The threads here are starting to come alive with the actions of the larger end clients and their intermediaries. Some banks have said "no more contractors", some are reportedly looking at options (although it seems that this might actually be their agency and not the bank), some will no doubt make their policy decisions much more quietly.
The common theme here though is that the end clients and the intermediaries will make decisions and contractors will be required to abide by them. In other words, the assumption is that contractors will be supine and are willing to be led by the nose into the new world with no regard for their thoughts, views, preferences but usually being left with the financial consequences of decisions they have had no input into.
Why?
I understand that the end client is ultimately paying all the parties in the chain and as such has (or should have) a major influence. I have heard clients say that they so desperately need the job that they will do pretty much anything they are asked to in order to get it and keep it. I have heard others say that their skill set is valuable and that end clients can (and do) pay premium rates to get that person and keep them.
So I understand that the end client/contractor relationship is a complex one that goes beyond simple supply and demand. This nexus will change forever once IR35 reform has bedded down though and true contractors outside IR35 post April will I think have a greater weight to their position in any negotiation.
The present crop of agencies, recruiters, PSC accounting firms are all facing major changes in their business model. The objective of the reform is to reduce the number of contractors. HMRC say by 90%, commentators here and elsewhere consider that target to be ambitious and perhaps unrealistic, but even a 50% drop in numbers will be catastrophic for intermediaries.
Some will go under. Some will seek new business models (service companies, SOW, etc) which will prop them up for a while but I am convinced that HMRC will be looking to use their IR35/MSC/AWR weapons to investigate all such models. The weaker models will not be able to withstand that review and will fail.
Umbrella firms are coming under pressure to be more transparent- and rightly so. These threads are full of warnings about umbrella practices that are perhaps less than honest. Amongst the umbrella community, it is obvious that the majority of the better known names are aware of this need and are complying with the need to be clear and open with clients, to a greater or lesser degree. I think we will see this continue and many of the umbrella firms who misuse that name will be dragged into the light - or will close.
Advisers in the accounting/tax worlds will see a change in role as well. Whilst I am sure that some will continue to offer schemes and structures that are claimed to be "compliant", "approved" and "never challenged", it is to be hoped that a wiser contractor population will be better equipped to separate fact from fanciful fiction.
The old models of how this sector works are (in my view) destined to disappear. Pressure from a Government hungry for revenue, changing employment law, etc, will force change.
Individual contractors have a once in a generation opportunity to shape the market they work in.
The power of the end client and the intermediaries is still there but is will be reduced as the reforms bite.
In a market worth billions of pounds, those entities will seek to re-shape the business models to protect their position. If that new model sees fewer contractor posts and a refusal from end clients to increase rates, then intermediaries will increase fees and seek to impose them on individuals.
Contractors can and should realise that for a few months, perhaps until the end of 2020, they have an increased influence on how contracting will look and act for the next 10 years.
Contractors can and should realise that they are not supine and should not accept without hard questioning, new business models that many will seek to impose on them.
Will they?
History says not.
There is opportunity for contractors to organise and direct what THEY want.
For example it was suggested to me by a party known in this website that some form of "kite mark" granted by an organisation working for contractors (and not intermediaries) to "approved" umbrellas, agencies, recruiters, end clients even, would be a good idea.
I agree. I also however think that such an organisation is a lot of work for whoever puts it together and runs it, will require funding and staffing and resources, would have real difficulties in staying true to its purpose.
The biggest challenge however is the apathy of contractors.
Despite the slings and arrows of outrageous fortune that many contractors have suffered over the past two decades, there is no appetite seemingly to seize even a modicum of control over their own destiny. No desire to dictate terms to intermediaries. No willingness to "rock the boat".
The period of market reform we are now in is the perfect opportunity to grasp the nettle and at least start moving towards a fairer, more transparent and ultimately safer (financially and in matters of physical and mental health) goal.
A contractor owned and controlled entity needs to be the catalyst for this.
And yes, we see a model that is some of the above in our own Big Group. The Big Group is not however aimed at the above problem and whilst it may serve as a template, it is not entirely suitable.
We see perhaps a better prototype in how LCAG was formed around a single issue. I can safely say however that the group was formed and retains its purpose by dint of hundreds of hours of effort from a relatively small group, juggling their own jobs and lives alongside the LCAG work.
Whichever model is used, failure of contractors to take some control and shape their own destiny, NOW, will result in commercial intermediaries and end clients increase their power at the expense of individuals.
The common theme here though is that the end clients and the intermediaries will make decisions and contractors will be required to abide by them. In other words, the assumption is that contractors will be supine and are willing to be led by the nose into the new world with no regard for their thoughts, views, preferences but usually being left with the financial consequences of decisions they have had no input into.
