It has been suggested that the implementation of the Agency Workers Regulations will make it harder for umbrella company contractors to secure a mortgage.

Mortgage lenders have always viewed the employment status of contractors with risky eyes. Contractors and freelancers have struggled to persuade banks and building societies that they receive payment from a third party, especially when expenses and payroll fees feature on their payslip.

Furthermore, lenders say that AWR has made their lending decisions even more complicated because payslips do not show what an individual really earns.

Some lenders will grant a contractor mortgage on the value of a gross annualised contract, but in order to qualify the contractor needs to be named on his or her contract. And this is where the problem lies.

Since the introduction of AWR, a lot of umbrella companies have firmed-up on their contractor’s employment status. Increasingly, contracts do not mention the name of a contractor, meaning they cannot avail of specialist mortgages based on contract rate. The payslips that they do receive also mention various headings and deductions that make mortgage companies wary.

Despite these seemingly insurmountable obstacles, umbrella company contractors should not be tempted to tell lies on their mortgage application forms. They must come clean about their employment status and if they are working on a short-term contract, the lender must be informed, Failure to do so could see them charged with mortgage fraud.

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Those of us looking for work might be interested to read the results of the latest Outlook Survey from Manpower. The survey asks employers about their hiring intentions for the coming quarter.

Overall, Manpower found that employers are still positive, although less than they were previously. The Index recorded a balance of +2% companies intending to recruit employees in Q4. However, this is a decrease from the previous quarter when hiring intentions registered +3%, and it’s the first overall decrease since the beginning of 2009.

The North-South divide has reappeared and prospects in several areas of the North do not look good. The mythical line runs from the Humber to the Bristol Channel and employers to the North of it predict -2% hiring, whilst below the line, the figure was +6%.

Earlier this year, employers in the finance and business services sector were hiring like nobody’s business, but their Q4 predictions were down four percentage points to +6%.

Mark Cahill, the UK MD of Manpower, said the finance sector had been the most optimistic sector after the recession but this optimism has been dropping away recently.

The utility sector has now taken over as the most positive sector. Employers in the electricity, gas and water industries report hiring intentions of +10%.

On a regional basis, the East of England is most optimistic at +11%, followed by the East Midlands and the South West at +8% and +7% respectively. At the other end of the scale, hiring intentions in Northern England fell to -10% and in Wales to -6%. Unusually, London came in at a flat 0%, but that could be due to the lack of optimism in the financial sector.

Of course, there could still be plenty of opportunities for contractors, especially in the North. Employers may not want to hire permanent staff, but if they have a rush job to complete, they could well turn to freelancers and contractors to plug the gap.

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Contractors may be interested to learn that the UK hires more online freelancers than any other European country.

Elance, the online freelance jobs market, recently released survey findings that showed that the UK hires the greatest number of online freelancers, followed by Germany, Switzerland and the Netherlands.

Fabio Rosati, the CEO of Elance, said the UK is leading the trend for online workers. Businesses appreciate the flexibility of a freelance workforce and contractors are snapping up online working opportunities now that traditional employment routes are stagnating.

He went on to explain that this trend could be seen across Elance’s platform as companies turn to freelancers and contractors to finish projects and fill skills gaps.

Maybe not surprisingly, companies in London hire the most contractors from the Elance site. However, in recent months, there has been an 89% growth in online hiring from firms in Birmingham and 59% from companies based in Reading.

Meanwhile, the REC will be extolling the virtues of the flexible working market when it participates in the European Employment forum later this month.

Tom Hadley will chair the meeting and will focus on the role recruiters in the private sector can play in national labour markets.

Hadley said he was delighted to be invited to such a high-profile event and says it shows recognition for the role the UK recruitment industry is playing in promoting flexible labour and helping to tackle youth unemployment.

In addition to the opportunity to highlight the REC’s Youth Employment Charter, the Forum in Brussels will provide a great chance to exchange views with other European employment experts, he added.

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Suitably qualified IT contractors might benefit from the lack of applicants for mid-level permanent vacancies in the UK’s IT departments.

