Liz Truss and IR35 - Why the Conservative leadership frontrunner needs to follow through on her words in government

After weeks of debates, media interviews and columns, the Conservative Party leadership contest has finally heated up for freelancers. On Sunday, frontrunner Liz Truss stated in The Sun that if elected, she would order a review into one of the biggest issues currently facing the UK’s self-employed – IR35.

Implemented in the private sector in April 2021, this devastating reform has fundamentally changed how freelancers operate. It has shifted the responsibility for determining notoriously difficult decisions about a contractor’s employment status from contractors to their clients, with dire consequences for the self-employed.

Since the reforms, contractors have faced blanket bans or blanket assessments by their clients, with little choice but to accept quasi-employment through an umbrella company and even close their limited company altogether. It has also placed a significant administrative burden on businesses, many of which have found it difficult to navigate the nebulous and complex rules.

IPSE research found that IR35 has been so disruptive that more than one-third of contractors have quit contracting since the changes took effect. With half of UK businesses (49%) stating that they could not achieve the same outcomes without the help of the self-employed, the fall in the number of freelancers could have a knock-on effect on companies and the economy as a whole. 

We at IPSE are therefore delighted that Liz Truss has pledged to review IR35, should she win the Conservative leadership race and enter Number 10 as Prime Minister on the 5th of September. We believe these rules are destroying businesses and holding back the economy – they need to change now.

However, we and the self-employed community shouldn’t get too excited by Truss’ statement. While it is positive to hear she acknowledges the need to look again at IR35, we have had reviews before and none of them have led to meaningful change. The government has previously ignored damning reports from the National Audit Office, the House of Commons Public Accounts Committee, and the House of Lords Finance Bill Sub-Committee – IPSE presented evidence to all three.

Instead, the issue has been left to grow, with thousands of self-employed workers and clients suffering as a result.

Going forward, we hope that any review announced by Liz Truss as Prime Minister leads to radical and tangible change. This means leaving nothing off the table, including scrapping the reform altogether.

In the coming weeks, we will be continuing our dialogue with Liz Truss and her team on IR35. We will continue to represent our members, as well as the wider self-employed community, in making sure that she follows through on her promise to launch a review into this devastating reform. We will also continue to campaign against IR35 and look to persuade the other Conservative leadership candidate, Rishi Sunak, in joining Liz Truss in ordering a review into IR35.

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