Gauke defends contractor T&S legislation

A top MP has accused the government of misunderstanding how the world of work has changed, and reiterated the call for a strategic review of legislation that affects contractors.

Roger Mullin, Treasury spokesman for the SNP, berated parliament over its mistaken perception that people are either conventionally employed or entirely self-employed.

His party has tabled an amendment for a review to be written into law with the effect that the T&S legislation, among other frameworks affecting contractors, would be scrutinised.

But the government has so far rejected the review plan, which the SNP wants due to its concern that constituents in Scotland are particularly hard hit by the April legislation.

Under it, the ability of contractors to claim tax relief on T&S costs has been largely removed, the SNP said, on the basis it was unfair as it was off-limits to employees doing the same job.

Mr Mullin believes that, contrary to the government’s claims about why it introduced the legislation, it is contractors who are being denied a “level playing field.”

He said: “The [Treasury] minister [David Gauke] argued calmly, as he always does, that the change is a simply a matter of ensuring a level playing field. 

“If he wanted a level playing field, he would be ensuring that workers employed through intermediaries benefit from sickness pay, holiday pay and many of the other advantages of full-time employment. They do not get those same benefits and cannot be compared with people in traditional forms of employment.”

Kirsty Blackman, the SNP’s spokeswoman on the Lords, questioned Mr Gauke on whether he had considered the “disproportionate impact on rural communities where travel is much more expensive and sometimes an overnight stay is necessary”.

In response, the government said it was interested in fairness, and said T&S relief represented an unfair benefit to those who happen to arrange their employment through an intermediary.

However for such workers, typically those who use an umbrella company, the minister accepted that wages would need to rise in some circumstances. 

He added: “In terms of whether it would reduce contractors’ ability to travel, creating a skills shortage or reducing flexibility and preventing growth, where businesses wish or need to recruit workers living some distance away, the government expect businesses to pay a wage sufficient to attract workers without any special tax subsidy being necessary.”

But Mr Mullin told the minister:“Part of the problem is that the government have misunderstood the needs of the modern labour market. People are no longer employed either in traditional ways or entirely self-employed in the way it is traditionally understood.”