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Freelancing - the State of Play Today
AGENDA
16/11/2004 19:45 at APU, Chelmsford
with Richard Robson from Professional Contractors Group
PCG Update and market
overview
Richard Robson, PCG Director
Agenda
• Today’s freelance market:
– Historical context
– Current drivers
– Future directions
• The PCG
– What we are here for
– What we are doing
Today’s freelance market
Self employment in the UK has increased markedly in
recent years, and since mid – 2002 has been growing
faster than at any time since the late 1980’s.
Labour Market Trends October 2004
“40% of the UK workforce will be
freelance by 2010”
Professor Richard Scase, University of Kent at Canterbury
Number of people self-employed
(UK 1985-2003)
More detail on recent increases
• Increase affected both men and women and full-
time and part-time
– Largest increase men 35-49 yrs
– Proportion of those self employed seems to increase as age
increases
• Differences are evident by sector
– Greatest change is in banking, finance and insurance, other
business activities (120,000)
– Construction (45,000) – part of an existing trend
– Public administration, education and health (53,000)
Growth areas/sectors
• Finance
• HR and change management
• Leading IT
• Construction
• Engineering
• Marketing
• Public sector (though procurement issues)
– Health
– Education
– Transport
Motivations: economic
• Increase in house prices reduces credit constraints
• Recent research suggests that 1 in every 30 adults in the UK
(1.4 million) is actively trying to set up a new business at any
one time. (2001)
• Four in every 100 people start-up a business because of an
opportunity and 1 in every hundred does so because they have
no better choice for work (necessity entrepreneurs)
• Respondents were positive about the climate for
entrepreneurship, although fear of failure would prevent 34.1%
of people from starting up a business
Motivations: lifestyle
• Belief that self-employment offers greater responsibility, more
flexibility, more challenges and larger rewards, plus more
personal freedom and a better work-life balance.
• 80% of self employed are satisfied or very satisfied with work
vs 64% of full time employees (Work Foundation)
• Research from the Working in Britain suggests that whilst
people are staying in their jobs slightly longer than in 1992,
work is not challenging or rewarding our abilities (Work
Foundation)
Employee
Market Space
drivers
Not jobs for life
- life of jobs
No loyalty
Lack of challenge
and reward
Business Space
Space for self
Increased competitiveness
A new generation Freelance Focus on strategic core, new models
Self esteem Interim
Self employed Adaptive and flexible
Work life balance
Consultant Outsourcing trends
Self determination
Low investment in human capital
Employer space Trust is diminished
Focus on costs
and service
ICT –
anytime any place
Use of “freelancers”
The future: competing on value
BREADTH TRUSTED
OF
BUSINESS ADVISOR
ISSUES
VALUABLE
RESOURCE
SUBJECT +
RELATED
TOPICS
TECHNICAL
SUBJECT
MATTER
DEPTH OF PERSONAL RELATIONSHIP Source: R Scase
Questions and Answers
The PCG
PCG – the vision
• The voice of freelancers
– working with Government and industry to protect and
promote freelancing and freelancers, on a local, national
and European level
• The heart of the freelance community
– supporting and nurturing its members through all parts of
the freelance life cycle, as well as offering commercial
support, fostering peer support and encouraging new ways
of working
PCG objectives
• Be the representative voice of professional freelancers in the
UK
• Protect members’ businesses
• Promote the positive benefits of freelancers and freelancing to
business, government and society
• Facilitate members’ commercial development
• Increase membership year on year
• Maintain constant dialogue with membership
• Raise internal standards of professionalism and quality, and
restructure as appropriate, to ensure the PCG is scaleable and
future proof
Recent achievements
• Continued to support members’ cases – current
status 500+ cases won, versus 2 lost
• Appointed Government representatives at ILO
• Successfully lobbied for the opt-out clause for
incorporated freelancers in DTI’s new Agency
Regulations
• All IT skills removed from Skills Shortage List
• Achieved ISO9001
Current activity: some highlights
• Arctic Systems
• PCGQS – an ISO9001 for freelancers
• Lobbying
• Range of publications
• Approved contracts/terms and conditions
• Regional work
• 12,000+ members
Benefits of membership
• Professional Expenses Insurance
• Support and help drive focus for lobbying
• Sample contracts drafted by experts
• Access to free tax and legal helplines
• IR35 and S660A analysis and manuals
• Discounted hotels, insurance, travel, software
• Entry to the freelancers’ online community
Questions and Answers
Questions and Answers
Current issues affecting freelancers
Richard Robson, PCG Director
Areas of concern
• Taxation
– IR35
– S660A
– Non-Corporate Distribution Rate and the Pre-Budget Report
• Legislative changes
– ~4,500 more laws and regulations since 1997
– Raft of EU directives
• Access to markets
– Procurement policies of public sector, large corporations
– Poor training opportunities
– Need to develop new channels
Areas of concern
Resources
2%
Managing your finances
4%
New technology
4%
Cash flow Taxation
5% 20%
Marketing yourself
7%
Updating your skills
9%
Changes in legislation
20%
Economic environment
14%
Finding new business
15%
Source PCG annual survey 2004, base 698
“Taxation with representation ain’t so hot either.”
