Contractors are by their nature resilient and flexible, attributes that mean the UK’s flexible workforce will undoubtedly continue to thrive despite the dire economic news and lacklustre growth plans revealed in the 2013 Budget.
Chancellor George Osborne’s lack of vision is a lost opportunity to take bold steps to lift the economic miasma that is dampening consumer spending and business investment. And what of the alternative? Shadow Chancellor Ed Balls’ suggestion to borrow and spend more is a solution similarly lacking in imagination.
Osborne’s measures, such as the increased funding for businesses and the National Insurance Contributions (NICs) allowance will fail to address the fundamental issue: It’s not that businesses cannot borrow to grow and stimulate the economy. It’s that business owners lack the confidence to do so because no one in government has convinced them that it has a credible growth strategy. Without that, it is understandable that business leaders won’t invest in extra capacity that they don’t believe will have a market.
And a National Insurance holiday won’t impact on those high-growth companies the UK desperately needs to generate wealth. That’s because they are already savvy enough to be using contractors and freelancers, so don’t pay employer’s NICs anyway.
For a moment, it looked like at least the beleaguered construction sector might benefit. However, not a single ‘shovel-ready’ infrastructure project has been approved – any new spending won’t be seen for at least 18 months. The UK needs its infrastructure upgraded now, and many of the public spending cuts in the Coalition’s early days, heralded as ‘victories’, were to badly needed capital programmes.
And the proposals to stimulate the housing market are astounding. Through his proposals to use taxpayers’ and borrowed money to underwrite the personal mortgage market, the Chancellor shows that he views individual households as a better risk than wealth-creating businesses. His plans, assuming they ever make the statue book, simply prop up what remains an overpriced property market. It is probably too much to hope that his plans to ‘warm up’ the housing market go the same way as the pasty tax.
So, where does all this leave contractors? Well, mostly sitting pretty, actually. The most recent Chartered Institute of Personnel and Development (CIPD) Labour Market Outlook (LMO) is only the most recent of the more reliable labour market reports to confirm that contractor hiring is being used as a resourcing strategy to manage capacity and innovation in the face of continued economic uncertainty.
And two of our Budget commentators, PCG’s Simon McVicker and ClearSky Accounting’s Derek Kelly, both predict gradual increases in contractor hiring as organisations innovate and implement projects they can no longer postpone.
When you add individual industry sector performance and skills to the mix, some core contracting disciplines are close to never having had it so good. Yes, truly. Take the oil and gas sector, which is not only booming in the UK, but also creating massive global demand for UK contractors.
The supply of engineers and IT professionals continues to fall well below demand, which leads many professionals to choose contracting in the first place. This is not just so they can earn more money, but because they can spend so much more of their time being productive on a stream of interesting, ongoing and well paid projects.
The no-growth 2013 Budget did little to benefit contractors. But unlike many Budgets in the past, it actually did little to harm their prospects. Although the economic landscape is looking pretty bleak, contractors will continue to thrive, by doing what they do best.
So thanks for nothing, George Osborne. Like most of the rest of the UK’s private sector, contractors will continue to succeed in spite of, not because of, your economic policies.