Spring Budget 2024: A 'main event' for tech jobs, which falls flat for 'sidelined' IT contractors

An accountant to tech contractors rightly told Free-Work that Spring Budget 2024 needs to - and will likely - up the UK’s AI game.

But IT hirers and computer freelancers were also right to warn this website that UK tech won’t see the chancellor ‘fix’ IR35 on March 6.

First though, that AI upside of Spring Budget 2024.

In some techies’ eyes, the Artificial Intelligence and tech investments from Jeremy Hunt yesterday may offset the disappointment of the OPW rules staying firmly in place. 

‘AI skills of the future’

Delivered yesterday, Spring Budget 2024 contains a new £7.4million upskilling fund pilot to help SMEs develop “AI skills of the future.”

Hunt sounded like he really wants to support what the House of Commons heard is the UK’s “$1 trillion tech ecosystem,” which he said now hosts ‘twice the AI start-ups of anywhere else in Europe.’

So before 2025, the government says it will disclose how access to the UK’s “cutting-edge” public compute facilities is to be managed.

‘World-class AI products’

Despite being an uncosted, technical move, the disclosure will let “innovative” firms secure the computing power required to develop “world-class AI products,” says the Spring Budget. 

An “SME Digital Adoption Taskforce” to probe how SMEs can use productivity-boosting digital technologies will be launched.

And this taskforce will be supported by the “AI Opportunity Forum.”

‘i.AI incubator to double tech worker headcount’

Meanwhile, the government will double its internal "i.Ai incubator team” – a recruitment drive being made to obtain twice as many “talented tech professionals…who can apply their skills and expertise to…seize the benefits of AI across the public sector and civil service.”

In addition, a new piloting of AI in local council planning offices will launch, and £34m will go into the Public Sector Fraud Authority to develop AI-led solutions to tackle fraud.

Even more directly beneficial to Free-Work users, a £3.4billion tech/AI fillip for the National Health Service was signed off yesterday at Spring Budget 2024.

‘Transform use of NHS data’

This showpiece IT move from the chancellor will invariably widen the jobs pool for freelancers with health-tech experience.

“£1bn will be invested to transform the use of data to reduce time spent on unproductive administrative tasks by NHS staff,” states Spring Budget (at Box2B,p32), adding:

“Pilots [will also run] to test the ability of AI to automate back-office functions..[and] £2bn will be invested to update fragmented and outdated IT systems across the NHS.”

‘Lay the groundwork for cutting-edge technologies like AI’

Speaking yesterday to Free-Work about this tech ‘shot in the arm’ for trusts’ hospitals, surgeries and clinics was Jacob Bellas, a contractor for the National Health Service.

Helpfully, as the tech will need time to bed-in, Bellas suggested it’s a tech shot in the arm for the NHS with positive side-effects later on.

‘Disjointed use of multiple software platforms’

Indeed -- Hunt said the total £3.4bn investment in the NHS will “lay the groundwork” for cutting-edge technologies like AI.

For example, thanks to the funding injection, big improvements will be made to the NHS’s app, and 100 MRI scanners will be upgraded.

“This large investment in NHS technology at Spring Budget 2024 is to be welcomed,” Bellas began in a statement to Free-Work.

“Having worked across a large number of different trusts, I’ve seen first-hand the disjointed use of multiple software platforms.

“There are also innovative uses of AI in clinical diagnosis that are fully worthy of investment, notably ICL’s Diamonds project.

“So Spring Budget’s investment in tech and AI [across the health service] will vastly improve the experience of patients in an NHS that has been overstretched - and understaffed.”

‘AI/NHS proposals are Spring Budget’s main event for IT freelancers’

But as alluded to, it’s not just patients who stand to benefit.

“For tech freelancers, the many AI proposals, and of course the NHS tech investments are the main event of Spring Budget 2024,” says Bowers Partnership, speaking exclusively to Free-Work.

Natalie Bowers, CEO of the niche contractor staffing agency continued yesterday:

“A mega £3.4bn earmarked for a new NHS IT system? That means get the confetti out if you’re a freelance Developer; Tester, Business Analyst, or Project Manager!

“Those with a penchant for the NHS, or even just a prior health-tech role under their belt, are well-positioned for what will be - for them - a bonanza of IT contracting opportunities.”