Gerald Barzan
IR35
"I really do prefer naivety or even foolishness in politicians to
hypocrisy and deception. Dawn Primarolo seemed to be very
pleasant, and clearly fell within the first pair rather than the
second. I was particularly amused by the way in which she
sincerely believed that the Budget measures would simplify
matters and lead to a fairer and more efficient tax system.
While I might have thought that someone with the several
years experience in the job that she had would have realised
the silliness of such statements, she seemed entirely at ease
with her conscience in making them."
Graham Aaronson, QC, on IR35
IR35
• Different pieces of work can be inside/outside
• Relies on the self-employment status tests
• Involves an imaginary contract
• Literally impossible to self-assess
• Repeal unlikely; clarification of self-employment would really
help
• PCG helps members by:
– Guide to IR35
– Taking cases
– Talking with the Revenue on implementation
– Moral/peer support
– Standard contracts, new contract approval process
S660A
• Settlements legislation around since 1930s
• Tax Bulletin 64 (April 2003) brought new interpretation
• Attacks situations where profits shared with spouse (or other)
• Apparent conflicts with: self-assessment, independent taxation
of spouses, company law, divorce law...
• PCG helps members by:
– Guide to S660A
– Test case(s)
– Moral/peer support
– Work with CIOT et al
– SARA
Non-Corporate Distribution Rate
• “The right amount of tax”
• Effectively reverses the introduction of a 0%
Corporation Tax band
• Least-worst option for freelancers at the time
• Fundamental re-think may be on the way: this
year’s Pre Budget Report will include a discussion
document
Public sector procurement
• Gershon report: standard procurement process
recommended, yet to be implemented
• Typically need some or all of:
– ISO9001
– Health and Safety Policy
– Environmental Policy
– CSR Policy
– Other stuff
• Cost prohibitive for freelancers
• PCG QS should help
Skills development
• Essential to remain cutting-edge
• Soft/business skills increasingly key in climate of
increasing offshoring
• Must focus on value – and price on value where
possible
• If inside IR35 pretty much impossible to train
• PCG would like tax incentives for development
A simple life
• Freelancers would like:
– Simple and certain taxation
– Simple access to markets
– Simple rules to follow
– (to be left alone)
• PCG can help by
– Lobbying
– Working with public and private sector clients
– Driving quality
– Branding good/compliant practice
Questions and Answers
Questions and Answers
PCG QS
16 November 2004
PCG QS
• “PCG Quality System”
• How did we get here?
• Why is it so important?
• Where are we now?
PCG QS
• PCG attained ISO9001/2000 certification August
2003
• PCG objective to “deliver an accreditation scheme
with real value in our members’ market place
• Was it possible to do this with ISO9001?
PCG QS
The problems:
• Can it be done at all?
• Can it be done for a price?
• Would it be credible?
• What components?
• What partners?
PCG QS
Can it be done at all?
Yes, there are other sector specific flavours of
ISO9001, operating in vertical markets, so why not a
horizontal sector scheme for consultants?
PCG QS
Can it be done for a price?
Yes. The key is standardisation ie to concentrate on
the business elements common to all consultancies
and then deliver them efficiently.
PCG QS
Would it be credible?
Only if we offer fully UKAS accredited ISO9001/2000.
“Unaccredited” certification has no real value
especially in a new market.
PCG QS
What components?
Needs a Quality Management System that works for one man
organisations
An effective delivery mechanism to many small businesses
Remote audit capability
Privacy
Support infrastructure
Auditors who know what the scheme is
Encouragement from our members
Encouragement from our members’ clients/agencies
PCG QS
What partners?
We needed an enthusiastic accreditation body, able to grasp the
concept and deliver uncompromised external audits to UKAS
standards.
