IR35 reform ‘behind 38% drop in active IT contractors’

A slump in the number of IT contractors on active assignment deepening for the third month in a row has been blamed on the April 2017 changes to IR35.

The slump first became acutely visible in November 2017, when the Association of Professional Staffing Companies said its member agencies had 33% fewer IT workers in the field on a temporary basis.

The association then saw the drop in live contract IT placements notch up further to 36% in December, perhaps due to the season.

Yesterday however it said it was up again; to a new high -- 38%.

“The main driver behind the drop, we believe, is the change to IR35 and the reduction of contract staff in the public sector”, APSCo’s IT Forum chair Ben Broughton told ContractorUK.

Describing the slump as “significant”, APSCo has calculated that demand for IT contractors -- as a whole -- is now down as a result, by some 8% compared to the same time last year.

This points to a deterioration in the last few weeks, as in late January private sector appetite for IT contractors was still positive, thanks to security, data and consultancy, Broughton said.

However speaking at the time, he cautioned that a “high” level of confidence among end-users had started to inspire a “drive to secure permanent staff and retain…[IT] knowledge in-house.”

That confidence seems to have held, as APSCo said financial services (unaffected by the April 2017 off-payroll reforms) was the only sector in January where the pool of new contracts ended up widening and even then; only marginally -- by just two per cent.