Parliament Discusses Need to Regulate Umbrella Sector

Last night Parliament discussed potential amendments to the Finance Bill, including proposals to “curb or kill” umbrella companies.  Amendments to the Finance Bill were tabled by David Davis MP and Sir Iain Duncan-Smith MP which would effectively give the government a year to decide how to regulate the umbrella sector.  The proposals also meant that inaction would mean umbrellas being required to discontinue in their current format, evolving into outsourced payment bureau model by 6 April 2022.

Speeches & Support from MPs

There were brilliant speeches by both David Davis and Sir Iain Duncan-Smith, along with supportive comments from MPs in all political parties including Alison Thewliss (SNP), John Spellar (Labour), and Sammy Wilson (DUP).  They had all been very well briefed with a solid understanding of the issues, including that it affects people in all sectors and at all paygrades.  Attention was drawn to the relationship with the recruitment sector:  “The problem is that the worse the level of malpractice, the greater the rewards and kickbacks for the agencies, reducing the revenue for the Treasury.” 

Similarity to Loan Charge

The parallels with loan charge scandal were clearly stated by Sir Iain Duncan Smith: “We should think of what will happen if it goes much further. We should think of the loan charge and the huge human problems that were caused by that and the attempt by the Treasury to use retrospective legislation to grab money back. Who got hammered in all that? Not the organisations that were doing these things, but the individuals who were led to believe they were in the right set-up. It is always going to be them who get hammered. I thought the purpose of Government was to protect the vulnerable and deal with those who are abusing them.”

Call to action

The conclusion to David Davis’ speech was a powerful call to action: “The Treasury and HMRC’s confused approach to the whole sector enabled the shameful loan charge scandal with thousands of people in financial ruin, families torn apart and seven people so trapped that they tragically ended their own lives. Failure to act on the mis-selling and illegitimate operation of umbrella schemes risks another scandal on a similar scale. That cannot be allowed to happen. We have a duty to act. Just as our key workers have protected us over the past year, it is time we started protecting them.”

What next?

The proposed amendments and new clause were not selected to be voted on, however the fact that such a wide ranging debate took place is testament to the increasing awareness amongst MPs that the government needs to intervene.  The Treasury is currently considering the merits of a well-written policy proposal which outlines how regulation might be achieved, and the increasing volume of voices calling for action must surely make it more likely to happen.

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