Speaking after discussions with parties including the Professional Contractors Group (PCG), David Heathcoat-Amory, the Shadow Secretary of State for trade and industry, said the Tories intended to abolish the current legislation, and replace it with measures designed to target any abuses of personal services companies for purely tax purposes. There would also be further consultations with the industry, he added, before any replacement measures were introduced.
"IR35 was a sly measure which turned into a disastrous attack on the IT sector," commented Heathcoat-Amory. "In seeking to eliminate the bad it destroys so much that is good. The Government fails to understand that contracting out is a legitimate and growing practice in IT and other sectors…Labour has been deaf to reasonable representations from the industry. By contrast we are taking positive steps to free people who are essential to the new economy from this repressive measure." PCG chairman, Gareth Williams welcomed the Conservative's stand and said that by pledging a period of consultation before the introduction of "appropriate" legislation, the Tories were committing to do what the present Government had "failed to".
"In contrast, IR35 was based on a flawed understanding of the modern economy, was badly drafted, hastily introduced, and targets tens of thousands of legitimate small businesses," noted Williams. "Perhaps if the Government had followed the terms of its own Better Regulation Guide, it would have realised that the effect of its legislation is to close businesses and drive entrepreneurs to other countries where their cutting-edge skills are in great demand."
The PCG will challenge the validity of IR35 in a judicial review before the High Court next month, from March 13 - 15. A poll carried out by Freelance Informer last October revealed that the Labour Party has indeed lost voters' support. Just 10 per cent of respondents said they'd vote Labour at the next election, compared to 27 per cent of contractors in 1997.
Half , (51 per cent) of the 1,700 contractors surveyed confirmed that they plan to vote Conservative, while 19 per cent of those surveyed said they'd support the Liberal Democrats. The remainder were mainly undecided.
This was first published in February 2001