We needed an online document registry or “EQMS” to suit our
members
We needed a very, very good consultant to design and deliver the
Quality Management System
ISO 9001:2000 What is it ?
ISO 9001:2000 Is the internationally recognised standard for Quality,
and is the preferred business management framework for over half a
million organisations in 149 countries.
Benefits of ISO 9001:2000
Internal: External:
• Driver of continual improvement • Demonstrates that you are a world
via the ‘Plan-Do-Check-Act’ cycle class quality organisation
• A proven tool that provides a • Creates new business opportunities
structured approach to managing with potential customers who
process to achieve objectives demand certification, and gives
competitive advantage
• Ensures discipline for effective
data management & traceability • Shows your commitment to
providing your customers a high
• Customer satisfaction focus level of service
• A systematic approach to • Improves company image as being
management proactive and growth oriented
ISO 9001:2000 Global overview*
*ISO survey
The value of certification
– Independent academic research
• Study of Effectiveness
– Study of 7500 organisations in USA found that organisations who were certified to ISO 9001 managed to hold
their performance whilst competitors who were not certified fell into decline
(ISO Bulletin )
• Academic research
– Organisations who seek ISO certification to truly improve the organisation do improve; performance, quality,
output, image and reduce costs.
“Does ISO Certification affect competitive advantage”
European Management Journal. B. Withers
– ISO certification was proven to have a significant impact on the organisation (performance, morale, customer
satisfaction, productivity, cash flow, market share, sales, exports , innovation etc.)
“The effect of TQM on strategy” TQM Magazine. M.Samson
– Companies who strive towards world class status find that ISO 9001 certification is the first and vital step
“Impact of ISO 9000 on best practice performance”
TQM Magazine. Prabhu, Appleby, Mitchell, Yarrow
Global market leaders value
ISO 9001:2000 certification
PCG QS:
The first horizontal scheme of it’s kind globally
Telecommunications
Sector schemes
Automotive
Aerospace
Oil & Gas
Vertical
Food
IT
AS 9100 TS 16949 TS 29001 Tick IT ISO 22000 TL 9000
PCG QS
Horizontal scheme
PCG QS:
The way forward
An ISO 9001:2000 accredited certification scheme specifically created to
meet the needs and working practices of independent freelance sector.
Unique features Benefits
EQMS ( Electronic Quality Gives competitive advantage
management systems )
Addresses a need/gap in the
Remote on-line auditing market
Ethical code of conduct Raises overall credibility of the
freelancer market
Fully packaged cost effective
offer Facilitates business
improvement
Secured business loans
BVQi predict that the ISO 9001 : 2000 PCG QS scheme will represent the
single most important future development in the UK certification landscape.
PCG QS
State of play
PCG QS
• Development 80% complete
• Beta testing started Sunday
• 14 beta testers have undertaken induction workshop
• Includes IT contractors, engineers and a quantity
surveyor and at least one “concentrator” company
• Target first external audits early Q1 2005
PCG QS
The process:
Train
Upload historic documentation into EQMS
Complete all mandatory stages
Practice what you preach
Internal Audit (health check)
External Audit
Pass?
PCG QS
Marketing and promotion:
Promote to PCG members from January 2005
Promote to outside world from February 2005 ie
Clients, agencies and other influencers
High profile “graduation ceremony” February 2005
PCG QS
• Questions
PCG Approved Contract scheme
PCG Approved Contract scheme
• Overview
• Benefits to contractors
• Benefits to agencies
• Summary
Overview
• PCG has developed the Approved Contract scheme for
the benefit of PCG members, participating agencies
and the wider freelance community.
• The aim is to facilitate the availability of standard,
commercially sound, business-to-business contracts
suitable for freelance businesses operating outside IR35
• Three agencies already signed up
Benefits to contractors
• IR35 risk is minimal
• Heavily discounted tax and penalties warranty
• Certainty from the outset
Real peace of mind!
Benefits to agencies
• Freelancers prefer agencies that recognise the
implications of IR35
• PCG recognised contract will lead contractors to you!
• Commercial terms assurance you are not a rip off
• A single recognisable hallmark
• Save effort
• Save time
• Save money
• Save assignments!
Contractor friendly? the ultimate
hallmark
The Process
Agency
application
Approved Affiliate members
contract Agree T&C’s
Pass/fail Current
Negotiate contract?
Contract
review
Summary
• Justice Burton’s suggestion
• Only PCG can do it
DISCUSS!
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