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Contractors could benefit from post-Brexit Government reform, expert claims

Contractors could be amongst the beneficiaries of regulatory reform following the vote to leave the EU and the arrival of a new Prime Minister, providing the Government plays to the country’s strengths.

The accelerated appointment of Theresa May and the resulting cabinet reshuffle – including the appointment of Philip Hammond as the new Chancellor – have fuelled speculation as to what the regulatory landscape will look like in a post-Brexit Britain.

For deputy director of policy at the Association of Independent Professionals and the Self Employed (IPSE) Andy Chamberlain, providing further backing to the flexible workforce should be high on the list of priorities for the new Government.

“We feel this is a good opportunity for the UK as a whole to take a look at what makes us different from other countries and to sustain and capitalise on the key skills that we have here already – the contingent workforce being a key provider of this.”

New cabinet to play to country’s strengths

Chamberlain encourages the new Government to prioritise making the important decisions to aid an economic recovery. As research has shown, flexibility played an integral role in keeping the UK economy afloat during the 2008/9 recession, and the contractor workforce is once again expected to have a key part to play.

“I would urge the Government to get on with formulating a plan that will encourage growth in the post-Brexit era. This involves ensuring that we protect the flexibility of the economy and the labour market, which is one of our great strengths.”

Whilst taxation, regulatory burdens and infrastructure are all flagged up as areas that could be improved to the benefit of contractors, Chamberlain notes that there is one matter that arguably requires more immediate attention.

Following the vote to leave the EU, the UK’s access to the single market has been one of the key talking points. According to a recent IPSE survey, 11% of its members work overseas each year. Though not all necessarily in the EU, Chamberlain notes that a large portion will contract in Europe, emphasising the need for the Government to ensure it maintains some form of access to the single market.

Corporation Tax cuts for contractors?

Although the new Chancellor was quick to quash suggestions of a post-Brexit emergency Budget, Chamberlain believes the omens look good for contractors ahead of the delivery of the Autumn Statement, following calls for further Corporation Tax cuts.

“It’s all on the table. There is currently a fear that economic growth will slow down following the decision to leave the EU. So I expect the Treasury will look at things such as Corporation Tax. Let’s remember, this is the Government that has lowered Corporation Tax from 28% in 2010 to where it stands now at 20%, so it’s certainly a possibility.”

Chamberlain also welcomed the news from the former Business Secretary Sajid Javid who called for the personal allowance to be raised by another £1,000 in order to help stimulate the economy:

“We would welcome raising the personal allowance. Over the years we have seen an upward trend in that regard, which bodes well. However, we have a new Chancellor now, so it all depends on what stance he will take.”

Agency Workers Directive to be given the boot?

Widely perceived to be the most likely legislation to be ousted after the UK’s vote to leave is the Agency Workers Directive (AWD). The EU directive, which provides temporary staff with the same basic protections as permanent staff after a qualifying period of twelve weeks, is unpopular amongst employers who claim it inhibits their ability to fill short-term vacancies.

But whilst many are calling for the AWD to be axed, Chamberlain encourages a more considered approach: “It was difficult to start with, and it did cause problems for the temporary labour market. It would be a good idea for the Government to review the AWD. If it isn’t working, and if it’s proving to be a significant administrative burden, they should consider reforming or even getting rid of it.”

Whilst acknowledging that the removal of the AWD could send a positive message to contractors, indicating that the UK encourages flexibility within its labour market, Chamberlain notes that its familiarity within UK employment law may provide an argument to the contrary.

“Contractors, agencies and clients have all gotten used to it over the years, and so it might be that it’s better to leave it now that everyone’s worked it out and they’re relatively comfortable with that regulation.”

Terrible timing for IR35 reforms

One issue that has been thrust back into the spotlight since the EU referendum is the proposed reformation of IR35 in the public sector. Experts have noted that this has come at the worst possible time for the economy, with flexible labour considered to be vital in helping to guarantee a swift economic post-Brexit recovery.

“We’ve written to the new Chancellor and the new Business Secretary,” notes Chamberlain. “We’ve reiterated that one of the most important things for the economy is that the flexible labour market needs to be protected, as it will encourage growth.

“Contractors enable other businesses to be more innovative, as well as helping them to cope with peaks and troughs in demand. We would argue that it’s a bad idea to implement any regime that would restrict that flexibility. We would, therefore, urge the Government to reconsider this proposal.”

IPSE pushing on multiple fronts

Aside from IR35, Chamberlain highlights that IPSE is lobbying the Government on several other fronts to ensure that it takes the opportunity to promote the flexible labour market through the means of improved digital infrastructure and tax reforms.

“We are beginning to write to the new ministers to let them know who we are and what we think the priorities should be. What we’re going to be telling them is the tax system is outdated and needs to be reformed for the good of the flexible economy. We need to reconsider the manner in which people work and implement a tax system that aligns with this.”

Chamberlain also notes that IPSE is pushing for a Government review of regulation and its impact on small business, in the hope that the Government will understand the burden placed on contractors.

“Of course, some regulation is good, necessary regulation,” he concludes. “But what we need is clarity as to what regulatory change will occur. It seems likely that there will be some change now that we’re out of the EU. So some sort of roadmap needs to be put into place to ensure any transition is as smooth as possible.”

Published: 21 July 2016

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