Reaction To Chancellor George Osbornes Autumn Statement
Reaction To Chancellor George Osborne’s Autumn Statement
Dropping of proposals on the taxation of Controlling Persons legislation – a huge victory for APSCo
“I was particularly pleased to hear this afternoon that the Treasury has accepted our argument and dropped its wrong-headed proposals on the Taxation of Controlling Persons – a decision which has seen common sense prevail.
The original proposals suggested that some professional contractors – those termed controlling persons – should have income tax and national insurance deducted at source. The difficulty stemmed from the Government’s incorrect assumption that a & lsquo;controlling person’ – i.e. someone who has managerial control over a significant proportion of employees and/or control of a significant proportion of the company’s budget must be an employee.
We said at the time that these ill thought out proposals took no account of the professional interim market and that professional contractors were not & lsquo;fat cat’ tax avoiders but skilled professionals working on short term projects for organisations undergoing change management programmes, turnarounds or other business critical issues.
We’ve been absolutely clear throughout that professional contractors do pay their taxes, and those that misbehave can be dealt with under existing IR35 legislation. Documents published alongside the Chancellor’s Autumn Statement show that our recommendation to look again at IR35 legislation in order to ensure that it is applied correctly and consistently has been taken up, and APSCo will, of course, be at the forefront of developing policy to make IR35 more straightforward and transparent for all involved.”
REC response to Autumn Statement
Commenting on specific announcements related to the recruitment industry contained in the detail of the chancellor’s Autumn Statement document today Recruitment and Employment Confederation (REC) chief executive Kevin Green says:
“We’re very pleased the government has listened to sense and dropped plans to impose restrictive tax regulation on use of interims and freelancers. The government was completely overstepping by attempting to get involved in restricting businesses’ flexible use of experienced managers in this way.
“A more robust HMRC is very welcome. As well as pursuing tax avoidance by big household name companies we’re very glad the government has responded to our calls and explicitly said they will investigate offshore intermediaries operating in our industry.
“However they have not made a commitment to improve their efforts to crack down on the abuse of travel and subsistence schemes and we will continue to argue for greater action. Abuse of these schemes distort the recruitment market and give unscrupulous recruiters an unfair advantage over those who play by the rules.”
Responding to other announcements on tax, benefits and investment in business Kevin Green added: “The tax cuts for business and workers announced today are welcome moves. A further reduction of corporation tax to 21 percent is fantastic news and will help the UK retain a competitive business regime. “Work must pay. Wages for those in work have not kept pace with inflation so it makes sense to limit increases in jobseekers allowance to 1 per cent. But more fundamental changes to the benefits system via the introduction of Universal Credit next year need to ensure that people are encouraged into work and are not penalised for taking on short-term and temporary contracts.
“Capital investment to kick start the UK construction industry is good news and will be welcomed by recruiters working in that industry as a boost to job creation.
“One billion pounds for the UK business bank and the increase in the annual investment allowance are both useful moves to boost investment and should contribute towards SMEs feeling more confident in taking on more workers. More support for British businesses looking to expand overseas is also sensible.
“As ever, the chancellor will be judged on whether these policies deliver real change on the ground.”
IOR Calls for Recruitment Bodies to Freeze Membership Fees as UK Faces SIX More Years of Austerity
In response to the chancellor's autumn statement, the IOR is pleased to announce that there will be NO membership price increases during 2013.
In a measure to help ease the burden on the recruiting sector in a difficult economic climate the IOR has responded to George Osborne’s Autumn Statement by freezing its membership fees at 2011 levels. It is further calling for other recruitment bodies to reconsider their 2013 planned fee increases.
Azmat Mohammed, IOR Director General says, “Businesses need support from industry bodies in these tough times and we want to help recruiters by freezing all IOR membership prices while ensuring we provide the same excellent service but at no extra cost. Mr Osborne warned there are no miracle cures for the economy as he admitted austerity will now have to last longer than previously predicted. We all need to play our part and I strongly urge other recruitment bodies to reconsider their 2013 price increases.”
