UK Government to promote direct employment in Construction Industries

Posted on 05 February 2021

The government is beginning to consider how they can encourage contractors to increase direct employment efforts, decreasing the reliance on self-employed workers.

The construction industry is a vital part of the UK economy, providing jobs, infrastructure, and buildings that support the country's growth and development. The industry has been heavily reliant on self-employed workers, which presents challenges in terms of safety, skills development, and investment in human capital.

Fergus Harradence, the Deputy Director of Construction at the Department for Business, Energy and Industrial Strategy, spoke about the government's efforts to increase direct employment in the construction industry. He noted how the government will aim to draw on past successes, such as the Olympic Development Authority, to promote more direct employment. By doing so, the industry can improve skills, safety, and well-being, as firms view their employees as assets.

It was also acknowledged that current business models pose challenges to this goal. Many contractors prefer to use self-employed workers, as it offers them greater flexibility and lower overhead costs. It was emphasised that the need for contractors to have more confidence in the pipeline of work and the strength of the broader economy is vital, if they are to increase direct employment.

Tax changes known as IR35, set to come into force in April, are expected to make self-employment less attractive in the construction industry. This policy could help shift the model towards more direct employment, which would be beneficial in the face of an exacerbated skills crisis.

Despite these challenges, the government remains committed to promoting direct employment in the construction industry. It is not a significant feature of the recently published Construction Playbook, which provides procurement guidance for the civil service and aims to shape behaviours in the industry. Increasing direct employment is a long-term goal that will require sustained efforts and changes in the industry's practices.

Firms have been urged to bid for public sector jobs at realistic costs and demonstrate their ability to create social value and reduce carbon emissions to achieve this goal. By doing so, the industry can move away from short-term cash flow management and towards investment, innovation, and sustainable productivity. Ultimately, the government aims to create a construction industry that drives investment, improves productivity and performance, and consistently delivers high-quality outputs for its clients by becoming more financially resilient and sustainable.

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