Despite some uncertainty over whether it would even happen – the first budget of the new majority government is just weeks away. At a time when the direction of government policy could have such an important effect on the talent landscape and wider health of the economy, there are several details that APSCo would like to see included from new Chancellor Rishi Sunak.
As he settles into his new position, we hope that the Chancellor continues to review how the self-employed are classified and taxed. There has been promising signs in this regard, and we welcome the recent compliance statement from the Treasury which confirms that HMRC will take a ‘light touch’ approach to IR35 non-compliance in the first year.
The fact that all businesses now have a statutory obligation to confirm whether or not they are ‘small’ takes the onus off others in the supply chain, while confirmation on the timeline for disputes is also welcomed. Many of our members will also be particularly relieved that the rules will no longer apply to clients based wholly overseas. These modifications show that HMRC have taken on board the views of our members and the wider professional staffing community.
However, the rollout of IR35 in the private sector still has the potential to not only impact individuals who have the entrepreneurial spirit to assume the risks and burdens of self-employment, but also those sectors of the economy which rely most heavily on independent contractors, such as banking, pharmaceuticals and technology. We hope that this will resonate with the new Chancellor given his strong background in business and finance.
Therefore, we are still calling on the government to allow sufficient time for a full and comprehensive review, which will result in a statutory definition of the self-employed and sub-groups within that definition, including Independent Professional. Such a definition would enable those highly skilled and well-paid contractors who operate via PSCs to be differentiated from those elements of the self-employed workforce who are lower skilled, and lower paid and are potentially more vulnerable.
Reform apprenticeship levy funding
APSCo also supports new investment from the budget to improve the quality of apprenticeships – an invaluable route into skilled, high value professions. However, for many employers the current apprenticeship levy is too restrictive, and due to a lack of candidates and restrictions on how funds can be used to upskill existing talent – they often lose out on the funding they pay into the levy pot.
In fact, in September 2019 the Government revealed employers have lost £133m from apprenticeship levy accounts due to funds expiring. The original aim of the levy was to fund the training of three million school & college leavers by 2020, but this has failed to materialise.
In order to make full use of the apprenticeship levy, APSCo proposes that the government reforms levy funding so that pots can be used in other ways:
• To provide training opportunities for Agency Workers to ensure their skills remain in line with those required by businesses, thus maximising their own earning potential and fulfilling their career aspirations
• To release funds to Independent Professionals so that they can finance their own continued professional development and skills expertise
As the city which generates approximately 22% of the UK’s GDP, there is no disputing that London is still the number one economic region in the country. However, in recent years, post-industrial towns and cities of the Midlands and the North of England have attracted some of the UK’s largest employers. For example, Leeds is now home to the headquarters of Channel 4, while HMRC employs 6,000 staff in Wellington Place, the new urban quarter of the city.
From the new budget, APSCo would like to see further commitment from the government to develop the work of the Industrial Strategy to ensure that all regions of the UK contribute to future success. This means continued public investment into these regions in order to address the skills shortages and a lack of funding in infrastructure that prevent certain areas from thriving. Tying in with a reform to apprenticeship levy funding, a renewed focus on technical higher education and in-work training and development will improve the domestic skills base across all sectors.
With the 2020 budget around the corner, it will be interesting to see what tone the government sets going forward. At APSCo, we are confident that the government and Chancellor will take the right actions needed to enable the UK’s skills availability to increase – so that the wider economy continues to prosper.