Tag Archive | "REC"

Soaring cost of childcare forces families into poverty

A recent survey by Save the Children and the Daycare Trust revealed that some British parents have to spend more than 33% of their income on childcare and this is preventing many women from returning to work and piling financial pressure onto parents.

The REC responded to these claims last week by highlighting the important role specialist recruitment agencies play in delivering a flexible childcare workforce.

The Chair of REC Childcare, Judith Ivers, explained that the cost of childcare is often a major barrier to a parent going back to work. Specialist childcare recruitment agencies provide parents with high quality, affordable childcare.

In addition to considering the cost of childcare, we also need to make sure that there is a pool of properly vetted, suitably trained childcare workers, she continued. Childcare recruiters provide us with this peace of mind.

An increasing number of parents in Northern Ireland are being pushed into poverty due to soaring childcare costs. They spend an average 45% of their income on childcare. Some families on low incomes are having to turn down jobs and others are thinking about leaving their jobs because they cannot afford the cost of childcare.

Whilst parents say they need to work, childcare costs are eating up such a large proportion of their income that nearly 25% are now in debt as a result. One Northern Irish mother said that it was hard to find affordable childcare and if she had to pay for a child minder or private nursery there would be no point in her going out to work.

If the government wants to persuade parents that working is the way out of poverty, it needs to make sure effective and affordable childcare support is available.

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Smallest firms could get more time to prepare for pensions auto-enrolment

Smaller firms may be pleased to learn that the government is considering giving them more time to get ready for automatically enrolling their employees in pension schemes.

The Pensions Regulator last week issued guidance for employers that says smaller firms sharing PAYE schemes with other like businesses will see their staging dates deferred by up to 23 months.

The new alterations are expected to be written into legislation prior to the Pensions Bill becoming law and will cover firms with less than 10 employees who are included in a larger PAYE scheme which has in excess of 239 members.

A business fitting the above description would have until the first of January 2016 to implement auto-enrolment.

The Pensions Regulator has also launched some interactive tools to explain the new regulations. As from October next year, employers and recruitment businesses will be required to auto-enrol workers after they have completed 12 weeks service. Employees then have the option of opting out if they do not want to participate in the scheme their employer has chosen. This new duty is to be phased in over several years, starting with larger organisations.

The interactive tools will help businesses establish their staging date, help them understand which employees need to be enrolled and how to enrol them, and what level of contribution is required for each eligible employee.

The REC still has concerns that auto-enrolment will create challenges for recruiters due to high levels of turnover amongst temps and the expectation that a lot of agency workers will opt-out of the pension scheme they have been enrolled in.

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Employment statistics contain a glimmer of hope

The latest employment statistics released by the ONS last week should bring a crumb of comfort to Britain’s younger generation.

895,000 young people were registered as unemployed between February and April this year, the lowest number since April 2009. Unemployment across all age groups also dropped to 2.43 million.

Kevin Green, the chief executive of the REC, said the reduction will be welcomed but warned that this could be the calm before the storm. Ten of thousands of young people will be leaving full-time education in the next few months and a large proportion of them will not have a job waiting for them.

The picture looks mixed for those in the 50-64 age bracket. 36,000 more people in this age group joined the working populous but the number claiming Jobseeker’s Allowance also increased and this group also has the highest proportion of people who are long-term unemployed; i.e. without a job for more than 12 months.

Meanwhile, prospects are improving in the City. The MD of Marks Sattin, Dave Way, said there has been a visible boost in middle tier employment amongst the 35 – 49 age group in City firms and finance and accountancy workers are confident they will receive a salary increase in excess of 8% this year.

The director for employment at the CBI, Neil Carberry, said the private sector seems to be creating jobs and he hopes this trend will continue. However, long-term unemployment is still a serious problem and the government must tackle the structural causes of this in order to get the UK working.

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What sort of budget would suit online accountants?

A number of leading organisations are calling on George Osborne to deliver a budget that supports small businesses such as contractor accountants.

Recent research from BDO found that business leaders in the UK want the coalition to speed up its plans for simplification of the tax system and concentrate on helping entrepreneurs, rather than big multinationals, in the budget.

66% of business leaders think the coalition should accelerate its plan to reform the business taxation system and make it fit the needs of all UK firms.

