PCG 5: IPSE is born
- 11 Jan 2018
On Tuesday, 11 May 2010, engulfed by a cacophony of noise and light from the mass ranks of assembled journalists and photographers, David Cameron walked through the front door of 10 Downing Street as the UK’s first Conservative Prime Minister since 1997.
Fifteen miles away from the hustle and bustle of Westminster, in an office in sleepy Heathrow Boulevard, staff and directors of PCG were – with a wave of optimism – formulating plans and discussing the ramifications of the General Election result.
The excitement was not necessarily at the outcome, however – which was widely expected to result in a Conservative Government – but at what the result meant.
For the first time since it was introduced in 1999, IR35 existed under a Conservative-led coalition Government who, alongside the Liberal Democrats, had been vociferous and longstanding critics of Labour’s tax avoidance legislation.
“We felt a wave of optimism, as did the whole of the contracting community,” then-Director James Collings said of the change of government.
“Whilst in opposition, the Conservatives and Lib Dems had consistently berated the fact that IR35 was there. We thought: ‘Great! We’ve got the Conservatives. OK, they’re in a coalition with the Lib Dems. But hey, the Lib Dems have been the most vocal against this tax law. So brilliant, now we can get it struck down.’”
As it became apparent that a Labour victory was unlikely in the months prior to the General Election, PCG’s Head of Public Affairs Simon McVicker had been targeting opposition politicians and ministers.
Since joining the organisation in 2009, McVicker – with a career in politics and external affairs – had implemented a different approach to lobbying.
Gone was the confrontational, aggressive and loud methods typical of PCG’s embryonic years; replaced instead by careful, measured and evidence-based lobbying preferred by established and professional business groups.
“PCG wanted IR35 abolished completely and had been quite militant about it,” McVicker said. “But it was all very undisciplined; it needed to be professionalised.
“I was being given a blank canvass and I thought, it could be an interesting challenge, as long as I was given the opportunity to try a new approach. I thought John Brazier (Managing Director) would give me the support.
“Then I spoke to Chris Bryce and Julie Stewart - the chairman and vice-chairman at the time - and, not only would I have the support, but I thought that they had ambition to do something with this organisation.
“The big hope was that the incoming Conservative Government who had opposed IR35 when it was brought in, would abolish it.
“In my early days much of the time was taken up by talking to the Conservative opposition because we felt there was no chance of Labour changing their mind and abolishing it.
Among the Conservatives, the then Shadow Chief Secretary to the Treasury Philip Hammond had expressed a particular dislike of IR35 over a number of years.
McVicker and Bryce met with both Hammond and David Gauke, the Exchequer Secretary, and were left reassured that a Conservative victory could spell the end of IR35, 11 years after its inception.
As Thursday 6 May arrived and the UK headed to the ballot boxes, exit polls revealed the Conservatives were short of the 326 seats required to form a majority government.
There was a genuine hope that when the Conservatives won the election, IR35 would be gone
However, with the help of Nick Clegg and the Liberal Democrats, who had opposed IR35 in their manifesto, the Conservatives were able to form a coalition government that still filled PCG and the wider contracting community with promise.
“There was a genuine hope,” Bryce said, “that when the Conservatives won the election, IR35 would be gone. The Liberal Democrats said similarly encouraging things in their manifesto, so we were very reassured.”
But once the Conservatives occupied Downing Street, something unexpected happened.
The hope quickly dissipated and was replaced by an unpleasant realism, because, almost immediately, within weeks of coming into office, the Government had completely changed their mind.
“We went to see David Gauke a couple of times and it seemed like he had very rapidly been persuaded by HMRC and the Treasury that IR35 was absolutely necessary and, in fact, should be rigorously enforced and to the best of his ability, enhanced,” Bryce said.
“From that point onwards, there was very little chance of us ever making headway against IR35.”
In stopping short of abolishing IR35 outright, the Government announced the creation of the Office of Tax Simplification (OTS). The Government asked the OTS to look at the future of IR35.
The OTS came up with three potential options: to abolish it entirely, to improve the administration, or to implement business entity tests. The Government decided, after a lot of pressure from HMRC, not to abolish IR35 but to improve its administration.
