Contractors in IT, what does Labour now firmly in charge mean for you?

Pretty much as expected, Labour has won a sizeable majority, not a large as some have predicted, but still enough to be firmly in charge - a fact contractors won’t take lightly, writes Alan Watts, a former IT contractor with 40 years’ experience in the UK technology sector.

When a party isn’t a party

Clearly, yesterday’s vote was more a case of an anti-Tory result than any great enthusiasm for Sir Keir Starmer’s policies, skewed by a large protest vote in favour of Nigel Farage and his Reform ‘company’ – well you can’t really call it a political party (and it is technically a limited company).

Would it have been any better had outgoing PM Rishi Sunak not called it now but waited until the seeds of recovery he has planted actually started to bear fruit in the autumn? 

Possibly not, it seems pretty clear that the majority of us voters didn’t want the Tories regardless of their achievements. Wait for new chancellor Rachel  Reeves to claim responsibility for that recovery though.

The plans of ambiguity have been voted in

But what does a Starmer-led government mean for IT contractors? It’s difficult to be sure, since Starmer has studiously avoided saying what he is going to do to pay for his wonderful plans for energy, immigration, workers’ rights, house building and the NHS. 

Don’t know about you, but I’m worried. It’s all very well Starmer saying he will pay for it all through growth in the economy, except most of the plans appear to centre on stifling that growth at source. 

The HMRC idiot wheeze (aka IR35) isn’t going anywhere

We can pretty much forget any idea of reforming IR35 in any way; that ship has now sailed. No, Gordon Brown’s gleeful adoption of HMRC’s idiot wheeze is here to stay. The workforce of people paying full taxes with no employee rights aren’t going to see any improvements. Yes, more rights are promised from day one for employees, but contractors aren’t employees so that’s a dead end.

Headline taxes aren’t going up, but there is still a target-rich environment out there. At risk are things like the 25% tax free lump sum in your pension pot, putting VAT on things that are currently out of scope like private education and private health insurance (Starmer doesn’t believe in private health care remember). 

Where else Starmer-Reeves could raid 

Inheritance tax, capital gains, tax relief on pension contributions – all things that would impact us middle earners and small businesses.

Immigration will surely be going up. Plans to tackle that thorny issue seem to be limited to renaming ‘Border Force’ and repatriating illegal immigrants. But how, exactly, since that will mean getting agreement with people like the Taliban, President Assad and France? Any restrictions on legal immigration would mean more work and more tax money going offshore.

What IT contractors can expect from Labour (cont.)

Former Labour leader Ed Miliband is somehow back, so expect a renewed drive for net zero - the ultimate white elephant given the UK is responsible for about 0.8% of the world’s greenhouse emissions. But his plans will need to be paid for of course.

More houses to be built, too. They are desperately needed but where will they go? Someone promised three million houses in the life of this parliament which, by my sums, is about 1500 a day

And on and on. Lots of promises of a bright new tomorrow, almost all of which are unattainable. 

And finally it’s Labour, soon to be the new Tories…

Nonetheless the people have spoken (just over a third of them at any rate). I fully expect Labour to be as popular as the Tories in about 18 months’ time. Meanwhile I’m not looking forward to a happy, comfortable retirement. But I don’t think those tech freelancers in-contract or on the bench will be popping champagne courts either - at least not at this stage.