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