back to article UK.gov has 18,000 IT contractors on its books due to dearth of skills

The government currently employs 18,000 digital contractors and 12,000 "in-house" tech folk, according to a leaked draft outline of the Government Digital Transformation Strategy seen by The Register. A lack of digital skills in government has repeatedly been named as the main obstacle against digital transformation. Billions …

  1. Trooper_ID

    down tools

    i shall move to the private sector. I am not paying this tax just because it is a public sector placement. The majority of contractors I work with all feel the same. It will be quite interesting to see how the 'defence' sector survives when 90% of its contract staff walk out.

    1. g e

      Re: down tools

      Same here, was just discussing this yesterday with a consultant I'm working with who's been looking into IR35 and public sector after I mentioned it to him a while ago. He will also be shifting contract to private sector in the absence of any guarantees/indemnities against HMRC deciding he should pony up extra money just because.

      So there's one central England county council whose entire project is going to stop dead in April, potentially even though it has a couple of years to run yet, supposedly.

      What is the current best information on what IR35 will be in April or is it still just as (intentionally by HMRC) woolly as it's been since the idea was first touted about ?

    2. Anonymous Coward
      Anonymous Coward

      Re: down tools

      "due to dearth of skills"

      Translation - due to not paying sufficient salaries to attract competent permanent employees...

    3. TheVogon

      Re: down tools

      "or hike their fees."

      This. x 18,000.

  2. Anonymous Coward
    Anonymous Coward

    Gordon Brown started it

    ... way back when, I felt IR35 was a kind of F**k you to contractors and all Gordon could manage to contemplate was a permanent employee. The economy is sadly not that simple and the chancellor should have known that.

    Here we are maybe 10 years (at least) later and the UK is STILL pissing around with it's "you can't be a one person company... " for some bizarre reason.

    Meanwhile, here in Asia out sourcing companies are taking the work from you. I know there are cap gemini and fujitsu who will mop up most government work, but from the outside, it really looks like the gobberment sit around and think of ways to make the UK less competitive.

    1. This post has been deleted by its author

      1. Blotto Silver badge
        Megaphone

        Re: Gordon Brown started it

        @Voland's right hand

        do us all a favour and let us know whom your speaking about.

      2. Doctor Syntax Silver badge

        Re: Gordon Brown started it

        The thinking at the time was that it was something the IR had been trying to get through for years. They finally found a Chancellor and/or Paymaster General* daft enough to fall for it. The sad thing is their successors are still falling for it.

        *Don't deny Red Dawn her share of blame.

    2. John H Woods Silver badge

      Re: Gordon Brown started it

      "you can't be a one person company... " --- AC

      This is what they seemed to be saying --- but for some reason almost entirely to IT people. I work in IT so it may be confirmation bias on my part, but it seems to me that lots of non-IT service companies are allowed to be 1 person companies: not just the more "hands-on" professions but a quick read of Private Eye shows a huge number of top political and media people working as 1-person corporations without too much bother from HMRC.

    3. Anonymous Coward
      Anonymous Coward

      Re: Gordon Brown started it

      Hear hear. I moved away from the UK when IR35 was brought in by Brown and have watched the UK IT decline steadily ever since.

      Brown and Darling killed the UK IT industry with legislation that made being productive in IT really hard. Later incumbents have failed to resurrect it and the consequence is the muddle and lack of skills the UK has now.

      With Brexit meaning the UK will lose even more IT skills, project costs will escalate to the point that they are simply uneconomical to do using UK resources.

      1. nadsy

        Re: Gordon Brown started it

        Where did you go?

  3. Anonymous Coward
    Anonymous Coward

    Common Misunderstanding

    People often fail to understand why government IT is always horrible, but I'm betting the issues plaguing the UK are the same as we experience here in the US. Namely, pay. The president of the United States only gets paid 400k to be the CEO of 330 million people, most CEOs wouldn't bat an eye turning that down.

    Government positions don't generally pay well - they are stable, but usually the work is simple and mundane. Not the kind of stuff it takes a genius to do. The public also does not want to see public employees running of to the bank with gobs of cash, so what does an organization do when it has a requirement for a special type of worker that it can't properly compensate within its pay range without overturning the apple cart? Contractors.

    If you look at the government pay scale, managers don't want their employees making more than them because it looks fishy, but in reality the employees might be doing more demanding, more difficult work which the private sector would pay them much more for.

    So now the only people accepting government IT positions are usually those who are really just politically ambitious or aren't skilled enough to compete in the private sector, and since they are actual government employees - they are the ones actually in charge and making decisions for their more capable contractors.