Despite an increase in the number of full-time IT roles on offer, recruiter IntaPeople says applications in the 3^rd quarter of this year are down 22% on the comparable period in 2010. In Q3 last year, IntaPeople had a pool of 2,874 people chasing a permanent role in IT; now it says it has 2,511 candidates.

One of IntaPeople’s directors, Stephen Riley, said some firms now have to put projects on hold because they can’t find the people they need. There is a lot of top-level talent, but workers in the mid-tier are usually the ones that turn strategy into action.

Riley wants to see the government do more to make sure youngsters understand the benefits of learning IT at school, but says that there is a void that currently needs filling and freelancers are well placed to step in.

He went on to explain that an increasing number of companies are looking to freelancers; especially those based outside major cities.

Meanwhile, ITJobsWatch has reported that daily rates for some IT contractors are decreasing.

The average rate for a developer is down £25 year-on-year to £375. 10% of developers are still getting more than £600 a day, but the same percentage gets less than £250.

Project managers and business analysts receive an average £450 a day, but the top 10% command an impressive daily rate of more than £650.

ITJobsWatch also reports that there is a bigger range in rates than was previously seen. And even though some banks have cut rates by 10%, there are still good rates to be had.

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According to jobadswatch.co.uk, the third quarter of 2011 saw an increase in the number of opportunities for IT umbrella company contractors.

The website’s data shows a 4.7% increase in the number of adverts for freelancers on the main IT and multi-sector UK recruitment sites in Q3. The number of adverts for full-time IT staff also increased, but only by 1%. However, these figures show that IT recruitment has been expanding for the last nine consecutive quarters.

Jobsadwatch expects this upturn will continue, as employers frequently turn to contractors in the first instance when hiring conditions improve.

However, there are regional disparities and IT contractors in the North West actually saw a 13% decrease in the number of job adverts in the third quarter, whilst Inner London registered the most new contracts.

Adverts for contractors with AGILE skills were up by 38%, followed by .Net with a 23% increase. AGILE is very much the new kid in town, but is rapidly gaining in popularity. There has been a 75% increase in demand for permanent staff with this particular IT skill over the past year.

None of the IT skills registered a fall in demand, but candidates hoping to secure a public sector IT contract saw a 40% drop in adverts.

Financial services firms are now looking for more IT contractors than they were this time last year, as are software houses.

The Monster Employment Index also registered a 19% increase in IT recruitment over the past 12 months. Despite this, the IT sector dropped to fifth place in the monster overall rankings. Engineering topped the chart, transport and logistics came in second and maintenance and construction occupied the third and fourth places.

Monster’s Employment Index also showed that in September, six out of the nine regions in the UK saw an annual increase in online job vacancies. Best of all was the South West where opportunities increased by 22%.

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Employers are increasingly turning to the flexible workforce, including freelancers, to help them survive during the current turbulent economic climate.

The REC recently published a paper entitled “Talent Acquisition in Turbulent Times” which highlights a change away from the traditional model of managing talent in favour of a model based around Talent on Demand. This allows companies to align their talent requirements with their dynamic business objectives and move away from a fixed base of resources to a more flexible one.

External recruiters have a vital role to play in this new model, providing companies with unique access to a pool of candidates with rare skills.

Roger Tweedy, the director of research at the REC, said the emerging open model challenges the existing internal recruitment solutions that are becoming bogged down by the pressures of time and cost.

HR departments face some serious issues as global talent shortages get worse and companies need to alter their approach to acquiring talent. Employers face major challenges if they want to secure the best candidates and gain competitive advantage, Tweedy continued. As well as addressing rapidly changing technology and a lack of suitably qualified people within their organisation, they will also have to consider a new breed of candidate and new ways of working.

We need to identify new robust recruitment models that can withstand the challenges of the future. Leading recruitment agencies are already developing new ways to match both active and passive candidates with employers and these new tools enable recruiters to provide better value for their clients and build up vital strategic relationships.