Respondents to the survey were also asked what measures the chancellor should take to reduce the deficit. 50% favoured more public spending cuts but very few thought the solution was to increase taxes such as income tax or VAT.

However, when the economic situation improves, 41% of business leaders believe a cut in personal taxation should be prioritised. 35% said further measures should be taken to reduce the deficit and only 6% thought a cut in corporation tax was a priority.

Stephen Herring, a senior tax partner at BDO, said the results highlight that there is an urgent need for business tax reforms to drive business growth across all sectors.

The REC has written to George Osborne asking him to make sure the Budget really is a ‘Budget for Jobs’. The letter builds on the themes of the REC manifesto to remove the barriers that are prohibiting growth and deliver opportunities and jobs.

In particular the REC suggests avoiding any increase in business taxes, implementing an NI holiday for SMEs that hire young people and scrapping the National Insurance increase. The Confederation also calls on the government to do all it can to smooth the AWR implementation and promote flexible working.

The ICAEW says the chancellor should concentrate on long-term growth plans rather than quick-fix solutions. In order to achieve this, he should develop a simpler taxation system, a better approach to supporting enterprise and a highly-skilled, socially mobile workforce.

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Are more public sector contracts on the cards for contractor accountants’ clients?

UK contractors will be pleased to learn that the government has committed to overhauling the process by which SMEs compete for public sector contracts.

This will be achieved by cutting bureaucracy and becoming more open and transparent in its dealings.

The national chairman of the FSB, John Walker, says this is a victory for small businesses in the UK. The FSB has been campaigning for SMEs to have the same opportunities to public sector contracts as large organisations do. The new measures to get rid of red tape and open up transparent communications channels, which were outlined on Monday, are most welcome, he said.

There also needs to be a genuine change in culture within government procurement when it comes to dealing with SMEs, Walker added.

According to the Federation’s statistics, 70% of smaller businesses rarely bid for public sector contracts because of lack of awareness.

The situation is so bad that the UK ranks 24th out of 27 member EU states as far as access to public procurement markets goes. Only 24% of public sector contracts are awarded to small businesses in the UK, compared to 44% in France.

The REC has also been campaigning for a change in procurement practices for several years. Kevin Green, the chief executive of the REC, said that at last we are seeing action instead of mere words. The REC wants to see a competitive, dynamic market where recruiters can compete based on their capabilities and competences. He added that the REC will monitor the implementation of the new measures and will continue its constructive work with the Cabinet Office and OGC.

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What does 2011 have in store?

Contractors could be amongst those set to benefit from internal skills shortages at UK firms as we go into 2011.

The Chartered Management Institute recently said that 43% of managers in the UK think they cannot fulfil their objectives for next year with the staff they currently have. As a direct result, 48% are expecting to make further redundancies in 2011. This could lead to openings for highly-skilled limited company contractors as companies look to complete tasks without increasing the size of their permanent workforce.

The CMI’s chief executive, Ruth Spellman, said that 2010 has been a very difficult year for managers and in many cases they have had to deal with the difficult conditions without a suitable team.

There are also conflicting reports on the state of the UK economy and its jobs market. The latest figures from the ONS show that unemployment reached 29.13 million in the quarter to October. 33,000 of the 35,000 job losses were in the public sector which is to be expected considering the government’s austerity measures.

The CIPD says the figures bring no joy to jobseekers and its chief economic advisor, Dr John Philpott, said the data was far worse than expected. He believes the jobs market has run out of steam which does not bode well for prospects in 2011.

The British Chamber of Commerce, on the other hand, said that whilst the figures were disappointing, they gave no cause for despondency and longer-term trends point to a strong labour market.

The REC was also disappointed by the latest figures. Kevin Green said that employers are still cautious about hiring new employees but he still believes growth will return to the jobs market in the New Year. However, contractors, temporary staff and interim workers are likely to play an important role in helping businesses meet increased customer demand.

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Should online accountants be worried about PAYE reform?

Last Thursday, the REC responded to HMRC’s discussion paper on plans for streamlining the PAYE processes.

The Revenue wants to reduce the cost of administering PAYE for businesses and the government and at the same time reduce the number of incorrect tax deductions.

The main suggestion under consideration is to migrate employee tax details to a centralised account and introduce Real Time Information so that employers can submit income tax and NICs deduction details each time an employee is paid.

