You are here: Home / News & Resources / Chairman's View

Full employment: Is this really what the construction industry wants – or needs?

David Jackson | 13th May 2014

Hudson Contract Chairman David Jackson takes a trenchant view

A Hudson Contract client who’s a specialist contractor recently told me that one of the main contractors he works for has just gone bust, owing his firm £80,000.

It’s something every seasoned construction owner has to deal with from time to time, and after expressing my sympathy, we started to discuss the wider issues.

The client had eighteen freelance operatives on the site and he had to tell them to hold off for a week or two whilst he reorganised his workload. Fortunately, he has a good order book and can offer the lads more work. And of course, he’ll pay them for what they produced by way of measured works, so they’re not personally out of pocket.

“They all understood and cheerfully nipped off to work somewhere else,” our client told me. “If they’d been on the books,” he added, “I’d have had them sat in the yard for a fortnight and had to pay them for doing nothing.”

I realised that in just a couple of sentences, our client had made an important point that some government departments fail to understand.

Let me explain:

In their recent drive to put 200,000 construction workers on ‘on someone’s books as an employee’, HMRC – along with trade unions and some so-called tax experts – say they believe full employment is ‘what the industry wants.’

Fact? Or biased opinion from those who seek to control the construction industry?

The fact is, entrepreneurs take risks in creating businesses. BIG risks. Financial risks. To start a business takes guts, determination and sheer hard graft.

Setting up a construction company creates employment opportunities for others, and you have to accept some setbacks including financial losses. But one way to manage your way through the minefield of running your own business is to de-risk your contracts. Freelance builders enable entrepreneurs to do just that, giving owners the flexibility to thrive in good times and survive when the economy – or the business itself – takes a hit.

Here’s another example of what I mean:

We have a client that specialises in ceiling and partition installation. They employ two people in the office, three PAYE workers and two apprentices.

The firm needs an average turnover of £50k a month to break even – and during the past six months, actual turnover figures have been £54k, £38k, £33k, £48k, £103k and £61k.

“Most of our clients request we are on site within a fortnight,” the owner tells me, “and given our state of confidence for the future; we dare not let them down.

“Without the pool of self-employed operatives we have accumulated over our thirty years in business and contracted through Hudson, it would have been impossible to ride the spikes in turnover.

“It is these spikes that get us through the troughs. And my fear is that the new legislation will destroy smaller businesses like mine that offer an immediate turnaround service.”

The freelance builders that work for firms like these, do so with their eyes wide open, knowing they can pick and choose their jobs, and cash in handsomely on the spikes, by increasing their earnings in line with their own hard work, and their skills.

Meanwhile, the construction union UCATT continues to paint a picture of self-employment as rank exploitation of the working man, and talks of a ‘denial of rights through coercion into self-employment’.

Mind you, Jerry Swain, UCATT’s Regional Secretary said at an annual conference, that there are ‘two willing partners’ involved in an agreement to work on a freelance self-employed basis, before asking the telling question: “How do you tell someone on £1,000 a week on a site in London that he should go on the cards and take a pay cut?”

It’s an opinion that seems not to be shared by others at UCATT. But I know our client – the man who has lost £80,000 worth of revenue because one of his clients is now in administration – would wholeheartedly agree.

How safe are your current self-employment contracts?

Get an instant contract health check now

Do you make payments under CIS? If so, are you certain your self-employment contracts will withstand scrutiny under the latest HMRC rules? Take this quick, confidential quiz and see if you’re at risk.

Evaluate your risk now Contact us