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Limited company contractors could be set to benefit after the government announced it was to inject £950 million into the Regional Growth Fund.

Earlier this week, Nick Clegg, the deputy prime minister, announced the cash injection as part of the coalition’s pledge to stimulate the jobs market. The funding should help to directly create about 37,000 jobs and protect or create around 164,000 jobs in the UK’s supply chain. 119 firms will be able to expand, thanks to the funding, and another 10 enterprises are bidding for funds at the moment.

Clegg said he was delighted to announce this boost for businesses, which will kick start growth and create lasting employment opportunities in areas that need them. As well as enabling businesses to expand, this support will unlock private sector investment.

As more firms expand, highly skilled freelancers could find themselves in demand as projects that have been on the back burner are eventually given the green light to proceed.

Pharmaceutical research contractors based in the Nottingham area, could be one such group to benefit from the funding. Molecular Profiles has received £1.6 million to help it create 62 new high-quality jobs.

However, Ed Miliband, the Labour party leader, does not appear to share Clegg’s enthusiasm. He said this funding was “too little, too late”, saying the £1.4 billion Regional Growth Fund’s three year budget was only 33% of the money made available to the Regional Development Agencies the coalition have scrapped.

He went on to explain that the new funding comes at a time when ministers are withdrawing the capital allowances for companies investing in plant and machinery.

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IT Contractors may not be aware that the UK is not the only country with a thriving contractor community.

Freelancers and contractors are now playing a key role in driving innovation and growth across many sluggish European economies, including Belgium, the Netherlands and Scandinavia.

John Brazier, the managing director of the PCG, recently highlighted the increase in contracting activity throughout Europe and explained that the Group was actively engaging with contractor organisations on the mainland. These include established organisations such as the European Small Business Alliance and the European Forum for Independent Professionals.

Recent data from Eurostat estimates that 32.6 million workers in Europe are self-employed. That equates to 15% of the workforce. Furthermore, 23 million of these are either contractors or freelancers working as sole traders.

Professor Andrew Burke, from the Cranfield School of Management, recently presented research findings to the Freelance Sector All Party Parliamentary Group in which he identified contractors and freelancers as vital elements of entrepreneurship, enterprise and growth.

Contractors are now becoming micro-multinationals, according to the think tank Lisbon Council.  They can access international markets via enabling technologies and online service providers, such as Elance, PeoplePerHour and Odesk enable them to export their talent and secure overseas contracts.

Skilled UK contractors have huge opportunities to tap into the European marketplace and those who can apply their creativity, flexibility and skills could help reinvigorate stagnant European economies.

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Umbrella company contractors who are members of the PCG may be interested in a new scheme the Group has set up.

The PCG has linked up with Club Workspace to offer PCG Plus members a place to work when they have to go to London on business. Members will be able to access coffee-making facilities, a hot desk, showers and Wi-Fi at sites by London Bridge and in the City.

John Brazier, the managing director of the PCG, said a lot of members have complained that most of the working day ends up wasted when they have to visit London for a business meeting, because they have nowhere to work before or after. This is the PCG’s first step towards providing the support contractors need and ensuring freelancers are able to work whenever and wherever they need to do so, he added.

James Friedenthal, from Club Workspace, said his organisation was proud to be involved in this progressive partnership with the PCG.

Meanwhile, small businesses are increasingly turning to IT contractors to satisfy their IT demands.

PeopelPerHour.com says that 18,226 small businesses hired IT consultants in the last 12 months. This time last year, the figure was just 7,457. Small firms are particularly interested in contractors with experience in web design, IT training and SEO.

The North West has seen the biggest increase in demand at 79%, followed by the South West at 76% and London at 72%.

Xenios Thrasyvoulou, the CEO and founder of PeoplePerHour.com, said despite the turbulent economic climate, small firms continue to invest in IT and contractors will have a more dominant role to play in driving growth in the next five years. Small businesses have now realised that they cannot afford to ignore the wealth of talent available in the freelance market place.

