PracticeConsultingCheap labour forces IT contractors to leave UK

Cheap labour forces IT contractors to leave UK

Controversial tax legislation such as IR35 and Section 660, combined with an influx of cheap skilled labour from overseas, is forcing UK IT contractors out of the country.

A survey carried out last month by contractor pressure group Shout99 revealed that more than half of IT contractors had either left the UK or were waiting to do so.

And the situation will get worse should the European Commission go ahead with plans to extend the length of work permits offered to foreign providers of computer services at the World Trade Organisation negotiations in Cancun, Mexico, next month.

If ratified, the move will mean that IT experts from outside the European Union will be allowed to work for up to six months on IT contracts, as long as those projects run for no more than a year.

The Professional Contractors Group (PCG) is seeking reassurance from the Department of Trade and Industry and the Home Office that the system will not be open to abuse.

Ian Durrant, external affairs director at the PCG, said the proposal could be used as a means for companies to replace staff with cheap labour from overseas. ‘On the surface this doesn’t seem like a dramatic change, but given the experiences of fast-track visas, there are people willing and looking to find loopholes. And this looks like a scheme that is easily abusable,’ said Durrant.

In June, government agency Work Permits (UK) and the National Audit Office said they both planned to launch separate investigations following claims by the PCG of abuses of the fast-track visa scheme.

‘Allowing people to come over for six months makes this far more attractive to use as a body-shopping arrangement,’ Durrant said.

‘Because the proposals are so vague, what’s to say someone could go home for three weeks then come back to the UK for another six months. It’s open to abuse.’

The PCG is seeking clarification and reassurance from both the Home Office and the DTI that the proposed scheme cannot be used for job replacement purposes.

In response, the DTI said in a statement: ‘The EC’s offer is part of a broader negotiation within the WTO to liberalise trade in services. We are also seeking to lower trade barriers in other countries and increase overseas business opportunities for British industry.’

But Durrant was unimpressed: ‘The biggest fear is that in an attempt to make the IT industry competitive, it will actually drive down rates so far that we have no industry left.’

Email David_Rae@vnu.co.uk.

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