers where thousands of contract staff are currently being denied access to the national teachers' superannuation scheme because they are engaged via agencies and are not held to be directly employed. Of more concern to contractors in the knowledge-based sector are the Government's plans to introduce retrospective changes to employment and pension taxation in the form of IR35 and GN11. UKTECH will be closely reporting on developments to GN11 over the next few months.
Working under Alistair Darling is Ian McCartney who has been appointed Minister of Pensions and will be responsible for Basic Pensions, SERPS/S2P and the National Insurance Fund/ NIRS2. This new Department has important overall implications for contractors, agents and clients because it is set to take responsibility for Employment Status law, previously held by the DTI and DfEE. It will also take on board the Department of Social Security.
Also of importance to the contracting community is the transfer of responsibility for work permits and fast-track visas from the deconstructed DfEE to the Home Office. Having taken over Jack Straw's former job as Home Secretary, David Blunkett has already announced that an increase in legal immigration will be one of his top priorities. He has signalled a shake-up in the work permit system so that immigrants can help fill Britain's skills shortages under a US-style Green Card scheme.
The Home Office has specified that there will be a limit on numbers but exact details have not yet been clarified and the ceiling, rather like that on National Insurance Contributions, has not yet been set. Mr Blunkett, who has moved from Education, said: "We will look at connecting the work permit system to ensure it supports the needs of the economy, providing a controlled but legal route for people who seek work to fill the skill shortages in our country."
Finally, Charles Clarke, previously responsible for the Regulation of Investigatory Powers Act and the new Private Security Industry Act (which could oblige IT security contractors to hold the same licence to work as wheel clampers and nightclub bouncers if it is successfully introduced) has been appointed to the new post of Minister without Portfolio as well as Party Chair. A Home Office spokesman told UKTECH that responsibility for both of these Acts will remain in the Home Office, most likely under John Denham - Home Office Minister for State Police.
Richard Powell, UKTECH