Regular readers – both of them – will have learned by now that if someone ever sets up an Appreciation Society for the benefit of Saint Vince of Cable I am unlikely to be in the queue for tickets. His tenure as Business Secretary has been littered with decisions that seem almost deliberately intended to make the contractor’s life even more difficult than it already is. I doubt he does it on purpose, so we have to conclude that he simply doesn’t think things through properly. Or perhaps he doesn’t pay attention to the outcomes. Well, hey, he is a politician, I suppose.

Consider the Agency Workers Regulations, which are looming ever larger on the horizon. The intent of the original EU-derived ruling was to ensure that low level temporary workers – people who aren’t really in the best place to fight their own corner – are protected from being denied basic rights that are taken for granted by permanent employees; little things like holidays and sick leave and access to the canteen. It has to be said, that is an entirely reasonable and even laudable aim.

As is the way of such legislation, the EU sets the objective and leaves it to the member countries to enact as best they can. So guess what happens when St Vince’s department get hold of it?

Firstly there is a consultation period. They produce a straw man proposal and invite interested parties to comment on it, note ambiguities and errors and suggest any obvious improvements. They consider the responses, redraft the straw man into a final document and that become the legislation.

Except for one minor point. They kind of missed the ever-so-slightly critical point about the scope of the legislation.

Like I said, it’s meant to protect vulnerable workers. Now I am many things but I don’t for one minute consider myself to be vulnerable to being downtrodden. Apart from She Who Must Be Obeyed of course, but I volunteered for that one. So why the hell am I potentially in the scope of the AWR?

It seems that DBERR have been gold-plating the requirement. Specifically, rather than draft something aimed at “agency workers” they allowed it to cover any independent worker, including freelance contractors who, as a breed, are probably the least vulnerable workforce in the country.

And what makes me angry (and No 10, who tried to see if it could be redrafted at the eleventh hour) was that very point was made, clearly and explicitly, in the original consultation. They were told the scope is wrong, it’s not meant to apply to this group but only to that one. But when the final draft hits the presses the only exemption is the somewhat mealy-mouthed exclusion of “those genuinely in business” which, as we know all too well, is not a clearly defined anything. They may as well have said “Those who are either taller, or shorter, than six feet. Without shoes”.

So apart from now facing the risk that our contracts are going to get even more tangled as HR and the agencies try to get around the legislation, we lost the chance for a clear chance to define exactly what is meant as a freelance contractor, as opposed to an agency worker. Given the average itinerant fruit picker is unlikely to own his own company, there is at least one simple and very clear separator. This would have greatly aided various other arguments such as who is caught by IR35. But it is not to be; instead of clarity we get muddle and greyness. A bit like St Vince, in fact. Which is something of a pity.

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Image: Back Yard On New Year’s Day 2011 by Kerry Niemann

I see St Vince of Cable is back in the news, challenging Mr Cameron’s views on immigration. What a shame that he is continuing to confuse two entirely different issues, which is most unlike a Liberal Democrat.

I offer no comment on immigration in general. I tend to side with the Cameronian view that controlled immigration is a good thing while uncontrolled immigration is not, but that’s as far as I go on that subject.

However, the importing of foreign labour to do jobs that used to be done by UK workers? That, I’m afraid, is a different issue entirely.

Sadly it is a distinction that Cable seems determined not to make. He remains wedded to the view that UK PLC is in such dire straits that it absolutely has to import a range of technical and engineering workers to maintain its position in the world economy. Furthermore he is supporting this contention by pointing out that it allows us access to markets that would otherwise be closed to our industries. This has a degree of merit, if you allow that we have something that market wants to buy.

But it is interesting to note that I don’t see a great influx of Chinese workers on ICTs coming in to the country to do a range of fairly low level technical jobs. After all, China has a rapidly growing economy and probably the biggest untapped market anywhere in the world. And we seem to be pretty good at selling into it, without reciprocal trade deals – at least, none that I’ve seen reported. I could be wrong but I also don’t see us paying for China’s growing nuclear industry, nor its education system.

Funny that, isn’t it?

It doesn’t help that the people charged with supervising the new ICT rules on salary banding and the like don’t seem to have much of a clue what’s going on either. The transcript of a discussion at the Public Accounts Select Committee makes for depressing reading. Not that they aren’t concerned about the issue, they clearly are, but that they are so vague about the rules themselves and vague about how compliance is going to be measured. At one point they are saying that the number of request for salary information to enforce the rules is too high for the system to cope. In other words, the rules are in place but there’s no effective way to apply them. They are even rather vague about the local resident working test, which is intended to stop an existing worker being booted out by an incoming ICT one.

And Cable and friends still fail to grasp the fundamental point here. If we give all the entry-level jobs away, how are those 20,000 IT graduates, to take one example, ever going to get their first step into their chosen career? And in a few more years’ time, where will we find the middle managers and technical experts who actually get this somewhat overrated ICT workforce to deliver to the required standard?

