Umbrella company contractors have no doubt been keeping a lookout for warning signs that the UK economy is slipping back into recession.

People can be forgiven if they seem unsure about the direction the country is heading in, especially when the experts seem to have differing opinions.

The CBI has now predicted that the UK will not suffer a double-dip and that growth this year will be 0.9% followed by 2% in 2013.

The CBI’s regular economic forecast says that companies are beginning to invest in equipment and looking for new export markets. It thinks the manufacturing sector will grow as exporters buy new equipment. It also believes that we will avoid two consecutive quarters of declining output by reversing Q4’s 0.2% fall.

However, the results of a survey from BDO suggests that turnover is still falling and that is an indication that a recession will follow. Furthermore, the CIPD has discovered that employers are feeling more inclined to make redundancies.

The BDO survey, which investigates company turnover, discovered that it has now decreased for eight consecutive months. In addition, the output index fell by 0.2 points to 91.2 in January. An index reading lower than 95 indicates contraction.

The CIPD questioned 1,000 employers for its survey and said the difference between the amount of employers planning to reduce their headcount and those intending to hire had increased to its highest level in more than two years.

The Institute’s public policy advisor, Gerwyn Davies, said employers were adopting a wait and see attitude three months ago, but now several services firms in the private sector have decided to make redundancies. The CIPD warned that we could see unemployment reach 2.85 million if economic conditions do not improve.

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IT umbrella company contractors are well placed to weather the jobs storm, according to the results of a recent survey by the CIPD.

When the Institute asked hirers about their recruitment plans recently they discovered that 20% of hirers intend to create more jobs in IT over the next five years. The only occupations that were classed as ‘hotter’ were business development and sales and marketing.

In the shorter term, 15% of respondents plan to concentrate their efforts on their IT departments. As far as demand goes in the current quarter, IT candidates top the hard skills list, although people with soft skills such as secretaries and sales assistants will probably find themselves in even greater demand.

Despite the positive outlook for IT hiring, the overall outlook is bleak with 60% of companies saying they will not create any new positions before the end of March. Added to that, firms in the private sector are expecting to reduce their headcounts at the fastest rate since the spring of 2009.

The private sector seems to have moved past wait and see mode and decided the time has come to make redundancies due to worsening economic news. This will impact the prospects of all job seekers, but there are also micro challenges facing British born IT candidates.

It transpires that organisations may continue to prefer to hire IT workers from outwith the European Union. Already non-EU migrant workers are more likely to be found in the IT sector than any of the other industries that regularly look for staff.

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Umbrella company contractors who had been hoping to benefit from more government contracts are disappointed that major corporations are still getting the bulk of the work.

According to the UK200Group, 92% of contractual orders are still being awarded to large businesses despite the coalition’s pledge to grant 25% to small businesses.

When the coalition came into power, it agreed to allocate 25% of external orders to the SME sector and put an end to mega IT contracts. But in the third quarter of last year, only 7.8% of state contracts were awarded to SMEs.

The UK200Group said that out of £3.6 billion worth of orders, only £227 million went to smaller suppliers during the three-month period and SMEs have good cause to feel ignored.

Jonathan Russell from Rees Russell accountancy firm said he was not unduly surprised by the results when you consider all the hoops businesses have to jump through to secure a government contract. He claims that government does not understand the way small businesses operate and presumes they have similar policies and procedures to large companies.

He went on to say that civil servants still expect small businesses to ‘sell to government’ whereas they should learn to buy from the SME community. As long as this mindset continues, the Civil Service will carry on wasting taxpayers’ money. The current procurement system is flawed by under delivery, overspending and lack of control.

He ended with a plea to the government to run courses to teach public sector organisations how to buy services.

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IT contractors may be interested to learn which skills are currently in short supply in the IT sector.

According to the latest Report on Jobs from the REC/KPMG, the shortage of contractors with Citrix, Datastage, Firewall, .Net and Oracle skills that began at the end of last year continued in January. Last month, two new skills were added to the list; Business Analysis and Security.

The REC said that recruiters are now struggling to find candidates with skills in the above-mentioned disciplines.

Demand for IT contractors increased slightly in January according to the REC index. It scored demand at 51.7, compared with 51.4 in December. However, that is still well down on the figure of 61.2 recorded in January 2011.

It has been suggested that the decrease in temporary billings is linked to AWR but as yet there is no conclusive evidence to back up that suggestion. Kevin Green, the chief executive of the REC, acknowledged that there had been a dip in billings for temporary staff, but said employers are still taking advantage of flexible working arrangements.

He went on to point out that employers have also started looking for permanent members of staff even though the economic outlook is uncertain. Demand for full-time IT staff rose in January, although the skills shortage problem once again raises it head.

Agencies recruiting for full-time IT staff have had problems finding developers, database administrators, IT marketers, C#, .Net, SAP and Security candidates. They also report a lack of applicants for DB2 and Datastage positions.

