The forgotten factor driving NHS staff shortages

In a newly published report, the committee found that England is now short of 12,000 hospital doctors and more than 50,000 nurses and midwives. The shortage has had a significant impact on the service, with the report finding that a reluctance to decisively plug the staffing gap could threaten government plans to tackle the Covid backlog.

Unquestionably, there is a range of issues that have led to the crisis. Some blame Brexit, others point to unappealing pay and conditions. But there is a forgotten factor that also needs to be addressed: IR35. Implemented in the public sector in 2017, IR35 has fundamentally changed how self-employed workers are taxed. It has shifted the responsibility for making notoriously difficult employment status decisions from freelancers to their clients, and has created mass confusion for hirers and self-employed people alike.

According to our research, IR35 has had a seriously damaging effect on the NHS. Half (51%) of public sector hiring managers have lost skilled contractors as a direct result of the changes to IR35 regulations. Moreover, eight in ten (80%) hiring managers believe that they had seen a substantial administrative increase in engaging and paying contractors.

The administrative cost of the flawed reform has meant that managers now have had to go through a series of unnecessary barriers in hiring nurses, doctors and other NHS staff. These barriers are so difficult to overcome that research from the Independent Health Professionals’ Association (IHPA) found that 12,000 medics have left the service since the implementation of IR35 in the public sector in 2017.

One such barrier is determining whether contracts are inside or outside IR35. Associations within the NHS such as NHS Digital have found it incredibly difficult to determine contracts, leading to accusations of blanket decisions or misdeterminations. There have also been numerous legal disputes within the NHS on this, with the case of George Mantides Ltd (GML) Vs HMRC being a notable example of the health service misdetermining a doctor’s contract.

If the IR35 rules aren’t changed, then the health service will continue to struggle to plug resource gaps. While the Health Secretary Steve Barclay will undoubtedly be focusing on bringing more overseas nurses and doctors to the UK and solving structural issues around tackling the Covid backlog, more attention needs to be taken by the government in solving IR35. As shown by other sectors such as HGV drivers, if IR35 is left to fester it can have a significant long-term impact on an organisation's ability to hire and retain self-employed workers - who are crucial to the success of any business or public sector organisation.

We at IPSE are therefore calling on the government to urgently look again at the IR35 rules, for both the public and private sectors. It’s not just the NHS which is in the midst of a staffing crisis. Businesses are also desperate to fill roles and anything that can be done to free up the hiring process would be warmly welcomed. Rethinking the IR35 rules would ease the pressure on hirers, enable the NHS and private sector organisations to access the flexible talent they desperately need and provide a much-needed boost to public services and the economy.