New PM Boris Johnson backed by contractor sector, albeit tentatively
Boris Johnson being voted yesterday as Tory party leader -- ahead of his appointment today as the UK’s new prime minister -- has won the contractor sector’s tentative backing.
The sector’s hope for the politically ambitious, Brexit-supporting former foreign secretary is that just as he wants the UK to strike out on its own, his government’s policies will encourage individuals to strike out on their own too.
But first, the consensus is that Mr Johnson should instruct his new Cabinet to help such individuals by clearing the path of existing obstacles.
'Massive drag'
“[Contractors] have been hit by poorly thought-through policies like IR35 and the Loan Charge”, says Chris Bryce, chief executive of contractor body IPSE.
“[These two policies] are a massive drag on the flexible and innovative economy that the UK needs to be.”
The Loan Charge Action Group (LCAG) agrees. “[We] congratulate Boris Johnson on his victory but call upon him to follow through with his commitment to launch an independent review of the draconian Loan Charge, which has already cost lives.
“His commitment, made at the [Tory] leadership hustings in Carlisle, has given thousands of families some hope that this dangerous and immoral policy may now be properly reviewed, before more lives are ruined.”
'Quickly'
The group’s Steve Packham also told ContractorUK that, in practical terms, acting on his commitment means Mr Johnson suspending the Loan Charge with immediate effect.
Or the suspension could be put in place by whoever Mr Johnson appoints as chancellor (given that Philip Hammond is set to resign), but, either way, LCAG wants it done “quickly.”
Time, or the lack of it given that the UK is meant to be leaving the EU in October, is also on the mind of Nick Hood, senior adviser to Opus Business Services Group.
'Too much on his plate'
“Unfortunately, Boris Johnson is likely to have far too much on his plate at this early stage for him but late stage for Brexit, to get stuck into the sort of detailed tax simplification which UK contracting desperately needs,” he said.
Yet Richard Hepburn, operations director at Gorilla Accounting, points out that taxation affecting high-end professionals was among Mr Johnson’s (many) pledges on the stump.
“The new Conservative party leader has vowed to increase the high rate tax threshold from £50,000 to £80,000, and this would be a welcome bonus for many contractors.
“It would help business-owners across the UK too,” he said, “so overall, we see this [policy pledge] as being positive to the contractor economy.”
'Optimistic'
The upbeat mood which Mr Johnson’s supporters said dominated during and after his acceptance speech at Tory HQ yesterday has clearly left the building.
“I am optimistic that Boris will be good for the [contracting] industry,” says IR35 expert Kate Cottrell.
“But only if he manages to find the time to really understand the issues, and certainly not to just accept a brief from the civil servants in HMRC/HMT.”
'He's promised the earth'
If they contain the UK’s borrowing and deficit figures, those briefs could cause some of Mr Johnson’s pledges to come unstuck.
An expert on MVL services said last night: “‘BoJo’ has promised the earth in terms of borrow and spend, but don’t they all -- until they find themselves holding the actual purse strings?
“And of course any big new projects to heal Boris’ relations with business [after he reportedly said ‘fuc* business’], ought to generate work for contractors, but will they happen in reality?”
'Full fibre for all'
During his campaign for the Tory party leadership, Mr Johnson committed to large but uncosted levels of spending on broadband to achieve “full fibre for all by 2025.”
So telecoms, engineering and FTTP projects look the most likely to ensue, next to others already in the pipeline due to Brexit, which Mr Johnson said yesterday he would ‘get done.’
“For those contractors fortunate enough to offer services to the Change and Risk Management sectors, there could be good times ahead,” said Mr Hood at Opus.
“For everyone else, it’s time to make sure that their financial hatches are well and truly battened down. Indeed, three years on from the Brexit vote, business investment and confidence are still plagued by the one thing most entrepreneurs hate: uncertainty.
“Mix that with the volatility which many are predicting a Boris Johnson regime will create, and you have an even more toxic business environment.”
'Volatility'
Others fear that such volatility, previously from Mr Johnson rowing loudly enough at home for his neighbours to overhear, or from comments he made about Muslim women, could cause the former Mayor of London to get distracted.
LCAG sounds like it’s keen to ensure that doesn’t happen. “We note that many of Boris’ supporters are strong opponents of the draconian Loan Charge and we urge them to ensure that Boris does follow through”, it says.
But what his supporters think (his brother Jo Johnson MP is a critic of the Loan Charge), and what he himself thinks are potentially two very different different things, suggests Qdos Contractor.
'Damaging'
“What is the new prime minister’s view of IR35 reform which, in the public sector has left thousands of contractors being wrongly taxed as employees?” asks the firm’s CEO Seb Maley.
“[And ] will an independent body be set up to examine HMRC’s treatment of taxpayers? As a result of damaging tax reforms, including IR35 changes, there are a number of questions people working for themselves would like answers to [from Mr Johnson].”
The Institute of Directors says there are a number of measures which company directors need now from prime minister Boris Johnson, including an SME support fund for Brexit, Apprenticeship Levy reform and improved SEIS and EIS reliefs.