The NHS is being depleted of its much needed highly skilled workers as a direct result of the public sector IR35 reforms. Locum doctors and nurses are being lured to the private sector by firms and recruiters using online job boards to advertise ‘outside IR35’ contracts.
This is stretching already scarce resources for the public sector body, which is one of several organisations struggling to juggle the IR35 compliance burden along with a diminishing workforce.
“We’ve seen this happen across various sectors, but in the healthcare industry it has the potential to cause some serious damage,” comments ContractorCalculator CEO Dave Chaplin. “This was obviously an unintended consequence of the IR35 reforms but the Government really should have seen this coming.”
NHS struggling to compete with private sector recruiters
Recruiters are advertising practitioners’ positions as ‘outside IR35’ across various specialist online job boards, as well as major job sites such as Indeed. One advertiser even used ‘want to avoid IR35?’ as part of its pitch.
This is in addition to the significantly higher rates of pay available in the private sector. Recruiters on Jobs4Medical have advertised hourly rates of £80-£90 for locum doctors, compared with the £65 per hour that the NHS is reportedly offering.
Positions for social workers, who are also in short supply, are also being advertised as ‘outside IR35’, with the recruitment agency even offering IR35 advice to candidates.
Government failed to heed contract sector warning
The warning signs were there months in advance. In August 2016, ContractorCalculator published the results of a survey which found that 80% of contractors would sooner abandon the public sector than accept a contract inside IR35.
When considering that contractors can lose up to 20% of their take-home pay if caught by IR35, this comes as little surprise, though Chaplin warns that all signs towards an expansion of the rules into the private sector in the near future:
“The obvious failings of this two-tier tax system provide clear indication that the measures will eventually be rolled out into the private sector. This would be a disaster for UK contracting, but as it stands the public sector is suffering as a result of these ill-thought out measures.”
Public sector IR35 reforms are ‘a tax on the NHS’
However, locum doctors and other highly trained medical staff who want to remain in the public sector do have more bargaining power than HMRC or the NHS considered. Prior to the reforms’ implementation there were reports that the NHS told its entire locum workforce that it would be caught by IR35 and placed on a payroll.
We have seen many reports of rates going up for these highly skilled contractors in the NHS. The fact is many contingent workers are successfully negotiating higher rates, as Chaplin points out.
“We have seen an increase in rates in the NHS as it battles to retain staff.” He concludes: “Locum doctors have the upper hand and they know their worth. More money may be going to the Exchequer but in many ways the IR35 reforms are turning into a tax on the NHS.”