The Chancellor says weak economic growth means more spending cuts well into the next parliament, with austerity to last until 2018.
The downbeat Autumn Statement confirmed Britain’s growth figures had been significantly downgraded and the Government would miss its target to eliminate the structural deficit.
The UK economy will contract by 0.1% this year and the Office for Budget Responsibility (OBR) is predicting that gross domestic product (GDP), the measure of all the goods and services produced in the economy, will contract in the last three months of 2012, having only emerged from recession in the previous quarter.
On a positive note, the chancellor stated that 1.2 million jobs had been created in the private sector since May 2010, a figure 600,000 more than previously forecast by the OBR. It also cut its forecast for the unemployment rate this year to 8.0% from 8.7%, and for 2013 the rate is forecast to be 8.2%, down from the previous prediction of 8.6%.
Lee Knowles, UK Regional Director at NES Global Talent, said:
"Today's Gas Strategy, coupled with last week's Energy Bill, underlines the government's commitment to unlocking investment and creating jobs. While this will go some way to ensuring the future of the UK energy sector, it’s important the sector also addresses the underlying talent shortages that will only intensify as demand for energy increases. Competition for skilled engineers is fierce. So, we need to address the areas of education and immigration to ensure sufficient talent is produced at home and introduced from abroad to keep the lights on."
Road to recovery hinges on UK’s flexible labour market, says CIPD Chief Executive
In response to the Chancellor’s Autumn Statement, Peter Cheese, Chief Executive of the Chartered Institute of Personnel and Development (CIPD), said: “Today’s statement underlines that the road to recovery hinges on the continued ability of the UK’s flexible labour market to support employment growth in tough economic conditions. It also depends on the efforts of employers to improve employee engagement, innovation and productivity against a backdrop of prolonged fiscal consolidation and a squeeze on business and household finances. Tough, volatile and uncertain conditions are the new normal – and the key to boosting national productivity and competitiveness lies in building the people management capabilities and skills needed to ensure firms innovate, create and respond with agility.”
Mark Beatson, CIPD Chief Economist, added: “The forecasts released by the independent Office for Budget Responsibility show that the labour market has out-performed expectations in maintaining employment given the depth of the recession. Indeed, 2012 will end with higher employment and lower unemployment than forecast in March even though the economy has not grown at all over the year.
“Growth will be subdued in 2013 and lower than previously expected for the forseeable future. Even if the uncertainties over the US budget are resolved speedily, those surrounding the Euro Zone will remain. Most economists would agree with the Chancellor’s decision to spare the economy further pain by rolling forward the timetable for removing the structural deficit and abandoning the target of reducing the net debt by 2014-15.
“Long-term unemployment may continue to rise for a while and youth unemployment needs to fall so it will be important for the labour market to continue delivering jobs growth. Meanwhile, for those in work, 2013 will be the fourth year where average earnings do not keep pace with inflation.”
Peter Cheese continued: “What the last year has shown is that employers are learning the lessons of the past and are investing in the skills of their people in order to retain the capability to innovate and compete.
“Government policy on education reform, employer ownership of skills, and on improving the vocational education system will support the development of more high skills, high value workplaces – and we particular welcome the extra money for the Employer Ownership of Skills pilot – taking the total pot to £340 million.
“This area of policy has much greater capacity to deliver what employers need than the government’s desire to further deregulate our already flexible labour market, for example by pushing ahead with their & lsquo;shares for employment rights’ agenda. In common with the widespread sentiment amongst employers, we remain clear that this is at best a niche interest idea, and at worst undermines the kind of high trust, high engagement workplaces that will truly leverage higher skills to deliver better business performance”.
Chancellor needs act decisively to create jobs, says staffbay.com
The gloomy predictions and measures announced by George Osborne in today’s Autumn Statement could make deflating reading for the UK’s jobseekers unless they take the initiative to showcase their skills , says staffbay.com’s co-founders, Tony Wilmot and Elliot Kidd.
Tony says: “With wages low, the government seems to be wasting time and money by constantly fiddling with National Insurance holidays. I think this is mere tinkering around the edges.
