I was somewhat taken aback this week to read that someone in government had had a fit of the vapours and said something sensible. Even more confusing was that this was from the Labour side of the House. Although, just to restore my faith in human nature, he’s been shouted down by the rest of his side.

This was Lord Glassman, who has said that we need to put a freeze on immigration. Not a cap or a phased reduction, but a total stop, with the sole exception of the small number of skilled people we actually need to encourage to come over.

Of course none of this would be an issue if we had a better history of controlling who’s coming in, but we are where we are. At least we have some much more effective rules in place to bring a bit of sanity to the ICT system these days, which is the bit that really concerns us IT people. And for which, let us not forget, we owe a debt to the work the PCG has been doing over the years.

But as usual, nothing is as it seems.

There’s a bit of a debate going on about the new rules, centring of all stupid things on payable expenses, that well known fiddle factor beloved of the umbrella companies and assorted MPs…

But I digress. The rules set a minimum salary for the ICT candidate. However, with the usual stunning clarity of purpose, they haven’t actually defined how that salary should be made up. So you can include, for example, the costs of bringing your worker over here and giving them somewhere to live while they’re here.

Then we get into the Kafkaesque realms of do we include expenses paid for travel and accommodation while working somewhere else? I mean, let’s just think about that for a moment. You ship someone into the country, pay for their accommodation and give them a living wage. Then they have to go somewhere else on your behalf, for which you are paying the bills (or damned well ought to be). So how can that be part of their gross salary? Because I’m willing to bet that they never see any of it; if they did, their payslips wouldn’t be subject to the same level of secrecy as those nice people at GCHQ.

And just to pile on the ineptitude, the rules are being arranged so that “the taxpayer is not disadvantaged”. Excuse me? Taxpayer? The taxpayer, to the man on the Clapham omnibus, is someone who has a life here, a permanent address, is known to the gentlemen at HMRC. He’s not just popped over to perform a limited engagement (much of which seems to be to learn how to do the job so he can take those skills back home). And since his prime purpose is to take away work that could be done by someone who does live here, I’m afraid I’m not all that minded to be fair in how he gets paid.

Other countries have twigged this. Canada, for one, is taking positive action. How typical of our team that we try to treat them fairly and actively assist them in their efforts, less we tread on someone’s toes.

Talking of treading on toes, let’s give a small Hurrah for the PCG. Actually no, let’s make that a very large one. They have won not one but two trade awards, for electronic communication and membership success, against some much bigger (and older) organisations. Bearing in mind this is a very small team, the impact their work is having where it matters is out of all proportion.

Who said we need to import skills to ensure success…?

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Sometimes you really do have to ask yourself if you really understand what’s going on in some people’s minds. And just how much the people in charge of some fairly major institutions really understand the impact of their decisions.

Firstly DVLA, that government outpost at the far end of the M4 whose desirability as a posting is apparently only exceeded by the Commonwealth War Graves Commission. They have just awarded a £100m contract for a new Vehicle Excise Duty system to Capita. That is not an issue in itself, of course, but Capita re one of those who use a lot on non-EU resources to deliver their projects to keep their costs down. All well and good, but this is our money they’re spending, and even my shaky grasp of macro-economics says that it must be better to spend it within the UK if we are to grow the UK economy.

This also flies in the face of a recent survey by SOCITM, looking at the long term costs of outsourced projects, that shows that “when comparing the costs for any service, most elements will be more expensive if outsourced.” Which is something some of us uninformed IT professionals have been saying for years; framing a deal that delivers a genuine saving over a long term is very difficult indeed. Quality invariably suffers, and the savings are rarely delivered.

But hey, it looks good on the balance sheet, and who cares about what happens in ten years, it’s this year’s budget we have to worry about.

The other undesirable monolithic institution making worrying noises is the Scottish Parliament. Their beloved leader Me Salmond, (aka “Wee ‘Eck”, although my own epithet would be rather more punchy) recently came up with the slightly deranged idea that he wants to allow unlimited immigration into Scotland to overcome the lack of skilled workers.

