Re: Rolling out to private sector is the right thing to do. @Hmmm...
If IR35 becomes more widely applicable. it's likely to have serious repercussions in the IT Contracting world.
One of the problems that permanent employees don't see, or maybe do see but don't fully understand, is the fact that when you are in contracts that are typically 3 months to a year, you travel to wherever the work is rather than moving home. This normally means travel and/or accommodation costs. To me, it seems fair that this should be allowed against tax.
I'm currently renting a grotty little room in a cheap shared flat for no reason other than for my current assignment. This is in addition to paying for the family home. On top of that, I have a longish round trip (250 miles - I don't claim for travel to and from work during the week) every week. This costs me more than £600 a month. If that is made to come from taxed (and double NI'd [employer and employee]) income, it will be the rough equivalent of about £15 Grand a year out of the money generated by the assignment. This is an expense as a direct result of working this way, and adds to the vacation, sick pay and business costs that are all taken off the value of the assignment.
If I were a permanent employee, with expectations of working for years in a particular location, I would consider moving my family. But I'm not going to do that for a contract that has an clear end-date, and could be cut short at a week's notice with no redundancy or consultation process.
Next contract, I might have to go to London, or Manchester, or Edinburgh, or Plymouth. You can't uproot your family several times a year!
I have contractor colleagues around me doing the same or very similar things. What I can absolutely guarantee is that if IR35 is made to apply to contractors working like this (who probably make up a large chunk of IT contractors) such that they can't offset the costs against tax, that they will not be prepared to travel.
As the UK government has been keen over the last few decades to move large chunks of their operations outside of London, what this will mean is that they will struggle even more to find the skills they need, because the people with the skills will not already live close to where they are needed, and people with the skills can't afford to travel because they will be paying tax on the associated costs of working away from home.
It's already pretty demoralizing being away from home during the week. If the financial benefit is drained away in the manner described, there will be precious little reason to work like this at all, and where will that leave the government departments!