Whitehall lambasted for failure to assess impact of tax proposals

Changes to travel and subsistence relief that were announced in the government’s autumn 2015 budget statement came into force on April 6th. These are expected to have a significant impact on contractors and flexible workers, and also on those sectors where these workers are most apparent and in demand.

Whitehall has faced considerable criticism regarding the changes, which are likely to see contractors demanding higher rates of pay to cover the money they will lose as a result of the changes.

“The lack of planning and horizon scanning by departments responsible for some of our most treasured public services demonstrates appalling complacency,” commented Crawford Temple, CEO of the trade body PRISM. “How can you plan for expenditure if you don’t foresee the most flexible workers, those you turn to when gaps appear, expecting significantly more for their time?”

PRISM made enquiries at various government departments as to what extent the impact of the new tax policy had been assessed. All of those that were able to respond under freedom of information laws said that they had not done any research or made any assessments as to how contractors working for them would be affected. These included the Department of Transport, which claimed the impact would be negligible, and so an assessment would not be required. The Ministry of Defence similarly believed it would be unaffected as it only met travel expenses for contractors in exceptional circumstances. The departments of education, energy, health and climate change also made no attempt at assessments.

PRISM is maintaining its opposition to the change in the rules with a ‘Yes2T&S’ campaign. It is also urging contractors to email their local MPs highlighting the issues raised by the changes. It remains to be seen whether the drop in the number of available contractors and flexible workers will be as severe and damaging as experts have predicted.