To achieve this, the IR35 Forum was created and convened on a bi-monthly basis. It was intended to provide a platform for stakeholders and business groups to voice concerns but to Bryce, McVicker and Stewart who attended the meetings, it had become apparent that the forum would never take real action.
“It was clear to me the moment the Government decided this, that was the end of any hope of getting rid of it,” McVicker added. “If the Lib Dems and Conservatives together decided that, then the three main parties in British politics had decided IR35 was necessary.”
In the 2011 Budget, the Government announced that IR35 would be retained “as abolition would put substantial revenue at risk,” though its administration would be improved.
This realisation was a body blow to the organisation. At a strategy review in 2008, PCG had identified two aims: establish a seat at the top table of policy debate and become proactive in lobbying issues before they became law.
The invitation to the IR35 Forum, which would have been inconceivable in previous years, was progress in some respect, but IR35 was going nowhere. So, if the organisation wanted to achieve its aim of striking down policies before they became law, they would need other issues to challenge, problems to overcome.
With the flagship policy unlikely to be defeated, the time had come to look to the future with a comprehensive and potentially radical new strategy review.
“I felt very strongly that, as an organisation, we needed to take a very hard look at ourselves and decide what direction to go in,” Bryce continued.
“At that stage we’d been around for around 13 years and we were still hugely focussed on IR35 and contractor taxation. I felt that it had the potential to be a dead-end street. So, I asked Simon (McVicker), Gary Sharp (Director) and a few others to hold a deep-dive strategic review.”
At that point we realised there was no point honing our entire organisation around this subset of contractors
McVicker, Sharp and Chris Bell were tasked with taking the organisation in a potentially significant and radical change of direction.
To formulate a 360-degree view of the organisation – from the inside looking out, and the outside looking in – George Levvy, a professional strategy adviser, was brought in to help guide the review, challenge the status quo and advise from an impartial position.
Levvy had successfully developed strategy for many other non-profit organisations, and set about facilitating a discussion to identify the problems the organisation needed to solve, and how to formulate solutions.
He also sought input from external stakeholders to determine what people thought of the organisation and its standing within the policy world.
“During one strategy session there was an amusing instance where we’d been talking about what freelancers need,” Sharp said.
“How did they work? What are the pain points? How can we make life easier for them? Throughout the whole process, Chris Bell and I had been thinking of contractors like him and I whereas Simon was thinking of the wider concept of freelancers and the self-employed.
“What we realised was, even though we were talking about two entirely separate and distinct groups, 90 per cent of what we were talking about applied equally. At that point we realised there was no point honing our entire organisation around this subset of contractors.
“What we were doing was equally valid across the whole freelance market, so we should expand our scope to include anyone who considers themselves a freelancer.
“As a bigger organisation with more members, we would get more respect and would be listened to more. In the end, we’d be able to do more for our membership than we could if we limited our scope to purely the core members. As a strategy, it is much more effective to be bigger and inclusive than it is to be a single-issue organisation.”
The core membership – those affected by IR35 – would remain a crucial part of the organisation, but a broader focus of members and policies had been identified. Creatives, students, construction workers, locum doctors and nurses – all part of a vast self-employed workforce to represent and support.
Prior to the strategy review, Stewart had stepped down from the board and her role as deputy-chairman. After a year sitting on the Consultative Council, following the completion of the review, she returned as Chairman in 2013 and Bryce became interim CEO following the departure of Brazier.
During the election process Bryce updated Stewart with the progress of the strategy.
“He wanted to ensure that I was happy with running for chairman in the knowledge that decisions had been taken,” she said. “So, when I started as chairman in 2013 I was fully aware of all the developments, and it was up to me to implement them.”
Westminster was at the heart of everything, it was relevant, and we attracted a younger, more vibrant staff
Part of the strategy review had been identifying hindrances; one of the most significant being the offices in Heathrow Boulevard, which were over an hour from Westminster. With the end of the lease approaching, the most pressing need had become relocation.
The organisation was struggling to attract high quality staff to an undesirable location while the distance from Westminster made effective, reactive and prominent lobbying very difficult.
No MP’s had ever travelled out to Heathrow for meetings, and a trip into central London was time consuming. A satellite office had been purchased opposite St James Park station for McVicker to use to access Westminster.