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Umbrella company contractors working in the oil and gas industry should be kept in work for many years thanks to a new North Sea drilling contract.

BP recently sealed the deal, worth several million pounds, with Subsea 7, the offshore engineering company.

The Wick based Subsea 7 project will construct new pipelines at the Clair Ridge drilling project situated off the west of the Shetland islands where the Atlantic Ocean and North Sea meet. This is the second phase of the Clair Project and forms part of a £10 billion investment by BP, Chevron, ConocoPhillips and Shell.

It is thought that as many as 3,000 gas and oil supply opportunities will be created and many of these could go to specialist PAYE umbrella contractors. This latest contract is worth £63 million and will see almost nine miles of pipeline installed.

The Scottish Secretary, Michael Moore, explained that this latest contract underlined the confidence world-leading engineering firms and the oil and gas industry have in Scotland. Constructing this pipeline is a vital step towards opening the potential of the gas field.

He went on to say that the Subsea 7 contract is more good news for the UK’s oil and gas industry and associated Scottish supply chain. He was delighted that BP had invested in this project, which will secure jobs and expertise in the Wick facility.

Steph McNeill, the Vice President of Subsea 7 UK, added the company was looking forward to bringing the Clair Ridge project on-stream in an efficient, safe, timely manner.

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Umbrella company contractors may not be aware that the UK now has a new employment relations minister. Norman Lamb has taken over from Edward Davey and part of his remit is to look into ways to reduce the amount of red tape facing recruiters.

The REC has now announced that it is to meet with the new minister to ensure he understands the valuable contribution the recruitment sector makes to the UK economy.

Tom Hadley, the director of policy at the REC, explained that the immediate priority was to highlight the positive role of recruiters and to ensure the right regulatory landscape and compliance framework were in place to help the sector prosper.

He went on to say that the Red Tape Challenge provided an excellent opportunity to express the industry’s views. Furthermore, the REC hopes the Department for Business will continue to fight for the sector on overall employment policy and more specific issues such as pensions’ reform and taxation.

Meanwhile, the latest Report on Jobs from the Confederation showed that permanent placements in six out of the eight sectors surveyed increased last month. Amongst the sectors showing positive growth were IT, engineering and office professionals. Demand for hotel and catering staff declined, but that should not come as any great surprise after the festive season.

Kevin Green, the REC’s chief executive, once again pointed out that there was a mismatch between what jobseekers can offer and what employers actually want. Part of the solution would be to provide candidates with better career guidance, he said, as would more apprenticeships that provide young people with vocational skills.

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If you decided to throw a sickie last Monday, you were probably not alone.

Even before the snow blanketed many parts of the country last weekend, research from ELAS suggested that Monday February 6^th was the day Brits were most likely to phone in sick and snuggle back under the duvet. Whilst wintry weather was a factor, commuting in the dark, credit card bills and the long wait until the Easter holidays all contributed to the lack of enthusiasm for work.

The good news for businesses is that the faltering economy has encouraged employees to reduce the number of fake sickness days they take. The majority of staff now only absent themselves from the office for one day.

ELAS’ head of employment law, Peter Mooney, said the employment law consultants had been closely monitoring absenteeism for some years. A significant number of skivers take two days off to make their sickness appear more believable. However, over the past year, that trend seems to have stopped as the struggling economy forced managers to clamp down on absenteeism.

Mooney went on to say that there appears to be a steady increase in the number of people who throw a sickie, but the length of absence is decreasing. ELAS estimated that 400,000 workers in the UK would be ‘sick’ this past Monday.

You would think that people would be grateful to have a job and would do everything to retain it, but the ELAS research has shown that is not true. With all the doom and gloom surrounding the country at the moment, people seem to think they are entitled to the perk of an occasional day off work, Mooney concluded.

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The growing trend for mobile internet has led to an increase in opportunities for IT umbrella company contractors with experience in the telecoms sector, according to the giant group.

The contractor services provider discovered that slightly over 17% of all the UK’s IT contractors now work in telecoms; up 43% on this time last year when the percentage was just 12%.

Although retailers on the High Street have been badly affected by decreased consumer spending, a lot of them are investing in mobile commerce platforms to try and capture a share of the internet shopping market.

Customers are increasingly turning to tablet computers and smart phones as the medium of choice when shopping online. UK shoppers spent almost £8 billion online last December, up 16.5 % on the previous Christmas period.

Giant’s MD, Matthew Brown, explained that the retail sector increased its use of IT last year as they channelled investment into m-commerce. A lot of retailers still don’t have e-commerce, but as consumer shopping preferences change, those who invest in IT are likely to gain a competitive advantage.