Eventually HMRC would like to introduce centralised deductions. Employers would use an electronic payment system to submit gross pay to the Revenue. They would calculate the deductions and automatically credit the employee’s bank account with the resulting net pay.

REC Policy Advisor, Chris Richards, said that recruiters would welcome any reduction in bureaucracy but warned that the public sector has had problems with large scale IT projects in the past and so each stage would need proper evaluation and implementation spread over realistic timescales.

Another change that is being questioned by the FCSA involves the abolition of year-end tax adjustments. HMRC has said they favour a system whereby information is updated when somebody changes employment.

However, the FCSA says that implementing and maintaining such a system might be extremely costly. It is also concerned that the storage of all the additional information might leave the Revenue open to a data security breach.

Matthew Sinclair from the Taxpayers’ Alliance is horrified by the idea of a centralised deductions scheme. He points out that people wouldn’t get a payslip and would need to check online to see how much tax they had paid. However, he thinks many people wouldn’t actually check and more mistakes would go undetected.

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Coalition should rethink the new compulsory pension scheme

The FSB thinks that micro firms should not need to comply with the government’s new pension scheme that comes into effect in 2012.

Under the new plans, all businesses need to enrol their employees in a pension scheme automatically but this would cause an undue burden on firms with 10 staff members or less, according to the Federation.

The FSB also believes that the government set up pension schemes do not meet the requirements of SMEs and that the time and money spent on their administration would be damaging.

Mike Cherry from the FSB said that whilst they welcomed plans that encourage people to save for the future, the new automatic payroll pension scheme will cause administrative headaches for smaller businesses.

To back up their comments, the FSB conducted research that revealed that 70% of business owners are not confident about selecting a pension plan for their employees due to its complexity. To solve this problem, the FSB suggests that a default scheme is set up and anyone who is currently not in a pension scheme should be enrolled.

The REC, on the other hand, is concerned about the auto-enrolment issues for recruitment agencies using temporary workers. The Confederation would like there to be a six month qualifying period before a worker is enrolled into a pension scheme. They point out that the bureaucracy involved in setting up a new scheme for a worker who is only temping for a few weeks will not be off-set by savings benefits.

The REC intends to work with the coalition to make sure the pension reforms will work for everybody concerned.

In addition to the qualifying period, the REC is calling for an option that allows workers to opt out of the scheme before enrolment and the maintenance of the National Employment Savings Trust which all employers can access.

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Preparing for the Agency Workers Directive

The plight of UK contractors, freelancers and temporary workers has once again come under the spotlight this week following the launch of the REC’s Agency Workers Directive (AWD) Toolkit.

Since the EU-inspired regulations were signed off in January this year there has been much speculation within the industry about the scope of the AWD. As things stand, umbrella company workers are thought to be captured by the regulations whereas those who are genuinely “in business on their own account” are not.

This would appear to suggest that contractors working outside of IR35 and through their own limited company will not be subject to the much critised ’12 week rule’. Many industry insiders however are yet to be fully convinced that this is indeed the case.

The REC is under no illusions about the potential impact of the AWD. According to the organisation, their new toolkit will assist recruiters to overcome the administrative, legal and practical challenges in a post AWR world.

A spokesperson from the REC said that the industry has reached an important milestone and the now was the time to sit up and pay attention to what is one of the most significant events ever to hit the industry. More information about AWR toolkit can be found by visiting the REC’s website.

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IT Contractors and Intra-company transfers

The controversial subject of intra-company transfers was raised again this week by The Recruitment and Employment Confederation (REC). It has continued it’s campaign for a ‘level playing field’ for UK contractors and freelancers since the issue was first reported by the PCG last year.

Several leading contractor accountants have already voiced their disapproval at the use of ICTs, which involve the transfer of an overseas employee to this country at the expense of UK workers. According to the REC, more robust regulation of ICTs is needed to protect UK based contractors and freelancers who may have been either overlooked or worst still replaced for a contract role as a result of an ICT arrangement.

During it’s presentation on Employing and Vetting non-UK Nationals, the REC raised several issues with Tory minister Damian Green, with particular reference to the higher end interim recruitment market that often associated with IT contractors.

The REC’s external relations director, Tom Hadley, welcomed Damian Green’s assertion that the existing regulations governing the use of ICTs will be reviewed under a Tory government to safeguard the future of the interim worker in this country.

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