Member Article

Trade body responds to the Spring Statement

Responding to the Chancellor, Rishi Sunak’s Spring Statement, Tania Bowers, Global Public Policy Director at the Association of Professional Staffing Companies (APSCo), comments:

“The news that the National Insurance Contribution (NICs) threshold has been raised to ensure both the employed and self-employed can earn £12,570 without paying NICs from July is not what we expected or have called for. APSCo wrote to the Chancellor earlier this year calling for a delay to the NICs contribution increases due to the Health and Social Care Levy. This was based on inflationary pressures leading to rapidly rising costs, the additional costs to business driven by implementation of off payroll legislation and the risk of a dampening of economic recovery. Sadly, since then global events including the Ukraine war has led to the economic growth forecast for 2022 to be slashed from 6% to 3.8%. Although today’s announcement shows he has listened to some degree through the increased threshold, this doesn’t support the needs of the wider workforce and will not mitigate the tax increases for most agency workers and independent contractors.”

“Sunak’s claims that there will be an income tax cut is again welcome news, but without further details it is difficult to know what impact this will have, though we do welcome the increase to the employment allowance. With the Institute for Fiscal Studies (IFS) revealing that the Chancellor has raised taxes more in two years than former Labour Chancellor Gordon Brown did in a decade, any support to reduce the financial strain many are experiencing will be beneficial.”

“The Chancellor’s announcement that there will be an assessment as to whether or not the apprenticeship levy is ‘doing enough’ is welcome news. At APSCo we have repeatedly called for a rethink on how these funds are accessed, including the recommendation that the scope of the levy be broadened to cover administrative costs and ‘bench’ salaries to facilitate a commercial, realistic and flexible scheme in which recruitment firms can fund ‘flexi-job’ apprenticeships. This would enable the professional development of agency workers across placements. We will continue to lobby for these changes on behalf of staffing companies, including in our role as a Department for Education Intermediary Ambassador, while this assessment is underway.”

“In order to meet the country’s immediate needs, we’re pleased that the Government recognises the benefit of highly skilled immigration, in particular the disproportionate role it plays in driving innovation. The Spring Statement notes that “around half the UK’s fastest growing businesses have at least one non-UK-born co-founder…That is why the government is focused on creating a visa regime that will attract highly skilled and entrepreneurial individuals from across the world.” We hope legislation will fully support this as we have been asking for since 2016.”

“While the Chancellor didn’t mention it in his statement, given the current challenges around the cost-of-living increase and an on-going skills crisis, APSCo has called on the Government once again to consider an overhaul of current employment status law in tax and rights to build a legal system suitable for today’s and tomorrow’s labour market. Off-Payroll regulations continue to sow uncertainty for businesses and the contingent workforce, with Deemed Employers unable to access over-payment relief on taxes paid, leaving many out of pocket. We note that the government is investing £161 million over the next five years to increase compliance and debt management capacity to enable HMRC to tackle the most complex tax risks, ensuring large and mid-sized businesses pay the tax they owe. With the end of HMRC’s “soft landing” for Off Payroll in April 2022, this will cause fear amongst many of the largest users of contingent contractors that HMRC will issue large scale status reassessments as they did against central government departments following Off -Payroll in the public sector.”

“Uncertainty is, unfortunately, having a damaging impact on highly skilled contingent professionals. Self-employed status needs to be defined in legislation that differentiates highly skilled self-employed independent professionals from dependent contractors, workers, other variants of self-employment and the lower skilled, less independent elements of the gig economy. Reform is also needed to challenge current thinking around how workers and the self-employed can be financially assisted and adequately access benefits that are currently largely enjoyed by employees, including enhanced pensions, life insurance, family and dependent related paid leave, training, and development.”

“While we are pleased with the focus on “people, capital, ideas”, generally the Spring Statement was underwhelming when we consider the inflation forecasts of a 7.4% average over 2022 and the fact that the UK’s growth expectation has been downgraded to 3.8% this year.”

This was posted in Bdaily's Members' News section by APSCo .