‘Things could be even better’. Why services and the single market count.
Those who hold office should try not only to hit targets but exceed them, the positive targets that is..
British media and many statistical sources lack information.
Manifesto launch
At the manifesto launch, Keir Starmer unveiled plans to find £7 billion extra in taxes
- £5.2bn by closing the non-domiciled loophole and cracking down on tax avoidance
- £1.5bn from VAT and business rates on private schools
- £0.3 bn from closing the carried interest tax loophole and increasing stamp duty on purchases of residential property by non-UK residents by 1%
Critics question the plans feasibility. Some scepticism exists around labour’s aim to raise economic growth while those further to the right questioned labour’s ability to reduce immigration.
Yet even more ambitious revenues could be had via taxation if British businesses were allowed to trade again barrier free with their closest markets in Europe. Even then, there is a way to stay firmly in control of immigration from Europe. The main downside many see of the single market is ‘ Freedom of movement ‘, which is not ‘free’! Under article 7, if a fellow European (single market member) wishes to move to another single market member country, that person must provide evidence of:
- a job or financial means to survive without benefits
- comprehensive health insurance cover
in order to stay more than three months.
May failed to use this at the Home Office, but a new government could. No mention of that by politicians or the media on mainstream news. As Daisy Cooper pointed out in the recent TV debate with Farage, immigrants are more likely to contribute to the NHS than drain it.
Time for cold hard figures on what labour would lose out on. These should be a wake up call for labour and at the very least the public.
The B word again
A recent Goldman Sachs report claimed that Brexit left the British economy 5% worse off.
Speaking to services professionals whose markets and income have been reduced by the shortcomings of both the Brexit TCA and the UK-Swiss deal ‘crafted’ by Liz Truss by figures like 70-80%+, the damage is much higher. With the exception of the House of Lords UK-EU services inquiry, which allowed freelancers a voice to express damages in detail, no major government body or investment fund has thoroughly surveyed this sector.
Economic decline and falling jobs market
Britons blame Brexit more than covid for the economic malaise hanging over the UK:.
“[…] a backdrop of stubbornly high mortgage rates, near-record rent inflation, a slowing jobs market and per-capita GDP that remains below pre-Covid levels”.
ONS figures on June 11th, showed the number of people unemployed in the UK has risen by 138,000 in the three months to April, amid growing signs of a weaker jobs market, the highest it has been since September 2021. Job vacancies also fell, the weaker demand for staff attributed “to a lack of roles and firms delaying hiring decisions”.
This is mirrored by drops in the number of freelance projects. Demand increases when the economy is more stable and boyant. Recruiters attribute the slowing project market to Brexit effects; recruiters I speak to, who deal with both UK and European markets, tell me Europe is much more lively. Looking at project boards for freelancers, I concur. Britain is quieter. To some extent, the Summer rut sets in as we approach the holiday season, but economic malaise is there in the background.
For small businesses and large ones, if turnover is impaired or there is any uncertainty in business development, expansion of the workforce is a no go. Brexit ended any plans I might have had to take on staff or expand.
Facts and figures
In cases where freelancers run a limited company, 20%+ of our turnover (minus allowable business costs), are subject to corporation tax. Added together, our losses are also a serious dent in the revenue.
Creative tech
I chatted to Tim Brennan of Carry On Touring to find out more about losses in that sector. 74% of UK based touring tech crew are experiencing problems sourcing work, while Europe is busy.
Day rates vary depending on the discipline and experience of technology. Tim explained ‘ on top of day rate we usually get a Per Diem allowance between £25-£45 per day. We’re also paid from leaving home until return including days off. Hotels and travel are also covered’.
Video
- LED Tech £250 – £350
- Cameraman £300 – £350
- Vision Engineer £320-£400
- Vision Director £360-£450
- Disguise media server programmer / op £350 – £500
- Video Crew chief £350-£450
Sound
- Pa tech £220-£300
- System tech £300 – £350
- FOH engineer £350-£500
- Sound Crew Chief £350-£450
Tim said: “The other disciplines are similar to sound based on the level of responsibility and their design involvement in the show.”
