Issue 29; 7 November 1999

Welfare Reform Bill | What Happens Next | ICAEW | Blackpool

Welfare Reform Bill
After the drama and controversy of the Welfare Reform Bill's ping-ponging between the two Houses of Parliament, the Lords finally backed down and the Bill, with IR35 in it, entered the Statute Books.

After the debate was won and the vote was lost in the House of Commons, the Bill returned to the Lords on Monday 8th. Again their Lordships pushed the matter to a debate. The Earl of Kintore, who has been a staunch supporter of PCG, spoke from his personal experience of contractors and his involvement with PCG. He said: "If the seven or eight contractors - young, smart, articulate and interested - who were listening to the debate with me in another place last Wednesday are a representative sample of the group (PCG), we should be fighting tooth and nail to keep them in this country, and not treat them like unwanted raffle prizes."

Lord Jenkin spoke about the great shame of the Government giving with one hand and taking away with the other and driving contractors overseas.

Lord Higgins (leading for the Opposition) called for an undertaking that the Government would consult with people who are affected and again outlined objections to the proposals.

Lord McIntosh for the Government congratulated the PCG and its members - and then dismissed our concerns. "The second congratulations are due to the Professional Contractors Group. I have never encountered such a literate, persuasive series of letters. Ministers have had something like 2,000 letters. I have received many dozens. The noble Lord, Lord Jenkin, has received a number. They are literate, well spelt, well argued, persuasive letters - and wrong."

McIntosh assured the House that 'we are consulting with the PCG on guidance for its members so that the proposals can be made as clear as possible'.

However, in keeping with the Parliamentary convention that the Lords do not continue to defy the elected chamber, the issue was not put to a vote and therefore remained in the Bill and the legislation.

Link to Hansard, 8 November 1999

What happens next?
The Revenue has issued Draft Guidelines.

The PCG has been accepted as a representative body and Kevin Miller will be leading the PCG team in negotiations with the revenue. The devil will be in the detail. We would ask that you study these guidelines, specifically the three examples given. We will be carrying out a survey shortly to aid the discussions with the Revenue. We believe that many Contractors will be in the borderline area and if so this will cause massive uncertainty.

Next year, the Finance Bill is currently being drafted and will be published in Spring 2000, when it will have to pass through Parliament in order for the IR35 provisions to be fully enacted. The Opposition has made it clear that they will continue to push the arguments against IR35.

The issue has become - and will remain - political. It seems clear that the Conservatives are going to attack the Government primarily on its economic policy and particularly what they have dubbed 'stealth taxes'. They believe that, along with many others, IR35 falls into this category and will therefore remain on the political agenda.

However, for the next few months, the Revenue officials are the key proponents of this, as they will be working on the guidelines. It would seem clear that they are as committed as their political masters to pushing this measure through - and some quarters believe it is being driven more by the mandarins than the Ministers.

We believe that these rules are fundamentally unfair, anti-competitive and will have a serious impact on the UK economy and we will continue to consult, educate and lobby with Ministers, officials, MPs and the media. It is important to appreciate that this is delegated legislation and therefore can be changed.

ICAEW
On November 9 Andy White gave a presentation to about 80 accountants at the Institute of Chartered Accountants last week. He outlined the work of the PCG and the background to the proposals. Francesca Lagerberg from the ICAEW explained the complexities of the implementation of the proposals as they stand. The accountants then debated and disagreed with each other on a number of points, until one accountant, in exasperation, said: "This is all Alice in Wonderland stuff. The only winners are the accountants, solicitors and liquidators"

Link to Andy White's Speech

Blackpool
On November 12 Susie Hughes gave a presentation on behalf of PCG to an open meeting of contractors at Blackpool. She explained the work of PCG, the campaign to date and called on contractors to join up. Accountant Tim Warr also spoke and called on the Government to rethink IR35 in the context of an overhaul of the tax/NI treatment with a salary/dividend split for all businesses. Michael Jack, the local Conservative MP, was supportive of the campaign and offered his assistance.

Link to Blackpool Speech

Kind regards
Susie Hughes
Press Officer, PCG
e: [email protected]