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David Cameron: THE SELF-EMPLOYED ARE A KEY PART OF OUR LONG-TERM ECONOMIC PLAN FOR THE COUNTRY

Prime Minister David Cameron tells IPSE’s media adviser Jim Cassidy about his respect for the growing army of go-getters.

Throughout his term, his main focus has been the economy, the economy, the economy and the one sector that he has never stopped talking-up is the growing army of independent professionals and the self-employed. So what better place to start with questions for the PM than to ask him why he has championed and put his full political weight behind supporting this sector.

“I have huge respect for those who leave the comfort of a salary, strike out on their own and try to build something from scratch. And there has never been a better time to do that. Technology is allowing more people to set up fast-growing businesses from their homes and new business models are allowing large firms to emerge without having to employ people directly.

“These positive factors have driven a large rise in self-employment – part of the 1.85 million extra jobs created since 2010 – and are a key part of our long-term economic plan for the country. That’s why we have changed the tax system to support the self-employed, clamped down on late payment, set up schemes like Start-up Loans and liberated sole traders from needless regulations like health and safety, which had been designed for larger businesses.”

Some experts expect the number of those self-employed to overtake the number of those working in the public sector in the next few years.

What’s your message to the self-starters and go-getters thinking of starting this journey?

“Go for it. There is an army of self-starters on the move across Britain’s economy, working in almost every sector, every region and all age groups. There has never been a better time to start a business, and I want that to remain the case after the election with a business-friendly government, led by me, that does everything it can to back enterprise.”

More and more women are choosing to start their own micro businesses, sometimes for economic reasons and often for a better work/life balance; IPSE has called for maternity benefits to be introduced for women in this sector; while this has received a degree of encouragement from your party, is this something your government would pursue if they are returned to power?

“We have taken steps to help the self-employed enjoy the benefits that would normally only have accrued to the permanently employed. For example, our plan for tax-free childcare will be accessible for the self-employed, which isn’t currently the case. I am very keen to look at other ways that we can offer support and I know that maternity benefits is one area of concern.”

Many within this sector believe that IR35, introduced by Labour in 1999, was not only cumbersome, but ill-thought-out and unworkable. If returned to power, would your government revisit this legislation and ensure that fairer, more transparent tax guidelines are introduced for the self-employed?

“I appreciate the concern over IR35 and that is why I asked HMRC to improve the way in which it is administered. They have now published new guidance to help provide contractors with greater certainty about the likelihood of an HMRC investigation for IR35 reasons and we have set up the IR35 Forum to include HMRC, taxpayer representatives and professional advisers, including IPSE, with expert knowledge and experience of how the legislation operates in practice.”

Among 85% of small businesses, one of the main gripes is the issue of late payments, from both the public and private sectors. Late payments cause cash flow problems that put an added burden on this sector. Your government has made strides in this area, but would you like to see the Prompt Payment Code get more teeth? IPSE has suggested a small business conciliation service, again something Conservative Ministers seem to be attracted to.

“Tackling late payment has been at the forefront of our work and we are taking a number of steps to help small firms and the self-employed. We are rewriting the Prompt Payment Code so that 30-day payment terms are to be the norm of acceptable behaviour in the UK, with 60 days as the maximum in all but exceptional circumstances. This revised Code will have teeth, with a new enforcement body that will be able to eject companies that fail to live up to the new standards, and potentially with the power to levy fines.

“From the beginning, I have insisted that the Government pays promptly. I’m pleased to say that all Government Departments meet the target of paying 80% of undisputed invoices within five days and all others within 30. Finally, I have made a commitment that if I win the election I will set up a version of Australia’s Small Business Conciliation Service, as suggested by IPSE.”

 

On the face of it, the latest jobs report from KPMG and the Recruitment and Employment Confederation (REC) painted a positive picture of the UK labour market and economy in general writes Derek Kelly, managing director at the Optionis group.

The monthly snapshot, which draws on original survey data provided by recruitment agencies, found that the number of job vacancies on offer rose at the fastest rate in more than 15 years in January.

Permanent staff placements continued to increase strongly in January, while temp billings rose at a rate only marginally slower than December’s 15-year peak.

