Draconian and flawed off-payroll working rules must be reformed if Rishi Sunak is to have any prospect of winning over a crucial part of the electorate, says Dave Chaplin
Today, the UK boasts a highly talented freelance workforce who have become the engine of the UK economy and UK plc. They are a group of people who have shunned both the career ladder and the security that comes with being an employee, choosing instead to be their own bosses and deliver their professional services to clients on a commercial contract basis.
These one-person businesses pride themselves on being the best at what they do and deliver niche skills to firms on an as-needed basis. All parties benefit from this arrangement: contractors can work when they want, and firms gain access to the best expertise and experience they need without the added burden of employment rights and costs.
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But, unfortunately, this vital sector has been thrown under a bus by the Conservatives, who HMRC and Treasury convinced to go ahead with the draconian and flawed off-payroll working rules. And, not surprisingly, the bureaucrats鈥 ideas have resulted in the taking away of rights for these people to be their own bosses. Hardly Conservative values, are they?
Rishi Sunak now has a mammoth task on his hands if he is going to regain any credibility for the Conservatives in the eyes of self-employed people
There was a glimmer of hope on 23 September, when the former chancellor Kwasi Kwarteng announced his intention to repeal the rules. However, those plans were quickly quashed when his replacement, Jeremy Hunt, U-turned on the promise of repeal and, with it, the potential to win back the trust of the self-employed.
Rishi Sunak now has a mammoth task on his hands if he is going to regain any credibility for the Conservatives in the eyes of self-employed people. They may purport to be the party of small business, but the prime minister has let down the self-employed twice; firstly, by excluding a large majority of them from any financial support during the pandemic and, secondly, by imposing on them the off-payroll legislation, which damaged them further.
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The Conservative Party needs to make amends with the self-employed and show them that these people are valued, but the damage may have already been done.
Unless we see action rather than platitudes, I foresee self-employed people turning their backs on the Conservatives and engaging with the opposition parties, which may have better policies to support rather than punish freelancers.
Will the Labour Party help the self-employed?
The off-payroll rules have exacerbated 鈥渮ero rights employment鈥, and some firms insist that freelancers still operate via limited companies but then class them as 鈥渆mployed for tax purposes鈥 under the off-payroll rules. Consequently, these individuals are being taxed like employees but without the benefit of any rights.
Perversely, the tests for being an employee are the same for rights and tax 鈥 and a fair outcome would see an automatic trigger put in place so that, when a firm classifies a contractor as being 鈥渆mployed for tax purposes鈥, the associated rights also kick in. But, alas, this is not the case. The individual must drag the firm through an employment tribunal to obtain them.
They and their clients have entered into commercial contracts in good faith, which politicians or the taxman should not then curtail
Labour is likely to want to stamp out zero-rights employment. However, they should also be mindful that the self-employed have rights, too 鈥 the right to be their own boss.
These people are not victims, have not been pressured into working the way they do, and both they and their clients have entered into commercial contracts in good faith, which politicians or the taxman should not then curtail.
The next general election
At the last general election, IR35 became a battleground, as all the opposition parties promised an IR35 review. The Tories were compelled to promise the same, but then cheated the electorate because a proper review never happened.
Any promises that the Conservatives now make must be concrete. Unless they do something with legislative force, the voters will again turn to opposition parties 鈥 most obviously Labour, the party most likely to win.
In any election, self-employed people are a crucial group to win over. With Labour seeking to gain power, maybe they are the ones now to convince to help the self-employed. If they promise to fix the disaster that the Conservatives have created, they may, in turn, win a large majority.
Dave Chaplin is CEO of IR35 compliance solution and author of
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