Luckily the immediate response from the real Government down in London was fairly unequivocal. They didn’t quite say “Don’t be such a blathering fool” but they got about as close as you can get in politician-speak. Although one possible outcome should Salmond succeed in his plan would be border posts between Scotland and England. Now there’s an idea.

But I digress. The key point is that neither of the above examples takes any notice at all of the long-term health of the country. DVLA presumably tendered for a solution to the problem of marrying tax discs and insurance policies – on the face of it a trivial IT exercise, but I don’t know the detail and it may well be vastly more complicated to do. But that doesn’t mean that whoever came up with the solution is the best supplier to implement it. HMG keeps saying that it wants 25% of procurement to go to UK SMEs, and the DVLA seems not to be interested in that approach.

As for Salmond, we can allow for the fact that he’s a politician and hence only interested in next week, but if his country hasn’t got enough skilled workers, how about training the ones you have rather than shutting them off from any opportunities for all time by importing a new workforce over their heads? I suspect he could find a lot of people willing to work for £24,000 a year hiding in the highlands if he looked.

It really is time we started pushing our own agenda rather than everybody else’s.

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IT contractor accountants may want to tell their clients about a new report from Deloitte, which suggests that the public sector should make use of online channels of service in order to cut costs and improve levels of quality and support.

The government austerity measures are so severe that the public sector must encourage people to find cheaper and more efficient ways to conduct their business.

The report points out that there are some individual successes, such as encouraging people to file self-assessment tax returns online, but the coalition must do a lot more if it wants to cut costs in the long-term.

Deloitte’s public sector director, Joel Bellman, said the public sector tends to think of digital services as add-ons to telephone, paper and face-to-face contact rather than an alternative. Therefore they are only achieving a fraction of the possible savings.

Bellman went on to say that a range of new digital services will be launched in such sectors as benefit payment, education, environment, health, local government and social care.

The report ends up by saying that the coalition needs to adopt a clear strategy for the adoption of online alternatives.

The Chartered Institute for IT (BCS) is also urging the government to focus on using IT more effectively.

At the beginning of the year, the BCS put forward a range of proposals on how to get the most out of its IT infrastructure. At the time, the Institute said that an effective implementation policy had to be done in collaboration with academia and the private sector.

The BCS argued that the government needs to define core standards across all aspects of IT and information management. Effective governance will only come about if the government centralises fiscal and managerial authority and technical leadership, BCS’s chief executive, David Clarke said.

In order to adapt to the austerity environment, it will be necessary to invest in new IT and keep abreast of new technological developments. More government IT professionals should also follow a clear career path so that senior people will be equipped with the necessary skills to manage delivery and relationships, Clarke concluded.

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440 jobs are to be lost at Official Receiver offices throughout the UK, according to the Public and Commercial Services Union.

What might surprise you is that 680 people have applied to take voluntary redundancy since the cuts were announced to staff. That would suggest that at a large portion of the workforce is dissatisfied! This theory seems to be backed up by the high percentage of absenteeism last year.

There are 36 Official Receiver offices in the UK that deal with bankruptcies and company liquidations. The department expects to see a decrease in bankruptcies this year but personal insolvency experts disagree saying they will remain at record levels as the government spending cuts take effect.

The latest headcount at the Insolvency Service, taken at the end of last March, was 3,132 including agency workers and contractors.

Meanwhile, R3, the insolvency trade body, has condemned the government for not taking action against company directors who are guilty of dishonest and fraudulent activities. The number of disqualified directors has dropped by 25% in the past eight years.

R3 claims that insolvency practitioners submitted in excess of 7,000 reports to the Insolvency Service in 2010 and yet fewer than 1,400 of these resulted in a director’s disqualification. It is therefore calling on the Insolvency Service to increase its efforts to weed out dishonest company officials.

The trade body blames a lack of government resources for the service’s failings and expressed concern that more complex cases could be overlooked. Steven Law, the president of R3, said the trade body would like to help the Insolvency Service implement an effective system that ensures all cases are pursued.

