Budget brings some positives for sector but IR35 remains unchanged.

Spend relief.

Chancellor Rishi Sunak’s Budget statement has brought a variety of responses from experts and leaders from across the recruitment sector. Against the backdrop of the coronavirus and the possible impact this will have on business and the community, the recruitment sector was dismayed to find IR35 measures would still press ahead as planned. Despite this there were some interesting and positive aspects of the speech for the industry. 

“Unsurprisingly, the chancellor’s speech today addressed ongoing concerns around the Covid-19 outbreak,” said Tania Bowers, Legal Counsel at the Association of Professional Staffing Companies. “While there was a recognition that the virus may affect 20 per cent of the working population and have a significant negative economic impact, it is encouraging to see the government actively mitigate against this with a £12 billion plan to provide support for public services, individuals and businesses.”

“The fact that SME members will be able to reclaim the cost of statutory sick pay due to coronavirus absences up to 14 days will be welcomed by smaller companies,” she said, adding: “This was one of many measures, along with a Coronavirus Business Interruption Loan Scheme, and £2.2 billion grant scheme for small businesses that will help the country continue to thrive in challenging circumstances. However, while there are lots of indications as to how public services may be assisted, it is yet to emerge how sufficient staff will be sourced.”

Bowers noted that IR35 would continue and noted that the apparent further investment by HMRC in compliance officers and technology suggests that they are committed to a smooth implementation and a renewed attack on aggressive tax avoidance.

Bowers also said APSCo welcomed the £1.5 billion made available for further education funding as part of the wider commitment to increase national productivity. “We are also glad to see that Rishi Sunak has followed through with the Conservative party’s manifesto promise to commit to a new £2.5 billion National Skills Fund.”

Julia Kermode, CEO of the FCSA expressed shock that in the context of the support for businesses and individuals dealing with the coronavirus outbreak, the Chancellor made no mention of IR35 or the off-payroll reforms – “except perhaps veiled in his comment with regards to dealings with tax avoidance and compliance when introducing his public sector spending plans.

“The omission is insulting, to say the least for our sector,” she said, “not just to the many thousands of professional contractors who will be affected by the off-payroll reforms, but also to the House of Lords, trade bodies, and the many MPs that have raised their concerns about these reforms to the government.”

Kermode continues: “Recently, HMRC published its review of off-payroll in readiness for implementation in April. Included within this review was a commitment to commissioning external research into the impact of the reforms after six months of implementation. Now that we have absolute confirmation that the reforms will come into effect, the FCSA is calling for HMRC to undertake this research independently, ensure all stakeholders can contribute, and should consider the conclusions from the recent House of Lords Finance Bill Sub-Committee inquiry, particularly as they were dismissive of the reforms.”

Elsewhere, Kermode welcomed the government funding of Statutory Sick Pay (SSP) for small firms with less than 250 employees although she noted it wouldn’t apply for most umbrella firms who will have more than 250 employees. She also noted the change to Entrepreneurs’ Relief, scaling the figure back from a £10 million lifetime allowance to £1 million.  “This is good news for any self-employed person who is looking to close their limited company in light of the forthcoming changes to off-payroll,” she said.

Giving his industry’s perspective, Neil Pattison, director at the UK’s biggest hospitality jobs board, Caterer.com, commented: “The hospitality sector welcomes the news that the government will exempt businesses from paying National Insurance Contributions if they hire forces veterans. Hospitality is already very active in helping veterans back into work and with an anticipated 1.2 million hospitality vacancies by 2024, there is plenty of scope for restaurants, pubs and hotels across the country to help veterans re-enter civilian life while also tackling the labour shortage.”

Mercer’s Practice Lead on Leadership and Workforce Transformation, Lisa Lyons also welcomed the government’s £2.5 billion National Skills Fund, and especially the reference to training and retraining over the course of a lifetime. “We expect to see considerable workforce upheaval in the coming decade, as job requirements change more quickly,” she said. “The race is on for all of us to stay up-to-date and relevant.”

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