The Group’s research also found that contractors now spend less time in between contracts. 80% of IT contractors now spend at most 31 days without work before starting a new contract. However, contractors are placing job security above high pay on their priority list as they remain cautious about the jobs market. Nearly 70% said that given the choice between higher hourly pay and a longer contract, they would opt for the long contract. Matthew Brown added that he was not surprised that longevity won over pay given the current uncertainty in the economy.

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Some umbrella company contractors have been getting anxious in case HMRC uses the newly proposed GAAR to hound them.

It was recently revealed that the Chancellor might include a general anti-avoidance rule in the next budget. Contractors have expressed concerns that this could be added to IR35 as a way of policing their employment status. However, a number of experts believe these fears to be unfounded.

CIOT director John Whiting said he did not think contractors needed to be concerned about that a GAAR will have an affect on their employment status unless they have set up an artificial structure.

He went on to say that the March budget is likely to include a GAAR but it is unlikely that this would target contractors working through a company or that it would be used to police employment status.

Paul Mason from Abbey Tax, the IR35 compliance company, said the majority of freelancers and PAYE umbrella contractors working through limited companies would not be affected by a GAAR, unless they work through an offshore-trust arrangement.

The general anti-avoidance was proposed after Graham Aaronson QC conducted an extensive study. The aim of the rule is to deter contrived schemes that use an artificial structure. John Whiting believes that contractors working through a company are highly unlikely to be affected by it. Policing of employment status is already covered by numerous rules including IR35 and MSC, he added.

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IT umbrella company contractors could be set to benefit from HP’s decision to share more contracting opportunities with smaller UK businesses.

Hewlett Packard, the largest government IT contractor, has said it will increase significantly the number of small sub-contracting firms it uses by the end of next year. This could lead to an increase in demand for individual contractors, as more opportunities become available in the coming months.

HP intends to increase the number of SME subcontractors it works with to 15% within the next two years. The company already works with 600 small businesses and it intends to add a further 150 firms to that list. This will create job opportunities for IT contractors and freelancers who want to work within small groups.

Nick Wilson, the managing director of HP UK, said that a lot of the company’s current spending will be redirected as it moves towards providing significant support to the small and medium sized sector in Britain.

This move by HP could be of huge importance to the IT industry. Small businesses will have more opportunities and even those who do not obtain a lucrative contract from HP may still benefit as firms reassess their workload and clientele. Furthermore, the increase in opportunities in the small business sector will undoubtedly lead to more contracting positions that IT freelancers can take advantage of.

HP’s news is one of the first positive signs that things could be about to improve for the UK’s IT contracting community. We are starting to see green shoots at last!

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In case any umbrella company contractors have forgotten to file their income tax self-assessment form for the year ending April 2011, the deadline is tomorrow, January 31^st!

HMRC expects as many as 600,000 people will leave things until the last minute and submit their return on deadline day. Around 90,000 taxpayers will realise they have a query tomorrow and attempt to phone the Revenue’s contact centre for advice.

However, this year a large proportion of call centre staff are expected to take part in strike action initiated by the Public and Commercial Services Union. HMRC has now said that if the strike is not averted, it will expunge any fines imposed on people who cite the strike as a reason for filing their return late.

A spokesperson for the Revenue confirmed that the department was hoping to resolve the situation in advance, but said there was a good chance that would not happen. HMRC would therefore be unable to provide the service it would like tomorrow.

He said HMRC acknowledged that if people were trying to follow the rules, but can’t get the support they need, they would not be asked to pay an income tax penalty. Under current provisions their case would class as ‘reasonable excuse’.

Last year there was a rash of reasonable excuse tribunal cases and in some cases taxpayers had multiple late filing penalties quashed. In one case, Dental IT won an appeal after receiving misleading advice from HMRC’s VAT helpline. However, this is the first time the Revenue has said the inability to contact the helpline would be classed as a valid excuse.

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Umbrella company contractors are more likely to find opportunities with small businesses, according to the results of a recent survey.

The European Commission published the results of its survey on the 16^th January this year and they make interesting reading. Not only do SMEs provide better quality jobs prospects than their larger counterparts, they provide employment for more than 67% of the UK’s workforce and are responsible for 85% of new jobs.

SMEs are an essential cog in the economic recovery and they go some way towards negating the affect the recession had on employment. The report goes on to say that in order to draw an effective policy after the crisis, there needs to be expert analysis of how new small business job creation was affected by the recession, as well as analysing the quality of current jobs.

Limited company contractors could find lucrative opportunities in the SME market. They could find better quality jobs with a higher rank than would be available in larger organisations. Small businesses could also reap the benefits of turning to highly skilled contractors who are available to slot into a role at a moment’s notice.

Conditions do look favourable for contractors this year. New business opportunities are starting to appear but a lot of employers still have concerns about the UK’s economic future. They are reluctant to commit to hiring permanent members of staff until conditions improve, so instead they will need to rely on the UK’s flexible workforce.

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