Contractors, freelancers and the self-employed are facing an uncertain post-General Election landscape whoever wins at the polls on 7 May 2015.
Director of policy and external affairs at the Association of Independent Professionals and the Self-Employed (IPSE), Simon McVicker, believes that this is the hardest election to call that he has ever experienced.
“Whatever happens, we’ve got to work with the government that the people decide they want,” he says. “However, as we have seen in other European countries such as France, even if an anti-business government is elected, it cannot stop the rise in self-employment.”
The hard work on behalf of contractors has been done
According to McVicker, once the General Election has been announced, the messages from all political parties become very loud and focused on getting across certain key messages. The opportunity to influence those messages has passed.
He explains: “The work required to influence what happens during an election occurs during the four to five years before then. IPSE has had good relations with all the main parties.
“This resulted in an IPSE Magazine issue featuring David Cameron, Nick Clegg, Nicola Sturgeon, Nigel Farage and Natalie Bennett pledging bold action for the self-employed if they win power.”
McVicker was disappointed that The Labour Party did not contribute: “We had good relations with Labour up to the election announcement. The party has downplayed the whole issue [of self-employment] because the Trades Unions are very concerned by the rise of self-employment.”
What do the mainstream political parties offer contractors?
Although the debate around contracting during the campaign has been less than hoped, there has been an encouraging consensus among the main parties. The key manifesto pledges and election promises that will impact on contractors include:
- Support from the Prime Minister David Cameron for a small business conciliation service, which features in the IPSE Manifesto
- Emphasis on late payment and the prompt payment code: “Both Labour and Conservative are on the same page on this,” notes McVicker
- Consensus around opening up procurement so that more small firms win government contracts
- Improving infrastructure, including broadband, mobile coverage and transport links, such as HS2
- Reviewing self-employment status and making special provision for issues such as maternity and mortgages: another IPSE Manifesto item.
“It is important to review all election pledges in context in the round,” warns McVicker. “One manifesto pledge might mean something positive for contractors. But another might damage big business to the extent that contractors’ client base is affected and there is less work.
“There is no commitment by any party to review IR35,” adds McVicker.
Tax avoidance focus could result in collateral damage
Less positively, McVicker highlights that there is also consensus around tax avoidance: “The concern is that there could be collateral damage as a result of the anti-tax avoidance agenda. The public mood on tax avoidance is very negative. Each party has made spending pledges and will be seeking to generate as much tax as possible.
“If there are to be no VAT increases, no income tax increases and no increases in National Insurance Contributions (NICs), where is the money to come from? The concern is that this tax will be generated by closing loopholes.
“Many of the structures and benefits that contractors and the self-employed have become used to are threatened. There is a suggestion that certain things could be under review, such as expenses and personal service companies (PSCs).”
What post-election landscape do contractors face?
Uncertainty is almost certain, as McVicker believes this is such a difficult contest to call: “One option is that the Conservatives become the largest party, but whether they get into government depends on the Liberal Democrats. If the Tories get 300 seats and the LibDems 30, then we may see the government continuing as before.
“Another option could be a Labour Scottish National Party (SNP) government. However, because of the strain over the constitutional issues this would cause, the government could be unstable. Any unstable government is bad for business.”
“The biggest fear is that no combination will lead to a stable government, and that is quite possible. And that means a very uncertain time for business and the self-employed for the next few years until the inevitable next election.”
McVicker concludes: “Generally, people feel that the economy is improving and it would be disappointing to throw away everything that has been achieved over the last four years.
“We believe that the rise in self-employment will continue whoever is in government after the election, and any future government will have to recognise this.”