We examine the highlights – and gaps – in the government’s list of pledges and promises
Just over a week into his role as the Prime Minister, Sir Keir Starmer has started shaping his cabinet as he looks to unpick some of the issues that he and his party must resolve.
Approaching the election, the new PM made it clear that his first and most important goal is to deliver economic growth. So far, however, that vision has been articulated in relation to big businesses, with little recognition of the importance of the self-employed – who were mentioned just twice in the Labour
manifesto.
But it’s only a matter of time until Starmer realises the challenges the sector faces, and he will need to offer some solutions to them. In our view, many of these issues can be resolved – doing so is a matter of political will.
Speaking to
People Management recently, our CEO, Seb Maley, highlighted the need for the Labour government to “grab the bull by the horns” and address the biggest challenges facing the UK’s self-employed workforce.
In this article, we look at some of those challenges and also investigate what the Labour Party has pledged, or promised, so far.
An overview of Labour’s promises and pledges…
While the Labour Manifesto itself was somewhat sparse regarding issues impacting the self-employed, the party has clearly listened to some of the concerns raised by industry bodies in recent years – and taken stock of the issues holding the sector back.
In its ‘
New Deal’ for workers – which forms the basis of the party’s manifesto – it has committed to the following:
- A consultation on the introduction of a single ‘worker’ status
Recognising the “ambiguity” and “complexity” around existing definitions of workers, employees and the self-employed, Labour will consult on the introduction of a single ‘worker’ status, and “a simpler framework that differentiates between workers and the genuinely self-employed”.
This is one to watch, and we’re optimistic this work could have positive results for contractors and the businesses hampered by IR35 – if executed correctly.
- Spending plans backed by promises of “cracking down on tax avoidance”
The party’s promise to crack down on tax avoidance offers a glimmer of hope for those operating through umbrella companies.
While tax revenue lost to non-compliance in the sector was estimated at around
£0.5bn in 2018/19 and 2019/20 – a drop in the tax gap ocean – it’s possible the government will tackle the issue through a combination of greater funding for HMRC, regulation and enforcement.
- Introduction of a Single Enforcement Body
Labour has also pledged to introduce the long-overdue Single Enforcement Body (SEB), which would oversee compliance with employment legislation and obligations.
In tandem with appropriate regulation, this could start to improve standards across the umbrella sector and ease the tax avoidance risks facing flexible workers.
… and a look at what’s missing
It could be said, however, that the party isn’t as finely tuned in to some of the other, bigger issues affecting independent workers. No political party is perfect, and the Labour manifesto has some concerning gaps.
Crucially, there has been no mention of the IR35 legislation or the off-payroll working rules – a big oversight, in our opinion.
Similarly, it looks as though Corporation Tax will be fixed at 25% for the foreseeable future, which does leave some of the smallest businesses exposed to higher marginal tax rates.
A final thought…
Clearly, there are some challenges facing the UK’s flexible workforce. And if the PM truly wants to stimulate economic growth, he must find solutions to them – it’s unlikely the government will achieve its ambition without doing so.
The silver lining, of course, is that we are in the very early days of this government. As the dust settles, we hope to see the government begin working with industry bodies to find solutions to these challenges – perhaps some of the sensible proposals put forward in the recent past will be considered again.
Ultimately, there are plenty of places where the new PM can direct his energies. We look forward to seeing where he turns his focus first.
