I used to be a permanent member of staff at RBS, now I contract elsewhere. A contractor will earn broadly twice as much as a permanent member of staff. I was taking home £55k when others in the same job as me contracting were being paid £400 a day outside ir35.
So a contractor doesn't get some emoyment rights, but they do get paid substantially more money than a 'permie' even if they end up Inside ir35. Some people look on it as employment rights being optional, they'd rather have £40-50k in extra cash a year than paid holidays, sick leave or redundancy rights. In fact I worked for 10 years alongside contractors earning £400-500 a day (used to be 500 then they cut rates by 10% twice) and after ten years I walked out with around £30k in redundancy money, when one contracting BA I know on £500 a day probably took home around £500k more than me during that period. Like many, this specific contractor managed more than 10 years continuous contract extensions in the same role at RBS.
To answer your question these contractors could negotiate onto a permanent contract with holiday pay etc. But they would need to take a 20% pay cut to pay the PAYE rate of tax, another 50% or so to take them down to the same pay level as a normal permanent member of staff in the same job, and then there is a fair chance the Inland revenue would see their move from contractor to permie as an admission they should always have been permanent and go after them for the extra tax on the last 10 years wages (in the example of my contracting colleague above)