Information technology
IT roles in software development, design, testing and user interfaces command similar prices to creative techs depending on seniority. The more responsibility given, the higher the rate. Prices for roles involving architecture, devops (especially Cloud specialists who setup platforms), project management, team leading and IT strategy consulting are higher. The rarer the skill, the higher the price. Specific business sector knowledge can also increase prices, especially investment banking.
Rates in the SE of the UK and Europe tend to be higher.
Unlike creative technicians on tour, IT freelancers receive a day or hourly rate and are expected to cover expenses from that. Training can be expensive: an average course can run into thousands of pounds, a conference ticket is at least £600. Other substantial costs include accountant fees and liability insurance.
Market wipe out for niche professions
Furthermore, we have to consider the very niche sectors where most possible opportunities would be in Europe in technology, financial services and the creatives.
Ballet is one example. In a recent webinar, Carry on Touring Colleagues mentioned the difficulties young ballet school graduates had to secure their first job. There are simply not enough ballet jobs in the UK for the students who leave schools like the Royal or experienced dancers. They would solve this by auditioning for European ballet companies. Unfortunately, they cannot apply for many European ballet companies now. Candidates require an EU passport.
How can we possibly quantify not only the loss of someone’s economic livelihood, but the loss of the opportunity to work in an art that is not just a means of bread an butter but for many a vocation?! Ballet students work very hard from an early age. Some of those ballet dancers would have returned to the UK with more experience and delighted British audiences or perhaps opened their own dance schools once their own performing careers finished.
There are regional variations to consider
What about regional variations? Some areas such as the North East traded 40-50% + with European markets. Former MP Phil Wilson estimated some companies in his constituency traded 45% with Europe. The services industries which relied on mobility frameworks in the single market are left with huge restrictions and it is precisely that sector which benefited greatly from better wages and rates in Europe.
Higher rates in Europe
In many freelance sectors, the difference between prices compared to the UK is striking, especially technology consulting.
European rates in many countries are at least 1/3rd higher than the UK. Europe is busier than our own markets right now. It’s misleading to say we only lost 5%. Corporation tax is 20% of our revenues if using a UK limited. Remote rates tend to be 20% lower than onsite.
IT business advisor (Europe) – 105 Euros per hour.
The Swiss Powerhouse
Project rates in Switzerland are often more than double UK rates. Swiss accommodation is horrendously expensive and eating out costs a fortune. British citizens can no longer work in the Swiss market on payroll. Liz Truss UK-Swiss deal is dreadful, as many of our readers are aware from my expose of its faults. They disregarded the agency payroll model used by freelancers and despite complaints to our MPS and a supposed initiative by the British government to improve the UK-Swiss deal, blockages continue.
I was recently approached by a head hunter who found my profile particularly interesting for a long project in Switzerland which required skills in software development, cloud platforms, banking, fluency in German and English. His first question to me: would I consider re-location to Zurich and secondly, did I have an EU passport? I guess many agents seeing my profile and 5 languages might think, as a British citizen, that I have another nationality or that my languages stem from European parentage. This role paid more than double what I would normally charge for projects. I worked hard for my skills, but I cannot use them without a European passport.
We are all worse off
Even where a freelancer works on a Swiss payroll model, paying tax and insurance in Switzerland, HMRC requires tax equalisation: the difference between Swiss and UK tax is paid to our revenues when we are British domiciled. This brings in funds to the treasury. They do not take into account the high costs of accommodation or food as business expenses.
Fixing the red tape to make Brexit work is easier said than done
Labour pledged to renegotiate the Brexit deal to make it work which is easier said than done.
Some professions already have some albeit restricted conditions in the TCA which allow for work in Europe, but as we have seen in services, European trading partners ignore its complexity. I habitually send a summary of annex 22 of the TCA with project tenders, contractual service suppliers and independent professionals. Annex 22 defines the provisions for independent (technology) professionals with 6 years experience and a degree to serve onsite in some EU countries (Germany, NL) for 12 months without a work permit. Despite facts laid out in black and white, recruiters have simply chosen to label all British citizens as a no-go as company policy.