    They also know they aren't as capable, and are terrified of making a decision which could blow up in their faces, so they spend all their time trying not to make any - and just stay the course.

    If the UK wants quality work, they can either augment their salary tables to make government positions attractive to capable people or just subcontract all that work to large defense companies like the U.S. generally does.

    Source:. U.S. defence contractor that makes more than the vice president of the United States and is also sick and tired of dealing with inept government IT workers.

    1. Yet Another Anonymous coward Silver badge

      Re: Common Misunderstanding

      Add in the frequent cases of government body switches from system X to system Y.

      Its in-house staff only know X, it has a hiring freeze because of the costs of buying Y so can't hire anyone to operate Y. It then pays contractors to work Y.

      To look good politically it then reduces the number of these highly paid contractors

      So system Y stops working

      The government dept then looks at replacing Y with a new system Z which will solve all the problems

    2. TheVogon

      Re: Common Misunderstanding

      "The president of the United States only gets paid 400k to be the CEO of 330 million people"

      But also probably will then get paid that per after dinner speech at investment banks, etc, etc...

  4. djstardust

    Oil & gas

    Are going to be screwed as well. The industry is in a major downturn at the moment but when things pick up the operators will be wanting to employ contractors on 6 to 12 month positions to see how things pan out.

    Previously probably 60% of staff were day rate contractors on the "old" system, but since these changes are now in place I bet most won't touch contract roles with a bargepole as there's no advantage in doing that any more (unless they seriously uplift the day rates which they won't do).

    It's going to be a rude awakening for the industry when they suddenly realise no-one wants these contract roles any more.

    I'm off for some popcorn .......

    1. ecofeco Silver badge

      Re: Oil & gas

      I'm one of those who has been directly affected by the oil downturn and yes, when it comes back around, I will make damn sure the lost money and time is made up.

      But give up the dream of no one contracting. All industries are moving that way and have been for decades Fewer and fewer companies hire permanently.

  5. Steve Davies 3 Silver badge

    IR35

    With the Left Hand

    Well that's one way to reduce the cost of Gubbermint IT. Just investigate all IT Contractors and watch what happens

    Then

    The Right Hand complains that it can't meet the same Gubbermint targets for delivering the Digital Economy. So the employ more (but different) IT Contractors

    Rinse and repeat ad adnauseum

    Just get rid of IR35 and a lot of things will get delivered.

    I gave up and went back to normal employment and have since retired but I still get agencies ringing me up to work for the usual suspects on government contracts.

    Frankly, watching paint dry is more enticing.

  6. This post has been deleted by its author

  7. Andy 73 Silver badge

    No political will

    Unfortunately no current major political party is independent minded enough to think differently from those terribly kind corporate 'experts' who tell them that small, experienced, highly mobile businesses are just not suited to government work. No, it's far better to give the work to the big boys who deliver so reliably and never over charge.

    1. Tom Paine

      Re: No political will

      Unfortunately no current major political party is independent minded enough to think differently from those terribly kind corporate 'experts' who tell them that small, experienced, highly mobile businesses are just not suited to government work. No, it's far better to give the work to the big boys who deliver so reliably and never over charge.

      Except that the previous administration brought in a target of 25% of government procurement to be from SMEs.

      https://www.gov.uk/government/news/small-business-benefited-from-121-billion-in-government-spending-in-2014-2015

      https://www.gov.uk/government/publications/2010-to-2015-government-policy-government-buying/2010-to-2015-government-policy-government-buying

      ...and so on.

  8. Anonymous Coward
    Anonymous Coward

    Oh, that's just brilliant. HMRC thinks they will claim back £400m in tax by taking a saw to the branch they are sitting on.

    It's yet another example though of the misuse of law in this country. Anti-terror laws are frequently used to justify excessive or illegal surveillance. IR35 was intended to stop companies taking employees off payroll and re-hiring them as contractors to avoid tax, but instead it's the people who were supposed to be protected by the law who are living under it's shadow.

    I can't believe that the proposed changes will pass, given how many MPs operate through LTD companies themselves, but it seems that it will. I've already served notice on my own public sector contract (up at the end of the year) and the recruitment company told me that if the changes pass they will be dropping all of their public sector clients as they can't afford the risk of getting it wrong.

    1. CommanderGalaxian

      "IR35 was intended to stop companies taking employees off payroll and re-hiring them as contractors to avoid tax..."