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And, I have to say, quite a successful one, perhaps unexpectedly given where we started from. Speaking strictly as a freelance contractor of course, I thought it appropriate to round off 2010 with my slightly biased view of how the year has gone. So here goes with a very personal summary of the key events.

The main one, of course, has to be the replacement of Gordon the Glum with a real person. You may not like CallMeDave but you have to agree he’s an improvement on his predecessor: OK, not if you’re Ed Balls or Piers Morgan of course, but who listens to them anyway…?

We’ve gone from a Government that was totally and utterly convinced they knew best how to spend your money to one who was perfectly happy to let you spend it how you wanted. Of course, there wasn’t all that much to spend and they were going to have to hang on to even more of it than before. But let’s not be picky; at least we know why they’re being so mean.

So let’s look at the good things…

ICTs and the abuse thereof. Something I may have mentioned once or twice before? Leaving aside the wider question of uncontrolled immigration, there is a clear intent by HMG to cut down the number of workers coming in to the country to undercut the local workforce. Of course we are never going to stop companies using the cheapest labour they can find, that’s all part of capitalism and globalisation, but at least someone is trying to make it a bit harder to get us to train them how to do take our jobs away and kill off the industry at its source. Which, ultimately, has to be a good thing?

We still labour (geddit, geddit…?) under the Damoclean threat of IR35 of course. I never shared the conviction of some that a Tory government – oops, sorry, a Coalition led by the Tories – would instantly delete IR35 from the statute book. That was never going to happen; there is a political justification for IR35 that, while utterly barking, is not going to be reversed in any meaningful way.

Obviously the establishment of the OTS, and its very clear directive to look at IR35 as a priority was highly welcome. Even more welcome was the PCG gaining an influential seat on the Consultative Committee of the OTS looking at small business taxation. An organisation with 20,000 members and a 10 year lifespan gaining such access and respect at that level is something that simply cannot be underestimated. The OTS is working to some impossible deadlines, but fingers crossed, progress is being made.

The job market certainly seems to be picking up. I’m seeing hugely more jobs in my scope that I saw this time last year. Of course, 95% of them I won’t bother going for because the hirers are demanding impossibly tight lists of skills, industry knowledge and qualifications. The agencies are still incapable of challenging them and offering alternatives. For example I’ve been tracking a discussion on LinkedIn about how to use shared services and/or outsourcing to save money in Local Government. Good idea and one that may well work. Sadly, the consensus is that it won’t happen because the hirers put Local Government knowledge well ahead of any business experience that means you might actually understand how to do it properly. You see the same thing in Finance, which is a real shame since that’s where the work is. And don’t get me started on Security Clearance.

Oh, and I nearly forgot. St Vince of Cable has shown himself to be every bit as incisive, astute and intellectually superior as I always thought he was…

Personally it’s not been a bad year. I’ve worked most of it and actually banked a profit, which is nice. There is certainly reason to be optimistic about next year. The PCG continue to make great strides forward which is a source of pride, even from my marginal input to that progress. And I’ve had some nice comments about this blog, which proves that at least people are reading it, even if they don’t agree with me.

So roll on 2011. I think it could be an interesting year. I’ll see you there…

Alan Watts can found at LinkedIn.
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It’s not all doom and gloom in the business sector. In fact some firms believe that they will profit from the government austerity measures.

Admittedly many businesses are going to lose public sector contracts, but the job losses could well create outsourcing opportunities. Last week, the government announced that £236bn of public sector contracts would be made more accessible to SMEs. In a bid to ensure that 25% of public sector contracts do in fact go to smaller businesses and limited company contractors, all government departments will be required to publish details of all the contracts they award, and how many go to small firms.

The coalition is also looking into a more open framework to tackle the closed procurement system which generally means contracts are awarded to preferred bidders which are usually bigger organisations.

Other good news came recently when figures were released showing the economy grew at twice the expected rate in quarter 3. Experts say a double-dip recession is less likely as data from the ONS showed the economy is growing at the fastest rate for 10 years.

However, these figures do not take into account the public spending review and the impact it will have on the country.