“What the government should be doing is extending the National Insurance Holidays for employers – but combining this with a commitment to lowering Corporation Tax 15 per cent – and sticking to this. This would stimulate the economy and drive jobs.”
“With the Chancellor downgrading his forecast for growth in 2012, it’s hard to see how employers can be confident about hiring extra staff,” adds Elliot.
“Futhermore, employees will be just as hard pressed to look to the New Year with any degree of optimism. What jobseekers need to do now is find a way of making sure they make themselves as attractive as possible to potential employers.
“Businesses of all sizes can no longer afford to hire people who might not make the grade they need to be sure that the person they’re hiring can add value to their business, and this is what jobseekers should be looking to tell prospective employees. They can do this through a number of ways such a Skype, webcam or short on-line videos about themselves.
“With the government not backing down on its austerity measures, now is the perfect time for those looking for work to make themselves indispensible.”
Stuart Davis, Chairman of the Freelancer and Contractor Services Association (FCSA), responds to the Chancellor's Autumn Statement:
"FCSA welcomes the Chancellor's Autumn Statement which places much weight on entrepreneurship and supporting business, an area where the professional flexible workforce can and will play a significant role. At the same time, Mr. Osborne heeded the FCSA calls over recent months to clamp down on unscrupulous tax avoidance schemes using existing legislation. This move demonstrates the Chancellor’s recognition that new knee-jerk one-size-fits-all legislation being imposed upon the highly diverse flexible workforce simply wouldn't be appropriate.
"Finally, the Government's decision not to proceed with their proposal to tax at source freelancers and contractors who work in senior positions, is good news. It sends a clear message that HMRC intends to use IR35 more effectively in future and that the value and legitimate nature of the flexible workforce is accepted at all levels of business."
Simon Drake, Executive Interim Director at Penna (HR global services Group):
Penna welcomes the Government’s decision not to proceed with the proposed legislation on Controlling Persons as announced in today’s Autumn Statement.
The primary proposal of “The Taxation of Controlling Persons” would have required organisations using Executive Interim Managers to deduct the full equivalent income tax (PAYE) and National Insurance Contributions (NIC) directly, as if the Interim Manager were employed instead of operating as a business. As Penna commented during the consultation period in August, this proposal had the potential to at best significantly disrupt, and at worse seriously damage, a highly valued service that many organisations benefit from today.
Simon Drake, Executive Interim Director at Penna, said: “This clearly demonstrates a vote of confidence in the thorough consultation process that was undertaken and the considered response that was led by Penna and other IMA members and leading industry bodies like the IIM, PCG.”
The Government’s decision recognises the value that Executive Interims provide to businesses in the UK. When organisations suffer a loss in management and leadership or quickly require new leadership talent to help them improve or change, highly experienced Interim Managers are able to quickly step in to strengthen, or sometimes replace, an existing management team and implement change rapidly. The outcome is that the buying organisation is able to change quickly and improve. This helps to keep UK businesses and our public sector competitive at a time when remaining highly competitive and efficient is paramount.
Government scraps plans to increase taxes of interim managers – comments
The Government has scrapped plans to tax interim managers as if they were on payroll even though they work as a limited company, says Interim Partners a leading provider of interim managers.
Comments from Doug Baird, Managing Director of Interim Partners “Forcing interim managers to pay tax as though they are employees was a terrible idea. The Government’s U-turn will be a big relief to businesses that are heavily reliant on skills of interim managers.”
“Businesses are particularly reliant on the skills of interim managers at the moment because of the challenging economy. This would have been the worst possible time for the Government to hit interim managers with a tax grab.”
“Interims should not be treated as payroll employees, because they just aren’t the same. They do not have the legal protections that permanent employees have. Very often, interims have little job security, with their work coming in peaks and troughs. Interims often have long gaps between short periods of employment.”
Interim Partners points out that there are already very effective rules in place to prevent tax avoidance by contractors, including interim executives, in the form of IR35.
“Any tightening of the IR35 powers that the Government plans must allow the UK to benefit from a flexible interim workforce.”