      IR35 was never intended to do that - rather it was the excuse they used - clamping down on (a relatively small) abuse of the system. The intention was a always a tax grab on a group of well-paid workers they viewed as easy prey because they weren't unionised.

  9. Doctor Syntax Silver badge

    Maybe there's an upside to this. It could actually spell the end of IR35. Not that that would be enough to make me unretire.

  10. allthecoolshortnamesweretaken

    "Government as a Platform"

    Hmm. How about GaaS - Government as a Service?

    1. Dominion
    2. Adrian Tawse

      Gaas

      Rather like the gaas that comes out of my arse.

  11. Anonymous Coward
    Anonymous Coward

    Field day for the larger usual suspects

    What's the betting the contract work gets mopped up by the usual consultancies at higher rates.... Who will then hire the contractors to do the work or off-shore the work.

    Gov pays more and the profits will no doubt be funneled off abroad and the uk tax income is not improved.

    Great work hmrc *slow claps*

  12. Adrian Tawse

    Gobberment

    I do like that word, I shall adopt it, with your kind permission. It neatly describes politicians who just flap their lips for the sheer joy of hearing their own voices, and never mind the total crap that comes out.

  13. Tom Paine

    Ask Sir Bonar Neville-Kingdom

    I'm sure @SirBonar over on the Twitters would be happy to explain the strategic ramifications of this in the context of his Ring of Soup.

  14. David Roberts

    Easy targets?

    In my very hazy recolection IR35 was supposed to target the bottom end of the service industry - building labourers, office cleaners and the like - who were forced to become self employed and thus lost all employment rights and protection. This also moved tax collection from PAYE (one big target) to loads of individual small targets.

    However because it is enormously difficult and not cost effective to chase thousands of individuals on minimal wages for small amounts of tax, other targets for the legislation were noted. Put the same amount of effort into chasing an IT contractor that you would have to put in chasing an office cleaner and you get a much larger return on your effort.

    The large numbers of self employed today are still in the service industries; Uber drivers, various delivery services for example. These people need protection against loss of rights through disguised employment and general exploitation. In general IT contractors do not but are far easier to chase. Making employers collect the tax is potentially cost effective for masses of low paid workers. All it will do is piss off highly paid contractors who will just move contracts.

    1. John Styles

      Re: Easy targets?

      Conversely (and I write as a permanent employee of 31 years standing, 19 in this job), that IR35 was invented SPECIFICALLY to clobber I.T. contractors on the basis that they are 'nasty, smelly oiks who make lots of money but aren't people like us dahhling' . OK for your mate at the golf club to have his bit of strategic consultancy but not Fred the PL/SQL wizard, he's not the sort that this favourable tax treatment was intended for.

  15. Velv
    Black Helicopters

    And slowly "The Plan" by the big consultancies pays off. Don't for one minute think they aren't in collusion, they are actively setting up a cartel.

    HMRC engaged the consultancies to investigate UK income tax. "Oh look" they thought, "there's all those independent contractors taking roles our staff could be doing, lets advise the government how to put the small guy out of business (or at least off government contracts) then we'll be free to fill the gap at twice the price"

    So rather than the tax payer "receiving an extra £400m a year" they'll end up spending twice the amount on every project.

  16. Nocroman

    Problem withunskilled workers?

    The British Government should learn about this wonderful program created bac during world war two. It's called OJT (On the Job Training) and it will produce some of the most skilled workers in a very short time. I used this program at GM and had higher skilled designers in four years than those that cane out of college and had to be untrained of what a college professor who taught skills from (20) years ago when he was a designer and retrain them for two years to update then to current design practices along with computer training to the design software currently being used by GM at the time. Eight hours a day of training OJT makes a better skilled worker mush faster than a two hour class twice a week does in a college. Every employer thinks a college degree is needed just to start a job. They are so wrong. College degree's can take care of how to write, do math, know more history, speak another language, learn some chemistry, ect... but it is not necessary to start working a job under a good supervisor that actually helps and answers questions instead of yelling at employees and sitting around drinking coffee and bull shooting with other supervisors. Too many supervisors haven't a clue on what the word supervisor means. Oh and there are many American companies that could use this advice too.

  17. MBD1

    Brexit Contractors

    In this environment (IR35) where does HMG expect to get its 30,000 new people to work on the 500 projects (not all IT people of course, but IR35 involved) - from Europe perhaps????

    Thank goodness we live in a country where the Government understands the requirements of a digital economy - and as it's based on binary, two digits apparently!

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