Note of caution

Amid the broadly optimistic tone, however, there was a warning about the so-called skills shortage that is affecting certain sectors – notably IT, digital media, engineering and construction.

As the REC’s Tom Hadley put it: “Recruiters are struggling to source skilled people to satisfy demand.

“Many of the latest in-demand roles are being sought by employers looking to invest in staff to build their businesses including customer services, marketing and sales roles, although there are skills shortages across all sectors.

“This again underlines just how critical the issue of skills shortages is becoming, as businesses will not be able to contribute to economic growth if they cannot find the skilled workers they need.”

Barrier to growth

The REC is far from alone is raising concerns over skill shortages.

In a recent survey of more than 90,000 employers, the UK Commission for Employment and Skills found that 146,200 job vacancies (22%) went unfilled last year because of “inadequate skills”, compared with 91,400 (16%) in 2011.

Douglas McCormick, a commissioner at UKCES and managing director of engineering consultancy Atkins, said: “There’s a real possibility that businesses might not be able to make the most of the (economic) upturn because they don’t have the right people.”

Responding to the report, Neil Carberry of the CBI said: “The flip side of faster growth is an escalating skills crisis. While this isn’t surprising, it makes it all the more urgent to close the skills gaps in science, technology, engineering and maths to support the recovery.”

Looking for answers

So what is the answer to Britain’s skills crisis? Long term, there is a consensus that educational reform is key.

Experts agree that we need businesses to work more closely with schools and colleges, so the education system starts producing more young people with the aptitude and attitude to help Britain compete in the globalised economy.

In the short to medium term, however, the solution is much less clear-cut.

Personally, I’m firmly of the belief that the answer rests at least partly with professional freelancers and contractors like you. Here are three reasons why:

1) Freelancers give hirers the best of both worlds

In today’s rapidly-evolving global economy, the only constant is change. Businesses need to be agile, responsive and adaptable in order to thrive.

Increasingly, hirers want access to skills and expertise without having to commit to employing an individual on a permanent basis, with all the attendant risks and responsibilities.

Engaging a highly skilled contractor, freelancer, consultant or interim on a temporary business-to-business basis enables an organisation to do just that.

The growing desire for flexibility means contractors and freelancers are ideally placed to capitalise on the economic recovery and the subsequent increase in demand for skills and expertise.

2) The era of the generalist is over

The most in-demand roles in the knowledge economy of 2014 are in specialist areas.

Whether it’s data analysts, web developers, software engineers or cloud experts on the IT / digital side, or authorities in lean principles in manufacturing and engineering, it’s in niche areas that the skills shortage is being felt most acutely.

Recruitment agencies simply cannot find enough qualified candidates in these areas, and the laws of supply and demand dictate that the earning potential of individuals who do fit the bill is increasing rapidly.

Many smart contractors and freelancers decided long ago to carve a niche for themselves, and are now highly skilled in one particular area.

These individuals are exactly the kind of experts that companies – not to mention UK PLC as a whole – are crying out for.

3) Contracting is set to grow

During the long period of economic stagnation that followed the financial crash, skilled flexible workers such as IPSE members were a relatively under-utilised segment of the UK workforce.

As the downturn hit, freelancers and contractors were often first in line when the axe fell. Rates and contract opportunities remained relatively flat for several years.

Now, with the recovery accelerating and business confidence returning to pre-crash levels, we’re seeing a dramatic reversal in freelancers’ fortunes. The UK’s professional contracting market has grown by 8.7% year-on-year, according to the latest figures from the Association of Professional Staffing Companies (APSCo).

Demand levels across the traditional ‘core’ contracting disciplines of accounting and finance, IT, engineering, interim and construction are all firmly in growth territory.

This growth in demand is expected to continue throughout 2014 and beyond, with the likely effect that more and more talented professionals will feel emboldened to try their hand at contracting and freelancing.

As Britain’s army of independent professionals continues to grow, the ability of this group to solve the nation’s skills crisis will be more widely felt and appreciated. Historians and economists may well record that it was contractors and freelancers who enabled British industry to capitalise fully on the economic recovery of 2014.

The author is Derek Kelly, managing director at the Optionis group – home to specialist contractor accountant and IPSE Affiliate ClearSky Accounting.   

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