Understandably, contractors have questioned this Government’s commitment to the independent workforce for some time. And despite claims from The Conservatives themselves that they are the Party of enterprise and small business, the ongoing tax treatment of contractors tells a very different story.
The introduction of unpopular and subsequently damaging IR35 reform in the public sector was perhaps this Government’s first big mistake. The second looks increasingly likely to be the roll-out of similar changes in the private sector. And it is this which could cause irreversible damage to the already precarious relationship between the independent workforce and the Government.
This theory is supported by research too. Newly published Qdos Contractor data has revealed 90% of independent workers believe The Conservative’s attitude towards the self-employed poses a very real threat to this way of working. And if the Government’s single-minded approach to IR35 is an indicator of things to come, these contractors aren’t wrong.
To allow the UK’s independent workforce to thrive, the Government must rethink its stance on IR35. After all, freelancers and contractors make up 42% of the UK’s 4.8 million self-employed. Should the Government blindly plough on and introduce further changes to IR35 (not to mention any other short-sighted tax reforms) the damage caused could lose them the contractor vote entirely.
In all of this, the massive economic contribution of the independent workforce cannot be overlooked. In 2016, it was estimated freelancers and contractors earned the UK £119bn. To put this into perspective, this is a sum that rivals the output of the UK motor industry.
These are just a few of the factors the Government must bear in mind as they map out fiscal policies for years to come. But there are immediate concerns to address too, and the ongoing IR35 consultation gives The Conservatives an opportunity to reflect on the damning reality of last year’s reform and think carefully about the impact that extending similar changes to the private sector could well have.
If new changes to the IR35 legislation are rolled out in a similar fashion to public sector reform, the Government would not only risk losing the waning support of contractors completely, but also threaten the livelihoods of millions of self-employed workers and vast numbers of companies in the supply chain.
The independent workforce has grown by 43% in the past decade alone, and this way of working is widely considered the new and future way of working. With the fate of IR35 hanging in the balance, now is the time for the Government to make amends for recent mistakes and listen to contractors at long last. After all, these workers could quite possibly hold the key to The Conservative’s long-term political success.