Freelancing - the State of Play Today AGENDA 16112004
Shared by: slapshotmel
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!