As we know, Labour won the general election by a record breaking majority of 411 seats to the Conservatives 121. So, out goes Rishi Sunak from 10 Downing St and parachuting in his place as the UK’s new prime minister is Sir Keir Starmer. The victory speech, “Change begins now”, and the conciliation speech, “A sobering verdict which I take responsibility for”, have been made, so what does all this mean for IT Contracting?
Historically, when there is uncertainty in the market, IT Contracting and hiring in general takes a hit. Investment and projects slow down or pause and candidates in the market tend to take a ‘batten down the hatches’ approach. Now we have the stability of knowing we have a new government, I hope that this will encourage organisations to plan for the future and invest further in their technology on an increasingly competitive global stage.
“We are pro-business and pro-worker. The party of wealth creation,” Sir Kier Starmer has said. Britain’s economic performance since the coronavirus crisis has been the weakest among the Group of Seven major economies with the exception of Germany, which was also hit hard by the jump in energy prices following Russia’s invasion of Ukraine. The belief is that by increasing investment in areas such as technology, there will be an overall increase in productivity.
The former government, led by the son-in-law of the owner of a renown Systems Integrator, did rather seem to favour the use of Systems Integrators. Through the award of large contracts to SI’s and IR35 reforms, the independent IT contractor, has had a tough time. There was a very brief (Liz Truss / Kwasi Kwarteng) IR35 repeal in September 2022 which was welcomed by a rather surprised freelance market.
Reform UK were the only party who pledged to abolish IR35 and they won just 5 out of a total of 650 seats despite having 14.3% of the total vote (2.1% more than the Liberal Democrats with 72 seats, making a compelling argument for proportional representation). Coupled with the fact that it was actually a Labour government who brought in IR35 in the first place back in April 2000, the off-payroll working rules in their current form are most likely here to stay. Use of the governments own ‘Check Employment Status for tax’ tool is strongly recommended, which the HMRC have said as long as responses inputted are accurate, they will stand by its result.
So it is very early days to really know what the new Labour government means, apart from perhaps it being most likely we will be working with IR35 for the foreseeable future. But the stability and investment theme the new government brings, should hopefully provide some positivity. The appetite for technology still remains very strong and even though there has been a slight correction in the global tech stock market of late, there is still a significant amount of technology innovation where highly skilled independent IT contractors have an important role to play.