Public sector contractors came in for yet another bashing on the media site Exaro News, as the media site ‘revealed’ a ‘buried review’ confirming that there are 2,400 senior contractors and interims working in the NHS.
But yet again, the story focused on juicy headlines at the expense of hard facts. Why is it that some organisations find it so hard to accept the realities, and positives, of contractors and interims in the public sector?
We’ve covered this topic on numerous occasions since the ‘Ed Lester affair’ was first broken by Exaro News in 2012. At the time, it prompted the Treasury review of contractor and interim workers in the public sector. It also made the phrase ‘off payroll’ into an expletive, rather than celebrating the fact that using contractors allows the public sector to very cost-effectively bring in the experts it needs for short periods, without burdening taxpayers with yet more full-time civil servants.
And what of the review? It concluded that 94% of public sector contractors provided assurance that their tax affairs are in order. In other words, there wasn’t really a problem in the first place.
Furthermore, the later Lord’s inquiry concluded that the use of limited companies is a legitimate form of trading for small service providers, such as contractors and interims. And what Exaro News is claiming to be a “buried” NHS review was entered into the public evidence for this very inquiry.
“Serial contracting is a feature of the British workforce and is supported by both businesses and contractors,” the Lords’ report confirmed, as well as acknowledging that there are many reasons to incorporate, and work “off-payroll”, other than reducing tax bills.
Without senior interims and project managers, many elements of the UK’s public service would either grind to a halt, or deliver an inferior service. The vast majority of senior interims working at board level in the public sector are hired for a specific skill and experience set that the public sector otherwise would not require, or be able to pay for, on a full-time or permanent basis.
Similarly, there are many functional specialists, particularly in IT, that are hired to work on specific projects. Again, their skills are not needed on a full-time permanent basis and would represent poor value for the taxpayer if they were contracted in that way.
There are two other key elements to using interims and contractors off-payroll and trading through limited companies; and these are benefits given to each of the parties in the contract.
For the public sector client, it simply costs them less to hire an interim or contractor, as shown by our analysis of the costs of a senior interim we did at the time of the original Ed Lester debate show. That represents net greater value for the taxpayer.
Also, interims and contractors have chosen to become what they are – small service providers – through conscious career and lifestyle choice. They have contracting careers that mean there are downtimes between assignments when they pay themselves out of the cash reserves built up in the company when they are working.
As small businesses and not employees, contractors and interims don’t receive any of the benefits associated with being an employee. They make their own provision, by taking out company pensions, death in service and other life assurance, sick pay insurance and so on. They generally also have to pay for expensive business insurances that their public sector clients insist on, such as coverage for professional indemnity. Short periods of employment severely disrupt this process and make it more expensive for the contractor to maintain their own pay and safety net.
It is these last two points that frequently get lost in the debate over off-payroll workers in the public sector. The benefits to both parties of the relationship are considerable. Why hide them behind headlines designed to inflame rather than inform? And why drive from the public sector the very people taxpayers so desperately need?