Contractor accountants keeping tabs on the government’s plans for a Universal Credit system might be unsurprised to hear that might be delayed.

The government was keen to introduce the new system in 2013, but the Revenue does not think it will have adequate real-time ICT systems ready by then.

HMRC were allocated an extra £100 million in the Comprehensive Spending Review to build a new system that could cope with tracking people’s job changes and form the basis for a universal credit benefits programme. However, last week the Public Accounts committee were informed that delays were possible as HMRC may not have the necessary systems in place.

The Department of Works and Pensions will need to extract information from the Revenue in order to commence the universal credit programme. Welfare reform requirements dictate the speed at which the technology needs to be built and these new requirements are a big job, Dame Lesley Strathie said.

The new system will also sort, identify and crystallise tax amounts owed and then translate them into the correct tax codes quickly. For the tax year 2007/08, HMRC estimates it could be owed up to a billion pounds in back tax and if you go back over the last five years, the Exchequer could have received around £40 billion less than it should have. A large portion of this figure is probably due to tax avoidance, fraudulent activity and organised crime, the Revenue believes.

There have been concerns over the implementation of real-time systems not least because of the of incorrect tax codes that were sent out earlier this year. However, Dame Lesley admitted that this was more down to the quality of the data that was fed into the system rather than the actual software.

HMRC’s financial controller, Jon Fundrey, said that IT work had been held up slightly due to the government moratorium on significant ICT spending. The same was true of IT recruitment but this is now underway.

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In what seems to be a contradiction of other recent reports, the latest quarterly job survey from the CIPD and KPMG claims that public sector redundancies will be more than offset by new private sector jobs.

The latest Labour Market Outlook recorded a figure of +11. This figure is a based on the number of employers planning to increase their workforce compared to those who plan a decrease. Whilst the public sector recorded a negative figure of -44, the private sector registered +39. In the summer the balance was +2 and we have now seen three consecutive quarters with a positive balance.

The chief economic adviser for the CIPD, Dr John Philpott, said there are now encouraging signs of increased buoyancy in the private sector job market. However, he did point out that it remains to be seen whether this will continue after the pre-festive season jobs surge and he didn’t go as far as to rule out a rise in unemployment next year.

Sectors that expect to increase recruitment levels during the final quarter of the year include manufacturing (+51), IT private sector services (+71) and consultancy (+44). Decreases are expected in central and local government (-95 and -65 respectively) and transport and communications (-39).

41% of public sector bodies will be making redundancies before the end of 2010 and these are expected to affect 14% of their employees. Whilst the average cost of making an employee redundant is £12,000, in the public sector it is £19,600 as opposed to £9,350 in the private sector.

Obviously everybody hopes that the latest LMO data is concrete evidence that we are witnessing a sustained improvement that will enable the private sector to absorb the public sector fallout.

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Over 50% of people working in accounting and finance departments think the economic outlook is good at the moment and staff growth has gone up by 30%.

However, on the downside, many are warning that another wave of redundancies is inevitable.

Poolia, a specialist recruiter, conducted a survey that found financial departments are more positive about the economic outlook for next year although they do still have concerns over staffing levels.

57% expect to see revenue growth next year, 40% predict an increase in projects and more than 30% anticipate increasing recruitment.

The general manager at Poolia’s finance and accounting practice said that there will a race for talent next year but the long term outlook will remain challenging. Companies cut back on vital trainees during the recession and now find themselves in need of experienced workers. However, there is currently a shortage of people with the right skills to meet this demand. 38% of firms are struggling to recruit skilled employees at managerial level and 40% reported problems finding transactional clerks. This lack of supply could lead to more opportunities for contractor accountants.

George Osborne is reasonably confident that the government has taken the correct measures to secure a sustainable economic recovery. While speaking to reporters at the G20 summit in Seoul he said that economic data had been on the optimistic side for the past few weeks and that gave him cause for confidence.

The Bank of England on the other hand is erring on the side of caution saying the outlook remains uncertain. Mervyn King expects the recovery will continue but its strength will depend on developments in the world economy.

Inflation will remain high next year due to the VAT rise, rising energy bills and an increase in the cost of raw materials, but should fall below the 2% target in a couple of years.

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Specialist IT contractor accountants may consider relocating if they’re struggling to secure a decent remuneration. But before you make that decision, you should read the results of a new study.

A recent report from CV Screen shows there is now a very clear north-south divide in the IT market, with the south-east and the capital proving to be the most lucrative. IT professionals working in London earn 14% over and above the national average, whilst employees in the south-east benefit by an extra 10.1%.

However, the study also shows that a number of technology companies moving their offices away from London and setting up in other areas of the country. The MD of CV Screen, Matthew Iveson, commenting on the results said that in the last few years he has noticed that candidates show less inclination to look towards the capital for opportunities.

He also pointed out that the expansion of online recruitment has meant candidates can find local employment much easier, and as many technology companies are now avoiding London, the market has definitely shifted.

Meanwhile, the Ashdown Group Jobs Index for September showed that placement availability for professionals in the IT sector increased by just over 5%. The adoption of PHP software is strengthening the market for skilled contractors and web developers are still in big demand.

In more good news, 86% of IT managers intend to continue spending on IT despite the spending review cuts and the continuing threat of a double-dip recession, according to research from City Lifeline. Roger Keenan, City Lifeline’s MD said it was really encouraging to see a positive attitude with regards to IT spending for 2011.

