Finance Bill

Baroness Bowles of Berkhamsted Excerpts

2nd reading & Committee negatived & 3rd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Friday 17th July 2020 Lords Chamber

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, the expansion of IR35 has been postponed for a year. That is a small mercy, but a fair balance between the employed and the self-employed needs a more thorough reckoning. First, for the same reasons as now, the economy will not be in sufficient shape by next year to take the IR35 risk to workforce flexibility, nor for companies to take the burden.

Secondly, the fix is simply a tax fix that ignores the reality, recognised by both the Office of Tax Simplification and the Taylor review: that there is a set of flexible, dependent workers who are part way between being employed and self-employed. The Government are roping them in to tax and NI as if they were employed, on the basis of tax fairness, but leaving them out in the cold when it comes to employment rights and benefits, which is clearly unfair if they pay the same.

Thirdly, along with the aid given to the self-employed during lockdown, the Chancellor has indicated that a revision of national insurance and the coverage it provides for the self-employed might be necessary. This must apply vice versa, to the situation of the self-employed and the dependent worker: you must get the security that you pay for. Notably, many self-employed have been left out of grant-based help, ironically because they are not companies.

Fourthly, there is no fair solution, other than banning dependent workers, if this is not taken in the round alongside employment and social security rights.

Fifthly, contract workers have other expenses that can be imposed on them by their clients. How are these to be treated? They can include public liability insurance and giving indemnities to the client. They come as part of the package terms, which often include unreasonable contract terms that are not applied to employees. What protections will the Government bring in to defend taxpayers equally?

There are more points to make but time is short. As a veteran of proceedings on the Corporate Insolvency and Governance Bill, I share now, as I did then, the concerns expressed by my noble friend Lady Burt about the new preferential status for HMRC in insolvency, making it even wider in scope than before the Enterprise Act 2002. The arguments about it relating to tax paid by employees and held by the company do not wash, given that the company does not apply that logic to pension schemes in the hierarchy.