This is something that needs decisive and effective action. Four words that seem to have passed by the honourable Secretary of State for Business, Innovation and Skills without leaving a visible imprint.

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That was the immediate reaction to Theresa May’s pronouncement on how the Coalition will be handling work visas as part of its attempts to reduce immigration: a fair start but not nearly limiting enough. While it was good to see positive efforts to reduce the influx of non-EU workers, there was a sense of disappointment that the ICT visas, about which there has been so much debate, would not be included in the capped total.

Why this should be so is mostly down to two factors. Firstly the somewhat misguided belief of some Coalition members, apparently led by St Vince of Cable, that British business would flounder in a sea of amateurishness if we didn’t keep importing these vital skills from overseas in unlimited numbers. Well I’m sorry, St Vince, but I’ve worked with quite a few of these incoming experts and while the odd one or two are very good indeed, the average is rather closer to the other definition of “expert”; “ex” as in “has been” and “spurt” as in “drip under pressure”.

Joking aside (OK, it wasn’t much of a joke, I admit…), it is nevertheless a valid point. ICTs are for moving highly skilled experts around or for putting experts and trainees together. It seems a little perverse that the bulk of the ICT traffic seems to be bringing in the trainees rather than exporting the trainers.

The second pressure was from big business. Some very big businesses in fact, although oddly enough they aren’t primarily UK companies. UK businesses were involved of course, although reading between the lines a little it is horribly evident that the UK companies had a genuine fear that they would lose their ability to move modest numbers of staff freely in and out of Britain while the other guys, the predominantly non-UK ones, were clearly more worried about their bottom line. Although you have to ask exactly why non-UK companies think they should be able to redirect UK’s government policy in the first place.

Anyway, the deal has been struck, ICTs are not being capped. Gloom and despondency among the UK freelance workforce, joy unbounded from UK PLC (or should that be Elsewhere PLC?).

But wait. There is a glimmer in the gloom.

If you want an ICT visa and to be here more than a year, you have to be earning at least £40k per annum in real salary. Given the supposed qualities of the average ICT that is a not unreasonable figure for most companies.

Aim to stay less than a year and it falls to £25k. Which is a laughably low for a talented individual, of course, but still significant; many ICTs being body-shopped in the UK workforce are allegedly paid rather less than that already. But that one year cap makes all the difference. It blows a big hole in the budgeting, which has been designed to recover immigration expenses over two or three years.

The reactions to this from the big boys have been interesting. Briefly, they really do not like it. Which means basically we got it right. Shame…

And one quote is, I think, particularly revealing. One company is reported as saying that it will be difficult to pay different salaries to people depending on if they are staying more or less than a year. Well it shouldn’t anyway (perhaps they need a better IT system…), but surely you are paying these people a wage in their home location, aren’t you? Why do you want to pay them anything different for a temporary gig elsewhere?

So while at first glance it was less than we wanted, it’s actually a pretty damned good compromise. The guys who put this together were largely reacting to some solid, very high quality work by the PCG team who should be congratulated for a job very well done. That an organisation representing some 20,000 freelance members can persuade the Coalition to go against the wishes some multti-billion pound corporates is an astonishing achievement.

In fact the title of this blog is all wrong. It should have been “Nemo me impune lacessit”. Which, as I’m sure you all know, translates as “Don’t mess with me, Jimmy”.

Alan Watts can found at LinkedIn.
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HMRC has postponed releasing any Time to Pay data while it reviews the release of statistical information. A spokesman from the Revenue said that he could not say how long the review would take.

The Time to Pay arrangements allow businesses to defer tax payments and were set up during the credit crunch as a lifeline for companies that were struggling to meet their tax liabilities.

The president of the UK200Group, Colin Howe, remarked that the Business Secretary, Vince Cable, had recently told the Institute of Directors that his department had instructed the Revenue to continue to ensure that it would be easy for applicants to obtain Time to Pay arrangements. However, if HMRC doesn’t publish statistics, we won’t know if that is happening.

Tax expert Richard Mannion from Smith & Williamson said that the review doesn’t tie-up with HMRC’s message that TTP works. He believes that government spending cuts could be the cause of the review.

In the first 15 months of the scheme, 300,000 Time to Pay arrangements were set up, allowing £5.13bn worth of taxes to be deferred.

Meanwhile, the Regulation Policy Committee is calling for vigorous, independent scrutiny of all new business regulations. Vince Cable announced last week that the ‘one in, one out’ policy for new regulations will come into force at the beginning of September and the RPC would like to see Whitehall produce a robust analysis of all possible alternatives and implementation cost estimates prior to the formation of new regulations.

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Image: The empty Book by Bidrohi Hirok

Traditionally this is the Silly Season, when the Press have to file stories about singing sheep to fill the papers since there is no real news to talk about. But actually there are not one but two interesting stories to ponder this week, one illustrating how very confused the whole immigration argument has become and the other illustrating just how out of touch with reality the Senior Civil Service seems to be.

