Uncertainty of Autumn Budget 2024 forced IT contractor’s hirers into ‘wait and see’ mode in August

Autumn Budget 2024 has started to interfere with the IT contractor jobs market, an agency body is signalling.

Uncertainty about what the chancellor will announce on October 30th prompted hirers to take a “wait and see” approach in August.

Neil Carberry of the Recruitment & Employment Confederation (REC), delivered this assessment to new REC figures showing “temp remains flat-ish.”

Demand for IT skills on a contract basis, for example, continues to be in the red, even if the rate of decline slowed from 44.6 in July to 45.3, shows the REC’s full index obtained by ContractorUK.

'Sweeping employment law changes incoming from Labour'

The downcast August reading reflects not just uncertainty over Autumn Budget, but also the opaqueness of the Employment Rights Bill.

Contractor accountant Louise Rayner says Labour’s changes to the workplace look “sweeping,” but many of the precise, practical details remain unknown.

Online last week, an employment tax adviser warned her clients that no consultations in relation to the Employment Rights Bill have been released.

And nor will they, as the consultation period would be too small, given that the deadline to put the bill in front of parliament is October 13th (Labour made a100-day pledge).

'Single Worker Status may be a done deal'

It means UK plc does not know which of the more than 50 measures in Labour’s New Deal will make it into the bill, and commencement dates are not known either.

Single Worker Status, possibly affecting IR35, may therefore be a “done deal,” fears the adviser (who was invited to comment further but declined to be named).

On Friday, Tory MP Kevin Hollinrake asked business minister Justin Madders whether Labour knows that uncertainty is keeping investment on ice.

'Recruitment and investment plans on hold'

Mr Hollinrake asked in the Commons: “Does [the minister] not realise…that until he brings forward the detail on these plans, businesses’ recruitment and investment plans are completely on hold?”

In the REC’s August Report on Jobs, co-author KPMG -- specifically its CEO Jon Holt echoed:

“Government warnings that the UK’s economy may weaken further before improving add to the overall sense of uncertainty, affecting recruitment plans.”

Holt was alluding to warnings by prime minister Sir Keir Starmer that chancellor Rachel Reeves’ Autumn Budget next month would be “painful.”

'Fiscal realism'

“A vision for a positive, prosperous Britain has to accompany the fiscal realism that is being served up ”, says REC’s Mr Carberry, also referring to Starmer’s warning.

“That is the test for the chancellor and prime minister this autumn.”

The REC’s CEO, Mr Carberry said August is “always a difficult market to judge because of the summer break.”

Like candidates, decision-makers are often on holiday, making recruitment less straightforward and budget sign-offs are often delayed.

'Cautious'

But Carberry observed this August had been different.

“Employers are still cautious…[as they were in July but now] they are waiting for a clear signal that sustained demand is around the corner,” he says.

“That is why we are encouraging the government to work with business to design changes that employers can work within, and to reassure them that they aren’t taking risks by hiring now.”

To his concerned followers wondering why the government has declined to consult on labour market changes, Carberry said there had been activity behind-the-scenes.

'Green paper would be best'

“A number of us practically live in the [business] department at the moment. [But] I agree that a proper green paper would be best,” the REC’s CEO wrote on Thursday.

Yesterday, Carberry said he expects no employment-related consultations to be released.

But he spoke  of a “big consultation in due course” because officials “have got their heads round it being hard.”

Umbrella companies and even IR35 could be part of this large call for evidence.

'Umbrella industry back on the agenda'

“The umbrella industry in general is back on the agenda,” said  Keith Rosser, a director at Reed, speaking when parliament returned on September 2nd.

Chair of the Better Hiring Institute, Rosser added: “I’m unaware whether IR35 is in that thinking, but we could certainly help push it.

“This is certainly a government acutely aware of issues that affect workers, although growth -- and money -- needs to be just as central. IR35 could certainly fit this agenda.”

Rebecca Seeley-Harris, an expert on the off-payroll rules at ReLegal Consulting, warned yesterday that “simplification can come with unintended consequences.”

'Alarming'

She added of Single Worker Status: “It's alarming…that Labour have not carried out a public consultation on what maybe a dramatic shift in employment status.

“All so-called 'Limb b workers' will become employees, or rather all workers and employees will become 'workers' with day-one rights.”

Workers in "short supply" for IT roles on a contract basis in August 2024 included those skilled in Cyber Security, Data Architecture, Data Engineering, Development, Full-Stack Development, Java and Software.

REC member agencies hiring for permanent vacancies also reported a shortage of skills in Cyber Security, Data Architecture, Data Engineering, Development and Full-Stack Development.

Full-time tech recruiters were additionally short in August of Automation Testers, Data Scientists, IT Directors, Senior IT Managers and Software Engineers.