Nevertheless, the better than expected picture could encourage investors to start thinking about expanding their portfolios. The stock market can seem to be contradictory in times of economic crisis. In 2009, the UK was in recession and yet the stock market rose by around 30%.

Before contractor accountants rush out and pile all their money into stocks and shares, they may want to consider talking to a specialist financial advisor.

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Image: Go with the flow – 080920099255 by roland

Do you ever get the feeling you don’t really understand what’s going on? Reading the news over the last week, I kept getting this horrible feeling that I was in an episode of Reggie Perrin.

Perhaps I’m working too hard, but if we’re trying to save as much money from the public purse as we can, why are we promising to give everyone the maximum pension possible? Why is the Mayor of London up in arms about ethnic cleansing in Streatham? And why will I have to take money out of my company to provide a pension fund for my staff – of whom there is precisely one – when the money that I deliberately leave in the company is meant to be to help fund my pension…?

The world really has gone slightly mad.

There have been flashes of sanity though. The Institute of Directors has written to the new Office of Tax Simplification pointing out that there is a tax measure they really need to look at. One that causes great confusion, that is counter-productive and actually costs money to implement since almost all attempts to charge it result in failure. You might have heard of it; it’s called IR35…

Errm, hullo, IOD? Aren’t you about 10 years late? Some of us – about 20,000 to be precise – have been beating that drum for quite a long time. Now, finally, it’s on the agenda for reassessment and, dare we hope, possible abolition, and the IOD have realised it’s a bad thing. Keep up at the back, chaps.

Actually what I thought was quite amusing was that they used the same arguments and most of the same statistics that PCG have been generating over the years. So perhaps there was a grain of truth in what we’ve been saying all along.

We’ve also been saying things about abuse of the visa system and the importing of non-EU workers to undercut the local variety, many of whom are now out of work. So it was with a degree of amusement that I read a survey has shown that a quarter of Tier 1 visa holders are working in non-skilled jobs.

Say what? Tier 1 are the people who can stand on their own two feet, who will make a positive contribution to the country and who, after two years, are supposed to be earning at least £35k a year to keep the visa. Granted people can work for whoever they want, at whatever they want, but if being a supermarket cashier is the height of your ambition, you really do have to wonder why they came in the first place.

I also read that someone in government has had a bit of an inspiration. When discussing the proposed cap on immigration and its reputedly monstrous impact on some companies’ ability to bring in staff, it was suggested that perhaps using up the ones they had applied for might be a way out of their dilemma.

And I’m sorry, but I still refuse to take St Vincent of Cable seriously.

Still, some things brought a smile to these grumpy old lips. The better than expected growth figures and the retention of our AAA rating prove that some think we’re going about things the right way. The Coalition’s spending review contained a lot of solid common sense, something politics has been lacking for quite a while (about 13 years, to be precise) although I still don’t quite get that thing about non-aircraft carriers. And I loved Osborne’s parting shot when announcing the programme, that the total cuts added up to 19% of government spending, which is precisely one percent less than the 20% that Labour had said was the most we could afford and what they would have done had they been in power.

So a confusing week in some ways, but not a bad one, all things considered.

Alan Watts can found at LinkedIn.
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I’ve written before about the confusion in the debate about immigration and the constant refusal of government and the press to separate genuine immigration from abuse of the system, especially the misuse of the ICT programme. That debate has been raging for a while now and remains unresolved, although we did think we might be getting the message across.

Then, all of a sudden it seems we have a major triumph. We, via our fiends (sic) in Brussels, have just signed a trade agreement with India. Nothing much wrong in that by itself, we need to trade and India is a growing economy. But look a little deeper…

In exchange for India relaxing its import rules so the EU can sell into that market, we have apparently agreed to give their engineers, IT workers, project managers and other skilled trades virtually unlimited access to our market. OK, so it’s a free world and we all have to get work where we can at the best rate we can. But given that India’s official language is English, and there aren’t that many English-speaking countries in the EU – even if you count Scotland – I somehow get the feeling that the traffic in this direction will be rather heavily biased in our direction.