Why?
I understand that the end client is ultimately paying all the parties in the chain and as such has (or should have) a major influence. I have heard clients say that they so desperately need the job that they will do pretty much anything they are asked to in order to get it and keep it. I have heard others say that their skill set is valuable and that end clients can (and do) pay premium rates to get that person and keep them.
So I understand that the end client/contractor relationship is a complex one that goes beyond simple supply and demand. This nexus will change forever once IR35 reform has bedded down though and true contractors outside IR35 post April will I think have a greater weight to their position in any negotiation.
The present crop of agencies, recruiters, PSC accounting firms are all facing major changes in their business model. The objective of the reform is to reduce the number of contractors. HMRC say by 90%, commentators here and elsewhere consider that target to be ambitious and perhaps unrealistic, but even a 50% drop in numbers will be catastrophic for intermediaries.
Some will go under. Some will seek new business models (service companies, SOW, etc) which will prop them up for a while but I am convinced that HMRC will be looking to use their IR35/MSC/AWR weapons to investigate all such models. The weaker models will not be able to withstand that review and will fail.
Umbrella firms are coming under pressure to be more transparent- and rightly so. These threads are full of warnings about umbrella practices that are perhaps less than honest. Amongst the umbrella community, it is obvious that the majority of the better known names are aware of this need and are complying with the need to be clear and open with clients, to a greater or lesser degree. I think we will see this continue and many of the umbrella firms who misuse that name will be dragged into the light - or will close.
Advisers in the accounting/tax worlds will see a change in role as well. Whilst I am sure that some will continue to offer schemes and structures that are claimed to be "compliant", "approved" and "never challenged", it is to be hoped that a wiser contractor population will be better equipped to separate fact from fanciful fiction.
The old models of how this sector works are (in my view) destined to disappear. Pressure from a Government hungry for revenue, changing employment law, etc, will force change.
Individual contractors have a once in a generation opportunity to shape the market they work in.
The power of the end client and the intermediaries is still there but is will be reduced as the reforms bite.
In a market worth billions of pounds, those entities will seek to re-shape the business models to protect their position. If that new model sees fewer contractor posts and a refusal from end clients to increase rates, then intermediaries will increase fees and seek to impose them on individuals.
Contractors can and should realise that for a few months, perhaps until the end of 2020, they have an increased influence on how contracting will look and act for the next 10 years.
Contractors can and should realise that they are not supine and should not accept without hard questioning, new business models that many will seek to impose on them.
Will they?
History says not.
There is opportunity for contractors to organise and direct what THEY want.
For example it was suggested to me by a party known in this website that some form of "kite mark" granted by an organisation working for contractors (and not intermediaries) to "approved" umbrellas, agencies, recruiters, end clients even, would be a good idea.
I agree. I also however think that such an organisation is a lot of work for whoever puts it together and runs it, will require funding and staffing and resources, would have real difficulties in staying true to its purpose.
The biggest challenge however is the apathy of contractors.
Despite the slings and arrows of outrageous fortune that many contractors have suffered over the past two decades, there is no appetite seemingly to seize even a modicum of control over their own destiny. No desire to dictate terms to intermediaries. No willingness to "rock the boat".
The period of market reform we are now in is the perfect opportunity to grasp the nettle and at least start moving towards a fairer, more transparent and ultimately safer (financially and in matters of physical and mental health) goal.
A contractor owned and controlled entity needs to be the catalyst for this.
And yes, we see a model that is some of the above in our own Big Group. The Big Group is not however aimed at the above problem and whilst it may serve as a template, it is not entirely suitable.
We see perhaps a better prototype in how LCAG was formed around a single issue. I can safely say however that the group was formed and retains its purpose by dint of hundreds of hours of effort from a relatively small group, juggling their own jobs and lives alongside the LCAG work.
Whichever model is used, failure of contractors to take some control and shape their own destiny, NOW, will result in commercial intermediaries and end clients increase their power at the expense of individuals.
). Big organizations are implementing their plans right now. We've heard from financial services because of their risk structures and the rules surrounding SAOs, but other sectors will be enacting things imminently. Ultimately, unless the new PM takes a completely different approach, which is highly unlikely, BoS contracting is probably dead, and no amount of lobbying or contractor circle-jerking is going to save it. What remains will be a large number of employees, whether permies or, more likely, FTCs, and a small group of specialist contractors that do project-based work and have always been outside and will continue to be outside. Where the line is drawn between the two will not be influenced by some Big Group cover band but market forces. 
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