Cross Border Services colleagues point out recruiters who are unaware of the TCA, or ignore it, may well fear legal sanctions for hiring a non-EU national without a work permit, such as fines, for professionals under the TCA. Recruitment for permanent roles in Europe also carries with it the legal obligation to seek candidates EU wide in the first instance before turning to third country nationals. Again, this may be a misunderstanding: a freelancer taking a project as a services provider is not the same.
The business owned by the freelancer is seen as the services supplier, not the person. Most project contracts outline the right of substitution whereby the service provider may replace themselves with a colleague, covering costs of any training for that new resource in their own time and at their own expense. These are not projects done on payroll models in Europe, which are not covered by the TCA.
Using the single market model gives clarity and saves time
There is no room for doubt, misunderstandings or administrative errors.
Labour does not understand this challenge nor the complexity reporting on faults and negotiating around these may take, even if the manifesto claims they want ‘to help open up markets for UK service exporters.”
The liberal democrats and greens were honest about it: fixing the TCA and going back to the single market would take time. Let’s face it, the country is in a mess after the last government. How much time can a new government afford to spend on renegotiating the TCA?
The Remote work misnomer
Brexiteers stated we could always work remote from home. Even remote roles are marked as EU only. Bar roles in the EU parliament, EU institutions and some government projects, we should in theory be able to work on remote projects.. The TCA signed us up to Data Equivalence, which should placate fears about data going outside of the EU to the UK. Some clients operate virtual desktop services on AWS: the servers are located in Europe.
Recently, I worked on a tender with a nearshore customer who serves the German market for a fully remote project for a German customer. Such a B2B deal falls under the TCA as an allowable project We had worked on this bid since mid May, prepared skills lists, profiles and held virtual meetings. This week they were told I cannot participate on this project without an EU passport.
Note this project would have provided around £10,000 in corporation tax to HMRC.
Go global, cry the Brexiteers
Research the US market; remote for companies there entails working US hours. This is not always possible. Start at 17:00 and work until the small hours… Furthermore, remote project adverts for US gigs (and perm roles) require the candidate to work remote from any US state.
Work for British citizens in Ireland falls under the ‘common travel area’. Nevertheless, many Irish projects, even those which are remote, require the service provider to work remotely from within Ireland.
Within the UK, where the SE is the most active market, recruiters for remote London based clients give preference for those based in the SE, especially where hybrid models apply, even if regional candidates are willing to arrange site visits. For a time, the pandemic where full remote became the norm, helped regionally based freelancers. Our location became irrelevant. London is as far from us, if not further or more costly to reach than many European cities. Nee chance for the North East, where pre-Brexit, we turned to the Auf Wiedersehen Pet model to fill that gap.
More debate and honesty is required on the single market
After the U.K. first joined the EEC in 1973 there was a referendum called in 1975 on whether to stay in or leave. 8 years after an Advisory Referendum in 2016, polling in the U.K. shows that a majority of people would vote differently today than in 2016. Significant numbers of U.K. citizens seem to think the question of rejoining EU – or at least the Single Market or Customs Union, which were not on the ballot in 2016 – might be a legitimate matter for at least some General Election debate).
There are serious matters arising from both the Withdrawal Agreement for British in Europe and the Brexit TCA that have left many individuals, families and businesses in a sub-optimal position compared to pre-2016.
Farage cried on TV debates: “Mass migration is making us poorer”. What’s making us poorer is BREXIT. Net migration rose after we left the EU, partly due to the hard fact that it is so much harder for Britons to work in Europe or retire there. Young teenager voters, like Hannah featured during the labour manifesto launch, are unaware of what we once had. Hannah will vote labour as the party stands for equality. Equality is easier to achieve when we have opportunities for everyone to pursue. That includes opening up good jobs markets and opportunities for us all to support ourselves and those who cannot support themselves via tax revenues.
Fact not fiction: many of those opportunities for young people and older professionals are in Europe. The next government has a moral obligation to facilitate those revenue injections to deliver services for Britain. Why settle for less?
