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Issue 22; 8 October 1999
Conferences | House of Lords; Welfare Reform Bill | Revised
R.I.A. | Our Current Position | Agents & Clients | Weston
Spirit
Conferences
PCG attended all the political conferences which concluded
with the Tories in Blackpool this week.
The main objectives were to raise awareness of the issue,
dispel the myths, rally support for the forthcoming legislative
debates, explain the damage to the knowledge-based sector
and the UK's ability to compete internationally and identify
and educate supporters and opponents. The detailed messages
we put through were the lack of proper consultation, which
led to a lack of understanding of the sector, which led
to a proposal which tries to use tests which have never
been applied to this sector. We are consequently left in
a black hole.
In summary, the Labour Party is convinced it has gone far
enough (in some cases, there is a belief that the Revenue
has gone too far in its 'concessions'). There is also a
feeling that 'if you can't pass the self-employment tests,
the point is proved that you aren't really self-employed'.
Despite letters, briefings and meetings, there is a reluctance
within Government and backbench Labour MPs to understand
the detail of the specific problems, particularly as many
other organisations are telling them they've got it right.
This combination of arrogance which comes with a huge majority
and ignorance which comes from listening only to people
who say what they want to hear means realistically that
there is little support within Government.
The Conservatives, on the other hand, are significantly
on-side. They generally understand the situation and are
prepared to oppose it.
The Conservatives will use us for political capital. It
is in their interests to criticise a Government policy which
taxes entrepreneurs in order to show that that Government
doesn't understand business. Labour will therefore take
a counter political view and accuse the Conservatives of
being the party which supports 'tax evaders' as the genuinely
self-employed can pass the test. Once political battle-lines
have been drawn the Government will not backdown and with
a majority of nearly 200 doesn't need to. Some within the
Labour party however will ask questions why a supposedly
genuine Consultation exercise has resulted in such negative
fall out and the provision of political capital to the opposition
parties.
Conference details
We had a series of meetings and 'door-steppings'. Some of
the main points were:
- Lord McIntosh, (Labour Whip who will lead in Lords)
was generally annoyed that we had objected to the concessions
while everyone else supported them and thought that the
Government had gone further than was necessary;
- PCG member, Phillip Ross (New Labour) spoke during the
economic debate at Conference and got his knuckles rapped
for his excellent efforts to draw the problem to the attention
of the Platform and delegates. Philip also had the chance
to put the case directly to Dawn Primarolo who was highly
unsympathetic and rejected the idea of a meeting (also
asked for separately by David Ramsden). However she agreed
to read case studies we sent to her;
- Meetings were also held at the Labour Conference with
Tony Coleman, Bill O'Brian, Dr Alan Whitehead, Nigel Griffiths,
Barbara Follet, John Healey, many journalists and others;
- In a brief, private meeting William Hague (Opposition
Leader) knew about it and said it was an 'ill-thought
out piece of legislation;
- Francis Maude (Opposition Chancellor) said in his conference
speech 'And he's (Brown) designing a new tax on entrepreneurs
too. It'll cost ?500m, put thousands out of business and
send thousands more overseas. That's his philosophy........Britain
needs these entrepreneurs, if we are to lead the world
in the New Economy';
- Quentin Davies (Opposition Paymaster General) was given
an updated briefing.
House of Lords/Welfare Reform Bill
The House of Lords seminar took place on Thursday morning
7th October, the Earl of Kintore attended with Kevin
Miller from PCG who apart from the Inland Revenue and
the Lords was the only representative present. No minutes
are to be issued, but Kevin Miller has produced a detailed
report.
With regards to the upcoming House of Lords debate
Gareth Williams, a PCG member, has prepared a detailed
briefing paper which has been circulated to Key
speakers.
Revised RIA
The Revenue have now released a revised RIA. It is still
significantly flawed and, this time, makes no attempt
to put a figure on the number of companies which would
close. Rather it suggests it will be in the region of
25 to 75 per cent.
Kevin Miller managed to review and prepare an initial
brief late on Wednesday night ahead of the seminar at
the House of Lords. Details
are available for members.
Our Current position
We have secured three major advances over the original
proposals.
1). The removal of the requirement for Registration.
Registration was being actively lobbied for by the larger
agents (ATSCo). It would have forced Contractors to
be paid net of PAYE and NIC whilst leaving the agent
free to receive their income Gross.
2). The Contractor will be responsible for NICs and
PAYE. This will remove the current obstacle for new
contracts, direct with end users.
3). The change from the test of supervision, direction
and Control to the wider self employment tests (Schedule
D) allows more PCG members to demonstrate they are genuine
businesses. A major concern remains however. We have
been prevented from working as self-employed for over
20 years (due to Agency legislation). As a result the
Schedule D rules that have evolved through case law
have therefore not taken account of the knowledge-based
sector. This could result in a 5-year vacuum as case
law is developed, during which time many PCG members
will be forced out of business and the UK will lose
its lead in this key sector. Our task is now to concentrate
on a simple, clear and unambiguous set of rules which
are capable of being met by PCG members working in the
knowledge based sector. It is ironic to note that in
the USA a bill is in front of the Senate that states
a method of demonstrating such a genuine business relationship
would be to have a Ltd Company and a written Contract!
Just as we are about to throw out a method of working
that has delivered a thriving economy, the USA are about
to adopt this way of working. Agents and Clients
Despite the unhelpful comments from ATSCo, it is important
that we work with Agents and Clients, in partnership,
to ensure that our members can stay "in business on
their own account" Our Lawyers are drafting a specimen
contract to follow, which would tend to show that the
member is in self employment. This will incorporate
feedback from the detailed discussions between the PCG
and the Government. We have also prepared briefing papers
for both Agents and Clients and would ask that members
download and send out.
Agents
briefing paper
Clients
briefing paper
To facilitate this further we have opened up the PCG
to associate membership from Agents, End users, Accountants,
Lawyers and Representative bodies. Although not having
an Internet vote in PCG matters it will allow access
to all PCG commissioned reports and model contracts.
We would ask that members encourage their contacts to
join up. This can be carried out on-line at https://www.pcgroup.org.uk
Weston Spirit
One of our members is calling for volunteers to help
with this Charity and details are available on the Forum.
Kind regards
Susie Hughes
Press officer for the Professional Contractors Group
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