Managers seem to recognise that investing in the latest IT technologies will ensure they remain competitive during these difficult times, he added.

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The Reed Job Index reached its highest level in six months in September; which will come as welcome news to contractor accountants and anybody else who is seeking a new position.

Across the UK recruitment activity rose by 2%, raising the Index to 104, the second highest level since Reed began compiling these statistics last December.

Salaries have not yet recovered to the same level as they were at the end of last year when Reed set the Salary Index at 100, although they recorded a 1% increase to 96 last month.

The Reed Job Index is compiled from data from reed.co.uk, the largest job board in the UK, which lists more than 90,000 job vacancies on a daily basis.

Customer service, digital and creative, leisure and tourism and IT and telecoms were amongst the sectors showing the greatest demand whilst public sector opportunities understandably declined.

On a regional front, the East Midlands, Scotland and Yorkshire and Humberside all experienced accelerated growth in vacancies, with the Index in those areas reaching its highest ever level.

Whilst this is obviously good news for job seekers, the Institute for Public Policy Research has released data that shows prospects for the long-term unemployed have not improved. In fact the amount of people classed as long-term unemployed has doubled over the past 2 years to 797,000.

The ippr data notes that there is a jobs deficit of 330,000, which threatens the capability of the coalition’s Work Programme to help people get back into work.

Under the scheme, contracts worth £3bn are to be awarded to voluntary and private sector providers. However, more than 5 people are currently chasing every one of the UK’s job vacancies.

Nick Pearce from the ippr said that one solution could be a localised and flexible system offering a highly personal service to the long-term unemployed.

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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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There’s been a lot said recently about clamping down on the amount of migrant workers allowed to enter the UK. Despite this, the latest CIPD/KPMG Labour Market Outlook report suggests that as the UK labour market improves, so does the employment demand for migrant workers.

600 employers took part in the survey and 45% of them said they have experienced difficulties in recruitment. Engineering, IT and accountancy positions are hardest to fill and consequently 17% of employers intend to hire migrant workers during Q3. 21% have recruited migrant workers in the last 3 months and of those workers, 37% came from outside the EEA.

Offshore outsourcing also seems to be making a comeback with 9% of private sector enterprises intending to offshore jobs over the coming 12 months. India is still the most common offshoring location, followed by China and Eastern Europe. Call centres, IT and finance are amongst the most likely functions to be outsourced abroad.

The public policy adviser from the CIPD, Gerwyn Davies, pointed out that it will take time to train British workers to fill the positions currently being occupied by skilled migrant workers. He believes that the proposed migration cap should be phased in gradually so as not to harm our competitiveness.

There is currently a temporary visa cap on all new Tier 1 applicants and applications for Tier 2 visas are limited by the issuance of Employer Sponsorship Licences. The permanent cap on UK visas will be introduced next April.

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Contractor accountants may be interested in the warning from the CEO of BDO Global, Jeremy Newman. He has cautioned that auditors may be cutting corners because of increased competition and cost pressures.

In his blog, Newman pointed out that extreme pressure to reduce costs could encourage auditors to cut corners and less stringent audits have the potential to lead to more fraud.

He says that whilst there has been a drop in demand for audit services, this should be offset by changing accounting standards, additional regulation and high quality audits.

Recruitment levels have fallen by more than the demand for audit services and the economic law of supply and demand should have led to a price increase and yet that has not happened and costs are decreasing.

The potential for an increase in company fraud should cause concern as research, also from BDO, reveals that the value of fraud in the first half of 2010 has risen to more than £1bn.

The head of BDO’s fraud services, Simon Bevan, said that during the recession there was a rise in the number of managers setting up companies within companies and diverting lucrative contracts to third parties. Insider dealing also rose.

Internal management originates 16% of reported fraud whilst another 17% is instigated by suppliers and third party customers. The finance and insurance sectors are the worst offenders with almost 50% of all fraud cases being committed by those 2 industries.

In the past year the average fraud has risen by almost £1m to £6m. Bevan said that fraud is now as prevalent as it has ever been and companies need to be even more vigilant during recessionary times.

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Internal fraud can be a problem for companies and businesses are being advised to carry out random checks on their employees to find out whether they have financial problems that could lead them into temptation.

Small businesses, such as contractor accountants, could be particularly vulnerable as they don’t have strict vetting procedures in place when hiring staff.

There was a 45% increase in internal fraud in 2009 according to the CIFAS. Theft of cash and fraudulently withdrawing money from customer accounts were amongst the crimes reported.

Neil Munroe, from Equifax, said that businesses should be proactive in terms of tracking where things are going.

Another type of fraud that has recently been uncovered cost a recruitment agency £50,000. Individuals purporting to be from a food processing company contacted the recruiter with details of a contract vacancy in Thailand. A suitable candidate responded and was offered the position.

However, the candidate and the individuals claiming to be from the food processing company were actually in league together. By the time the agency discovered the scam they had already paid the IT contractor.

Fraudsters can carry out this kind of fraud because recruitment agencies check out the company they are doing business with rather than specific individuals. As contractors can be paid up to £1,000 a day, victims of these frauds can suffer a significant loss of money.

To avoid becoming a victim, Marilyn Davidson from APSCo advises recruiters to double check that the person really does work for the company they say they work for. This is not always easy because generally recruiters don’t meet the people they are dealing with. All the arrangements are made remotely.

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