IR35 reform forces public sector exodus
IT contractors caught by the new IR35 reforms are leaving the public sector in their droves for more financially attractive positions in the private sector, which prompts questions about the public sector ability to deliver IT projects.
Statistics taken in June from IT job board CW jobs showed that 71% of IT contractors have had their income significantly reduced by as much as 30% due to the reforms. Almost half (47%) of the 1000 candidates surveyed say the reforms have forced them to leave, with 83% moving towards the private sector.
Public sector strain
The exodus has sparked fears about the public sector’s ability to deliver IT projects. This concern has already come to fruition with reports about how the 18 IT contractors behind HMRC’s Employment status service tool (used to determine IR35 status) downed their own tools.
An insider from the RCDT contractor group told ContractorUK that despite being assurances from their line manager it was ultimately decided centrally that they did fall within the rules.
According to the report, an HMRC leader admitted that all their projects “are turning RED as there’s just not the talent to deliver them successfully”.
‘A real cause for concern’
With IT projects now in jeopardy, the public sector’s digital skills have been scrutinised, as 47% of surveyed contractors say the current skillset is insufficient.
As a result, 62% of candidates and 55% of recruiters believe IT project delivery will suffer. While the public sector may look towards contractors to fill the skills gap, one in five contractors have vowed to charge more to offset the reforms. And likewise, recruiters have seen clients raise salary offers or permanent roles.
Fears surrounding IR35 has caused 51% of those surveyed to expect the rules to seep into the private sector soon.
Reacting to IR35’s impact on the public sector, Dominic Harvey, director of CW Jobs, said: “We are now facing a perfect storm of a brain drain from the public sector, questions over future project delivery, and an increase in fees from those contractors choosing to stay put: all are a real cause for concern.”