Following the release of Arras People’s latest report on the Impact of IR35 on the Project Management Domain, we delve a little deeper with the project management contractors who have been working in the public sector since the introduction of the Off-Payroll Workers Regulation in April this year.
We wanted to find out how the change has impacted them – hear it from their own mouths which is what we’re sharing in this article today.
So what have been the impacts felt by those contracting in the public sector today?
1. Less Roles Available
Project management contractors are reporting that there appears to be less project management roles coming out of the public sector. The interesting thing here is, as one contractor put it, “We know there is work to do but nothing is moving. It’s a perfect storm.”
Does that mean that the storm brewing on the horizon will mean when work becomes critical there will be a shortage of resources (as they have decided not to sit around and taken up offers elsewhere) or will there be a rethink about certain roles being deemed “outside” the regulations where once they may have been deemed “in”?
2. Higher End Roles are Not Worth Doing
Those working at the higher end in project management – like programme management or project consultancy type roles are turning away from the public sector because the roles – whether rightly or wrongly – are deemed to be inside the regulations and therefore subjected to the tax demands.
As one contractor put it, “Pitiful day rates make programme consultancy simply not worth it.”
Why would you take an IR35 role and have no sick pay, holiday pay and no protections (and no expenses) when the pay is so poor.
3. Its Less Attractive to Work in the Public Sector
Contractors make the conscious decision to change their whole approach to working life. They weigh up the pros and cons and of course one of those is having a take home pay that covers “travel costs, holiday, sick pay, pension, training and accountancy services”, which “are all payable out of the take home pay after IR35 leaving very little. Also, the rates on offer do not cover the above expenses fully.”
Tensions are running high, one contractor states, “I hate and detest this legislation… The money is no longer enough to pay the bills and feed and it has removed any incentive or desire to work for the government or related agencies”. Another, “Almost half of my wages was deducted as tax and NI. It has made the public sector a very undesirable place to work for me”
Stronger feelings too, like this contractor who is walking away, “Goodbye IR35 and all those myopic, over zealous tax legislators, who obviously don’t understand life outside their little public sector closets.”
IR35 has killed the public sector procurement market. This was always very buoyant creating employment and tax incomes as well as injecting the required change skills into the public sector. It is almost as if they have retracted to a development stalling position due to this legislation. I am also less likely to bother working for reduced rates and will likely work less for any public sector clients.
4. Turning to the Private Sector
We found out in the latest Budget that the feared news of the Off-Payroll Worker Regulations being extended to the private sector didn’t materialise (for now)
For many contractors who had been working in the public sector, the obvious choice was to think about moving into the private sector, which is not without stress (take a look at past articles about making the move from the public to private sector)
The impact is already being felt in the private sector too, as one contractor states, “More and more public sector contractors are leaving the sector and flooding the private sector market hence fewer opportunities to secure a role. Also, daily rates are being driven down due to the market being saturated with readily available resource”
The government is killing the contractor profession for those individuals who have worked for many years in permanent employment to establish themselves as professionals in their field and who have earned the eligibility and credibility to be able go contracting and add business benefit to a variety of organisations whilst achieving a healthy work / life balance.
5. Taking Longer to Find Work
It is inevitable that some contractors working in the public sector will find it longer to secure new contracts if they are actively waiting for positions that are deemed outside the regulations. For some contractors it has been difficult since April. “Very few jobs available that match my remuneration expectations” means the pool for potential roles has been drastically reduced.
The flip side is of course that public sector opportunities have opened up for people who are quite happy to work inside the Regulations. There has been comments that indicate this means people with less experience and as a link to that, younger in age. “I would also argue that this will ultimately force down the (average) calibre of staff as it reduces the market and also becomes a sort of ageism.”
6. Death of the Flexible Workforce
Retiring or turning to a permanent role are just two of the outcomes to the latest Regulations on contractors in the public sector. They’re also a vocal lot in terms of wanting to protect this way of life, not just for the individuals who choose to work on a contracting basis but also for the organisations who need this type of workforce and for the economy as a whole.
This is not just a case of sour grapes – a gripe that many who have never been a contractor would dismiss as “they’ve been having the cake for a long time now, why shouldn’t they pay taxes like the rest of us”
They have a point. Potentially the country could lose the ability to have a flexible workforce because there are absolutely no financial incentives to taking a risk and working freelance with all the uncertainty that goes with that.
“It’s a real shame that the government is removing these opportunities for people to run a business, and losing having the convenience of a flexible workforce / resource pool to tap into. Very sorry state of affairs.”
“We are moving from a world of permanent employment to one of flexible, freelance work. The government needs to get with the times and work out how to set up a tax structure that doesn’t punish freelancers…this is the future for more of us than permanent work is. We still need to ensure we’re not left with no other choice than to get a permanent job”
The success of the UK arises from its flexible workforce ie being able to hire the right skills for the right length of time. If businesses are forced to move from contractors to perms then the cost to businesses will rise and they will lose the flexibility to have the right skills for only as long as these are required.
To find out more about the Impact of IR35 on the Project Management Domain, take a look here.