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Limited company contractors working in the aerospace industry could benefit from a new government service.

 The coalition recently launched the Manufacturing Advisory Service, which it hopes will help firms grow and create as many as 23,000 new positions in aerospace and other high-value industries. Some of these jobs will undoubtedly go to freelancers and contractors working through an umbrella company. The government hopes MAS will help safeguard another 50,000 jobs and contribute about £1.5 billion to the UK economy.

Mark Prisk, the business minister, explained that we have world class manufacturers in the UK and MAS will not only help them grow, but also create more exceptional firms. Furthermore, the scheme will focus on helping smaller enterprises to flourish.

The Minister recently visited Arrowsmith Engineering, a firm of precision engineers based in Coventry. Arrowsmith supply the aerospace and motorsport industries and Prisk said the company has been able to grow by 20% after receiving support from MAS.

As well as offering technical support to manufacturing firms, MAS links them to apprenticeship programmes.

Meanwhile, a further three banks has cut their IT contractor rates by 10%. It would appear that UBS, Deutsche Bank and BAML have all followed the lead of RBS and Lloyds in implementing across the board pay cuts.

Cutting contractor rates seems to be something of a growing trend as companies tighten their belts again due to the continuing global economic uncertainty. Understandably, some contractors are feeling aggrieved because these cuts are instantaneous rather than being implemented at the contract renewal stage. Could we be about to see vast numbers of IT contractors looking for pastures new?

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Contractors, including those working through an umbrella company, may be interested to learn that the IR35 Forum is starting to make real progress.

According to the minutes of September’s IR35 Forum meeting, HMRC has promised to make improvements to four key areas of the IR35 process. The Revenue is now asking for detailed comments on ways it could improve contractor guidance, the IR35 helpline, status review and its investigation processes.

These areas form the backbone of IR35 reform and the Revenue has asked non-HMRC Forum members to consult with their colleagues on these matters because it is concerned that it is not receiving the specific, detailed information it needs to improve the administration of IR35.

HMRC also confirmed that although it will not share detailed risk profiling with the Forum, it will share the broad risk assessment. Whether or not contractors and freelancers will be able to use the broad risk assessment to establish their IR35 status will depend on how much detail is provided, but it is thought that this concession is a step in the right direction.

The Revenue also intends to create 12 different contractor scenarios, based on real life situations, in order to identify instances where there is disagreement with HMRC, agreement with the Revenue or uncertainty. Non-HMRC representatives of the Forum will be invited to present their views on these scenarios at the next meeting on November 9^th.

As well as the IR35 helpline, there are plans to implement a business Educational Support Unit to publicise IR35 guidance for clients and contractors and an IR35 National Compliance Unit.

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Despite the slow growth in the UK economy, contractors such as those working through umbrella companies are doing surprisingly well, according to a new survey by the PCG.

The PCG polled 2,000 freelancers and discovered that in the last twelve months, 75% of them have been under contract for at least eleven of them. 84% of the survey’s respondents said they expected business opportunities to remain the same or improve in the coming months.

The MD of the PCG, John Brazier, said he was in no way surprised at the results because freelancers can help accelerate the economy while UK PlC is getting back on its feet.

He went on to say that although public sector opportunities are drying up, PCG members have proved that they are adaptable and secured private sector contracts. However, in order for the freelance community to deliver its full potential, the government must address the problem of red tape and reduce the amount of regulations.

Whilst life is good for the majority of freelancers and contractors, nearly 25% of SMEs saw their pre-tax profits drop by 50% in the last financial year.

The SME Distress Monitor, from Baker Tilly, also shows that nearly 10% of companies that filed accounts last year saw their sales decrease by more than 30%.

Sarah Batchelor, from Baker Tilly, said the research demonstrated that short-term debt pressures are having a really bad effect on SMEs. As cash-flow tightens, business owners must take action at the earliest possible opportunity to make the best of available financial options to stave off problems in the future.

The current economic outlook is far from stable and it is crucial that SMEs seek advice and implement safeguards if they are going to survive, she added.

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