Again, not a problem, except that, as with the ICT scam, these aren’t likely to be long-term immigrants. Some will no doubt be here for a long time, and some will genuinely contribute to the UK economy. But I have a nagging feeling that an awful lot of them will be here to learn how to do the job we’re doing for ourselves and then move it back home where the labour rates are considerably cheaper. That might cut the bottom line but it is a horribly short-term view of things. It won’t take too long before all the real work in IT, for example, is offshored and our service economy – once one of the world’s strongest – has gone the way of the Dodo.

So if this is good news, I would really hate to see a tragedy.

And what really annoys me is that one part of Government is talking about limiting immigration, another part is making positive noises about ICT use and abuse while another part is selling us down the river. Well thanks, guys, great job.

And let’s be clear here. I have absolutely no problem with India or the Indians and never have done. I have no objection to skilled people coming into the country and benefiting us as a whole. I don’t even have a problem with the ICT system, which allows the simple transfer of key staff for shot term purposes.

But I do have a problem with our government doing all they can to close down the industry I’ve been working in for the last 35 years.

Someone has got this badly wrong. And I don’t think it’s me…

Alan Watts can found at LinkedIn.
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The Treasury is set to lose around 25% of its workforce due to the Chancellor’s spending cuts.

The good news for the existing Treasury workforce is that this will be achieved by natural wastage with no further recruitment, as opposed to mass redundancies.

By the middle of this month, George Osborne will have settled the budgets for some of the government departments, including culture, environment, justice and transport, as well as scaling back the role his own department and the financial services function play. He’s even proposing to move staff to smaller desks in order to squeeze more people into his HQ thus saving money on rent.

Over the next four years the Treasury department will lose about 350 staff members through natural attrition bringing the number down to 1,000.

The Chancellor’s willingness to impose cuts in his own department should strengthen his hand when it comes to negotiating with other departments.

One of George Osborne’s colleagues said they would be focusing on macro analysis and spending control rather than attempting to second guess the moves of other departments.

The comprehensive spending review will cut between 25% and 40% from the majority of other government departments. The biggest challenges facing the Chancellor will be defence and welfare. Transport could also be a problem as Boris Johnson, the Mayor of London, is battling with Philip Hammond, the Transport Secretary over Crossrail and upgrades to the Tube. Hammond also wants to see a cut in the £1 billion that subsidises free travel for children, the unemployed and injured war veterans.

Meanwhile, a treasury spokesman said the department would not get drawn into the spending review negotiations of individual departments; each of which have been told to reduce their admin costs by about a third over the next four years.

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The Audit Commission is to be scrapped, Eric Pickles, the communities minister, announced last Friday.

The commission employs about 2,000 people to monitor the performance and accounts of public sector bodies. The government claims that shutting it down will save around £50m a year.

This move is likely to benefit the private sector as councils and other public sector bodies will be able to tap into the open market and appoint their own external auditors. By outsourcing audit expertise, the government hopes to cut back on the centrally imposed bureaucracy and costly auditing, thus saving money for council tax payers.

The National Audit Office is to set up a new auditing framework to ensure public sector bodies are still subjected to robust auditing.

Pickles said that the Audit Commission is no longer a watchdog looking after the interests of the taxpayer; rather it has become a creature of Whitehall. This new plan goes together with proposals to create an army of local people who will hold local bodies to account when it comes to spending tax and delivering value for money services.

The Audit Commission, probably understandably, is less than optimistic that this new approach will work. Michael O’Higgins, the Commission’s chairman said the department had more than fulfilled its aims since it was set up by Michael Heseltine and the Tory government in 1983.

The ACCA believes the move will prove costly and lead to inconsistencies in local government reporting. The head of public sector at the ACCA, Gillian Fawcett, pointed out that although a lot of the Audit Commission’s work is currently contracted out; the commission ensures that reporting is consistent.

Whilst this move will undoubtedly benefit some private sector accountants and contractor accountants, the general feeling on the street is that the work will go to the larger accounting firms rather than smaller local businesses.

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