Labour in surprise pledge to scrap IR35 reform from April 2020

Labour has both stunned and elated IPSE’s self-employed hustings with a surprise pledge to entirely abandon IR35 reform in the private sector.

Made by the party’s Bill Esterson, his pledge on Monday night to the contractor group’s event means that Labour would “absolutely” scrap the changes to IR35 from April.

Asked by the Association of Independent Professionals and the Self-Employed (IPSE) about IR35 reform, the Labour MP said: “It should never have been implemented in one go.

“We absolutely can’t see it rolled out into the private sector the way things are at the moment.”

Pressed whether that means a Jeremy Corbyn-led government would axe the April 2020 proposals, Mr Esterson said it did, confirming their removal to now be official Labour policy.

Asked by ContractorUK why Labour’s manifesto made no mention of this plan to tear up the draft IR35 legislation, an IPSE spokesman last night said that the party was yet to clarify the omission.

The IPSE spokesman also said that Mr Esterson, the Labour MP for Sefton Central, made no commitment about the already in-force public sector IR35 changes.

'Causing real problems for the self-employed'

However, at times he seemed to imply otherwise – and not just because he spoke more about the public sector IR35 changes than the private sector’s, but also because he suggested a review of the April 2017 framework ought to be run.

“In the public sector, it [IR35 reform] has been implemented right across the board – causing real problems for self-employed professionals who need to get contracts. Causing real problems for the public sector as well.

“We are seeing a reduction in the availability of skilled workers in the health service and elsewhere as a result,” Mr Esterson said, adding – crucially. “There needs to be a fundamental review.”

'Tories have been slapdash'

Based on the wording from Mr Esterson, who went on to condemn the Conservatives’ treatment of the self-employed as “slapdash,” IPSE’s Simon McVicker is hopeful:

“The pledge [by the Labour MP] to halt and review the [IR35] changes will be very welcome to freelancers”, he said in a statement.

“The review would give IPSE the chance to clearly show the damage these changes would do and stop them once and for all.”

The association said much the same last Tuesday, when the Lib Dems were first to say the April IR35 changes warranted a review. The party left the commitment out of its manifesto too.

“This election, freelancers and the self-employed represent five million votes up for grabs,” said IPSE, adding:

“Now both Labour and the Liberal Democrats have heeded IPSE and the freelance community on IR35, it’s time for the Conservatives to take note too.”

'Disappointment'

Online, IPSE’s CEO Chris Bryce spoke of his 'disappointment' that the only Tory vow so far to contractors was a manifesto pledge to “explore how to better support the self-employed.”

Although that pledge includes launching a review, with a focus on helping the self-employed “better navigate the tax system,” it is far from what contractors say would make them vote Tory.

In fact, in a new survey by Harvey Nash, 60 per cent of tech contractors say they would put a tick next to Boris Johnson or his party – but only if he “abolishes or significantly changes” IR35.

Underlining the strength of feeling about the Intermediaries legislation, only 5 per cent said Mr Johnson and his party would still be “good for contracting” if he did nothing about IR35.

'There's still time for Javid, Norman, Johnson'

It is this ‘doing nothing’ about IR35 that bothers Mr Bryce, a former contractor himself.

“We finally see from [our self-employed hustings] that the Conservative Party  -- the party of business – are the only major party which would keep IR35 [as it is.]”

“But there’s still time for Sajid Javid, Jesse Norman and Boris Johnson to reconsider before 12/12 and remove this unnecessary, unfair and unworkable blight on the UK's agile workforce and unleash them to fully contribute to UK plc.”

'Major voting factor for contractors'

Elsewhere in the 1200-strong survey of IT contractors, about one-third dismissed the PM out of hand, saying that regardless of his IR35 stance he was bad for contracting.

“With the potential impact of IR35 [reform] on their livelihoods, the survey shows it will be a major factor in [contractors’] voting decision[s] in December,” said Harvey Nash’s managing director Matt Smith. 

He added: “If the political parties are serious about effecting real change after the election and driving new growth post-Brexit, then the planned changes in policy in relation to self-employment in the technology sector will need to change.”