Scottish Contractor Placements Plunging Due to IR35 say RBS

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Scottish Contractor Placements hit by IR35
Scottish Contractor Placements hit by IR35

Scottish Contractor Placements

According to the Royal Bank of Scotland Report on Jobs the number of temporary placements has fallen at the greatest rate in a decade. RBS put this down partly to the IR35 changes. RBS should know about this as they, themselves, have put a blanket ban on contractors using personal services companies.

Temporary placements in the UK have also fallen but not as much as in Scotland. Presumably IR5 is a factor too.

Questions on Scottish Contractor Placements

  1. What Effect is IR35 having on Scottish contractor placements?
  2. How quickly are temporary billings declining?
  3. Are contractor billings also falling across the UK?
  4. What notice are the Government taking of this?
  5. What’s happening to hourly rates in Scottish contractor placements?
  6. What is the cause of the fall in temporary billings according to RBS?

What Effect is IR35 having on Scottish contractor placements

In its recent report after its IR35 review the Government said as regards the impact of the IR35 changes on the contractor market:-

“The Government have not seen any evidence that this indicates an overall change in demand for the services and skills that contractors offer, but will continue to monitor impacts on the labour market.“

Well, here’s one bit of evidence to ‘monitor’.

How quickly are temporary billings declining

According to the RBS report, “Temp billings also fell and at the quickest rate since since April 2009, the research showed.”

So temp billing have fallen at the quickest rate since the Credit Crunch. Could IR35 affect the market in the Scotland and the UK as much as that did?

According to the report “Temporary staff billings across Scotland declined at the quickest pace for over a decade.

Are contractor billings also falling across the UK

“Temp billings also fell at the UK level in February, although the rate of decline was softer than that seen in Scotland and only fractional”.

So, it is not just in Scotland where IR35 is having an effect on the contractor market. It is happening all over the UK but at a lesser rate so far.

So, much for he Government saying that IR35 is having no effect on the market so far.

What notice are the Government taking of this

According to he RBS report “Temporary vacancies also expanded again during February. However, the increase was the softest since January 2012 and only mild.”

The Government is blind to all of this though.

They are fiddling while Rome is burning.

What’s happening to hourly rates in Scottish contractor placements

The report states that ” Average hourly pay rates also rose at a quicker pace midway through the first quarter.Indeed the rate of wage inflation was the quickest for three months”.

So. maybe IR35 is going to push up pay rates. That’s what happened in the public sector. Locum doctors daily rates rose at an annual rate of 13% in the first 6 months after the IR35 changes.

What is the cause of the fall in temporary billings according to RBS

According to Bank chief Economist, Sebastian Burnside, “Temp billings in Scotland meanwhile fell at the steepest rate for over a decade in February, which was partly linked to the upcoming implementation of IR35 legislation.”

Well, there you have it!

IR35 is having a strong effect in the contractor market in Scotland. It is also having an effect on he UK as a whole, although a lesser one.

But this Government has a tendency to ignore any bad news caused by IR35. They did this with the public sector saying it was a major success.

Meanwhile, while Nero Johnson fiddles, out there the contractor market is burning.

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For all critical IR35 news and advice for contractors click on IR35 News.

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