To a degree, and for a time, it served its purpose, but the Board had decided a new, permanent office in central London was essential.
“We had realised that a small satellite office wasn’t really cutting it,” Collings said.
“From the windows outside Heathrow Boulevard, you could see the diggers levelling the fields ready for the third runway, so we knew time was limited. It was the wastelands out there and wasn’t the ideal place to be.
“We knew that being outside central London was affecting our recruitment, because there were people who really wanted to work for us, but when they asked where we were based, their response would always be like ‘what? Really?’.
“That impacted our ability to recruit quality people and build a team to deliver our goals: a seat at the top table, membership growth etc. These things can only happen when you have the staff out there actually making it happen. There’s no point the board having grand old ideas if you don’t have the people or resources to go follow it up.”
So, in June 2013, PCG relocated to a new home just minutes from the corridors of Westminster.
“It was very exciting, and this organisation changed completely when we got here,” McVicker said.
“There was such a different feel to the organisation. Heathrow was sleepy, lacked energy and seemed distant from events. Whereas Westminster was at the heart of everything, it was relevant, and we attracted a younger, more vibrant staff.
“I went on holiday in 2013 and when I came back I didn’t know half the people in the office! There were so many young faces and it felt completely different.”
Once the move had been finalised, the organisation began a Governance review to ensure it was still fit for purpose. Directors had only ever been elected on one-year terms and, according to Stewart: “It was essential to extended this to a minimum of two years. If you’re going to have a growing organisation, you can’t have its fortunes decided on the whim of having directors elected every year.
“The Governance Review eventually decided upon three-year terms for both the CC and the board, and that the board should also have two appointed Non-Executive Directors who were specialists in their field and filled a knowledge and skills void on the Board.”
“Simon had brought us on in leaps and bounds since we’d moved to Westminster. But a rebrand was desperately needed, and that was part of the Governance review.”
With a broader focus, wider representation and a higher profile, the name PCG had become inaccurate, redundant and – worryingly for many on the Board of Directors – tarred.
PCG and the contractors it represented carried an ambiguity, but it also echoed the history of an organisation that had gained its notoriety from confrontational and aggressive methods. A history that had alienated many.
The rebrand extended us from just the core membership and into the whole self-employed world. We suddenly had a new vision, new momentum
To tap into a new market and start afresh with new relationships and fresh impetus, the need for a rebrand had become abundantly necessary.
“When Chris became CEO in 2013, there were a lot of things he wanted to do, which I agreed with him on,” McVicker said.
“We were speaking with a lot of people about a rebrand and they were telling us we had to do it because PCG didn’t appeal to anybody. The name didn’t resonate. We had a visit from Ken Phillips (Executive Director of Independent Contractors Australia) and he told me what they were doing in Australia and said that we had to own the term self-employment.
“Self-employment is understood by the media, by politicians, by ordinary people. If you own that, you’ll become the go-to organisation. It was like a eureka moment because what he was saying seemed so obvious.
“Subtly, we decided to start using self-employment instead of contractor. Immediately the press coverage started to improve – people were discussing us. If you rang up a journalist, they knew what self-employment was, but they didn’t know what a contractor was.”
Award-winning advertising and branding agency Saatchi Masius was brought in to carry out the re-brand. The agency worked with the staff, board and focus groups to understand the organisation’s past, present and future before unveiling a list of options.
Bryce took the options to the Board and, after much deliberation, a decision was made.
“I put it to the board meeting in May and eventually we settled on a name,” Bryce said. “They said to change it by September! That was very ambitious. A complete rebrand like that in less than six months is unheard of. However, we did it.”
And so, after 15 years, on 1 September 2014, PCG, the membership organisation for freelancers, announced it was rebranding in order to represent all independent professionals working in the UK’s booming self-employed sector.
McVicker added: “The change from PCG was not just a change of name but it was a change of culture, a change of attitude. I liked the new name and instantly felt far more ownership of it than I did PCG.
“That, following the move to Westminster, made us really feel like we were motoring. The rebrand extended us from just the core membership and into the whole self-employed world. We suddenly had a new vision, new momentum.”
IPSE was born.
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