NHS' IR35 strategy worsens situation

20th April 2018
Written by Qdos Contractor

Short-staffed and underfunded, the NHS is making matters worse with its IR35 strategy

With a staggering 1.7m workers, The NHS is the UK’s biggest and the world’s fifth largest employer. But with budget cuts impacting already stretched finances, its ability to overcome staff shortages is severely weakened.

We have sadly reached the point where skills shortages have become synonymous with the organisation. Recent reports suggest between a 55,000 shortfall in staff through to a massive 100,000 vacancies. Whatever the accurate figure, The NHS clearly has a staffing crisis on its hands.

The true extent of the problem can be found in a Nuffield Trust document here. At a glance, it highlights:

  • A 40,000 shortfall in nurses, as more leave than enter The NHS
  • 10% paramedic vacancy rate in England
  • 10% mental health posts are vacant in England
  • NHS GPs are leaving faster than they can be replaced
  • 84% of Physicians have reported staff shortages across their team

And just like any other organisation with an urgent need to fill positions, The NHS relies on thousands of highly qualified locum and contract workers. In 2016 and 2017 alone, it spent a reported £2.9bn on agency staff in a desperate attempt to plug the gaps.

Huge staff shortages combined with shrinking budgets means The NHS must be smart about how and where it spends its money when it comes to hiring. And with a growing need for contract workers, it’s vital the organisation knows how to attract and retain them.

So this does leave you to wonder why The NHS is reportedly still making blanket IR35 determinations, and placing independent workers inside IR35 irrespective of their working arrangement.

These questionable IR35 decisions have forced locums into ‘dubious tax avoidance schemes’, even after they raised their rates by 6.3% on average following last year’s public sector reform.

The NHS’ IR35 strategy is backfiring. Contractors have made it clear from the outset that they simply won’t stick around if they are lumped inside IR35 without a fair assessment of their contract.

And unless the organisation drastically rethinks its approach to IR35, the situation could worsen dramatically, according to new research. 98% of independent healthcare professionals are already considering seeking work elsewhere as a result of these blanket IR35 determinations.

If you harbour the hope that - as public sector servants - these contractors would be reluctant to take on private sector healthcare projects instead, think again. 70% are quite prepared to do so, such is the level of unhappiness with The NHS’ handling of IR35.

Additionally, half of independent healthcare professionals would consider working outside the EU should they be placed inside IR35, while 32% would contemplate taking on projects in another European country.

Ben Itsuokor, consultant geriatrician and president of The Independent Healthcare Professionals Association (IHPA), the body behind this research, outlined the true extent of the problem.

"It's highly troubling that certain NHS Trusts are pushing ahead with their unfair implementation of the IR35 rule, which leads to locums being falsely classed as inside IR35 due to blanket and incorrect implementation of the IR35 rules, with them subsequently losing up to half their income.”

In short, blanket IR35 determinations will deter contractors whom The NHS increasingly relies on. More so, the organisation’s short-sighted approach to IR35 has the potential to jeopardise its level of service, as Itsuokor, went on to say.

“Clearly, there is the real and present danger that patient safety and care will be put at risk. Continuing to contract under false employment in this manner increases costs for (NHS) Trusts and will lead to much bigger problems down the line.”

Just recently, The Telegraph suggested the staffing crisis is set to ‘spiral out of control’, while the majority of managers at NHS Trusts have described it as the ‘single biggest risk’ facing the organisation.

Following IR35 changes last year, The NHS initially made blanket determinations, before performing a U-turn, and promising to make assessments on a ‘case-by-case’ basis. Why the organisation has failed to keep its word remains to be seen, although there is plenty of speculation that it has something to do with a lack of internal IR35 expertise.

Only last month, 80% of NHS doctors revealed they are concerned about their ability to deliver safe patient care in the next twelve months, with 9 in 10 having experienced staff shortages in the last year alone.

Clearly, something has to give. The NHS’ demand for healthcare contractors has arguably never been higher, which is why the organisation must rethink the way it carries out IR35 assessments.

There is a wider consideration for public services too, and The NHS has the opportunity to set an example to other public bodies, and prove that last year’s reform - albeit disruptive - can in fact be managed.

Qdos Contractor
Written by
Qdos Contractor
Award-winning providers of insurance for the self-employed, Qdos are the leading authority on IR35, offering industry-leading employment status services to ensure the flexible working industry thrive. Qdos are the Best Contractor Insurance Provider 2022 and won the Queen’s Award for Enterprise in Innovation 2022 and 2017. 

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