Firstly, immigration. A large delegation of politicos, business leaders and sports stars (why sports stars?) led by Mr Cameron has been dispatched to boost our trade with India. Given that they are a tiger economy in their own right, this is probably a good move. Snag is, the Indians and Vince Cable have been talking about opening up the barriers to immigration while everyone else is talking about closing them. Remind me, what is the definition of “Coalition”?

Still, Mr Cable is actually correct; bless him; the ability to allow highly skilled workers in to the country to fill necessary gaps in our native skills is a good thing, not least because we have signed reciprocal treaties that mean we have to do so. Sadly this has got wrapped up with the whole net immigration argument which in turn has evolved from the last government’s unofficial but very real open door policy. We do actually need these skilled people, be they heart surgeons or chefs who understand Thai cuisine. Provided they pay their way and add some value to the UK economy, what’s the problem?

However, before we get all optimistic about them, how about the government looks at abuses of the system first? There isn’t a skills shortage in IT; we have 40,000 IT graduates out of work and hundreds of good applicants for almost every role. Why then, do we allow IT staff to come in on Intra-Company Transfers in their thousands to learn how to do our jobs so they can export them back home?

This is an entirely different issue to the one about net immigration. It would be nice if HMG and the Press could get that difference clear so we can have a reasoned argument about it…
The other interesting story is that the current IT Director for HMRC, a certain Mr Singh, is finishing his three year fixed term contract but staying in post as a freelance through his own shiny new limited company. Instant cries of “Foul” and “Why isn’t he being done under IR35?” arose. Unfairly perhaps, since he hasn’t yet had to fill in a tax form so his position under IR35 is unknown. OK, he’s a classic IR35-caught candidate, and I can’t believe HMRC would let him get away with anything, but he hasn’t done anything wrong yet.

Or has he?

The point of a Fixed Term Contract is that it has a definitive, pre-agreed end date: the clue is in the name. So why, after three years, is there not a suitable replacement lined up ready to go, either from the open market or by promotion from within? Is there really only one person suitable in the whole of the UK? Surely not…

But there’s even more to this debacle…

They are paying Mr Singh as a freelance a day rate equal to around four times his previous salary. HMRC mandarins claim this is to achieve parity with an equivalent Deloitte consultant. Fine, except Mr Singh doesn’t work for Deloitte and so doesn’t have to support myriad partners and office buildings. Nor a sales and marketing team, apparently. So while it‘s good that HMRC accept that freelance workers have greater overheads than employees, something we’ve been arguing about for at least ten years, a little bit of market perspective wouldn’t go amiss. Especially when it’s our money they’re spending.

You could also argue that Mr Singh, having failed to identify a suitable replacement, has significantly failed one of his key duties. After all, had he gone under a bus, clearly there is nobody in the organisation, or outside it, ready to take over. So much for continuity planning then.

We could also query the proper application of the OGC tendering rules for new staff and various other inconsistencies, but let’s not Labour the point more than necessary.
In May I was hopeful that our shiny new Coalition had a clear idea of where they were going and why. I confess I am beginning to have my doubts.

Alan Watts can found found at LinkedIn.
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Vince Cable, the business secretary, says that banks are making it harder for small firms to apply for loans despite claims from the semi-nationalised banks that they approve at least 80% of loan applications.

Stephen Pegge, the chairman of the small business panel at the British Bankers’ Association, claims other business bank accounts are also matching this rate.

Mr Cable said these claims are misleading and cited proof from business industry bodies such as the Institute of Directors that shows that the banks are not meeting demand.

The IoD recently published research which found that around 33% of UK businesses had been refused banks loans. However, there has been some improvement as similar research conducted last year found that 57% of businesses were refused finance.

The BBA has also released figures showing that net lending by the banks was at an all time low in May. £500m was lent to SMEs but the banks collected more than that in repaid debts and withdrawn overdrafts.

A consultation is to be launched this week to discuss business finance and it will consider whether there would be any benefit to be gained by forcing new targets on the two semi-nationalised banks; RBS and Lloyds. Cable thinks that mandatory action forcing the two banks to make more finance available could be an attractive option.

However, the Labour government was unable to force Lloyds and RBS to meet lending targets to limited company contractors even though they were legally binding and a spokesman from the Treasury said that the coalition was still considering whether a new target based option would be effective.

The consultation will also look at other business financing alternatives. The coalition has already said that using equity finance could be one possible option. Currently only between 1 and 2% of SMEs use this option and the financial secretary to the Treasury, Mark Hoban, says that the majority of small businesses are missing an opportunity. To encourage more freelancers and SMEs to take up the option, Vince Cable also suggested recreating 3i, a private equity organisation which provided equity for small, expanding businesses.

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