‘Swathe of new NHS projects in need of tech expertise’

A tax advisory to technology freelancers, Integro Accounting, agrees.

“Some £3.4bn pledged for NHS productivity, specifically to bring its IT systems up to a standard that can pave the way for the ‘world’s most digitally integrated healthcare system,’ is great,” the advisory said, quoting the chancellor.

“Touted [by Hunt] as a model to then be rolled out for all public services, this could be good news for contractors in tech; potentially bringing a swathe of new projects in need of IT expertise.”

Adrian Marlowe, chair of the Association of Recruitment Consultancies told Free-Work that the NHS’s digital transformation “can only indicate growth for the IT sector.”

‘Investment by Hunt in sectors such as IT’

Yet the Association of Professional Staffing Companies isn’t so sure.

Or at least, APSCo says it believes such tech sector growth approved by Spring Budget is massively overdue.

“The [chancellor’s] planned investment in sectors such as IT – which includes the fundamental reform of the NHS systems are welcome, and will no doubt require highly-skilled IT and other non-clinical contractors.

“This is good news,” said APSCo’s global public policy director Tania Bowers, before cautioning users of Free-Work:

“But in reality, it doesn’t address the dearth of talent. In the first two months of this year alone, we’ve seen IT applications for jobs fall 46% -- and this [downward] trend has been noted for some time.

“Without enough people to deliver on these plans [from the chancellor for NHS tech investment], they will fail.”

The APSCo director reiterated: “Highly trained professionals can’t be created in the permanent workforce overnight; that’s why better support for the contract market is still needed.”

‘Reform of IR35 reform urgent’

According to the association ‘better support’ would be Hunt addressing the IR35 off-payroll rules, the reform of which Tania Bowers described yesterday as “urgent”.

But the chancellor’s Spring Budget 2024 mentions neither IR35 nor the Off-Payrolling Working rules once in its 98 pages.

Spring Budget 2024’s Top 10 takeaways for tech workers

As to what the chancellor did unveil (Spring Budget’s top 10 announcements potentially affecting Free-Work users are below), a status specialist says tech contractors who operate as a limited company will feel left out.

“While Spring Budget contains some help on NI for sole traders and umbrella contractors, they’re the only atypical workers who tangibly benefit,” said the specialist, Charlie Hemsworth.

A director at Bauer & Cottrell, Hemsworth further told Free-Work:

“Raising the VAT threshold, like promises about the umbrella industry and its regulation, arguably affects limited company contractors [but they’ll likely feel]…well; sidelined.”

Hemsworth was alluding to the following top 10 announcements of Spring Budget 2024 for tech workers:

1.   The rate of National Insurance for employees being reduced from April 6th 2024 by 2pence in the £1 from 10% to 8%.

2.  The NI saving from it being reduced to 8% benefitting employees including those of umbrella companies (but not benefitting limited company directors who tend to pay a salary under NI and whose dividends don’t attract NI), totalling £950 a year - when combined with the 2pence employee NI cut effective since Jan. 6th 2024, unveiled at Autumn Statement 2023.

3.  From April 6th 2024, the upper rate of NI remaining at 2%.

4.  Class 4 NICs for sole traders being reduced to 6% (from 9% currently).

5.  For a self-employed person with profits of £35,000 a year, this 3% reduction in Class 4 NICs will be worth approximately £673 a year (according to calculations for Free-Work by chartered accountancy firm Moore Kingston Smith).

6.  Upholding the Autumn Statement 2023 vow to axe Class 2 NICs, as the government now says it will consult beforehand (although Class 2 payments will still be permitted voluntarily).

7.  The VAT registration threshold being increased from £85,000 to £90,000 from April 1st 2024.

8.  The VAT deregistration threshold being increased from £83,000 to £88,000 (also from April 1st 2024).

9.  The government promising to provide an update on the umbrella company regulation consultation at Tax Administration and Maintenance Day 2024 (last year, this fell in late April).

10. The government vowing to publish new guidance to support workers and other businesses that use umbrella companies.

‘Afterthought’

Despite this 10-strong long list of Spring Budget 2024 proposals meant to help micro-business, an independent strategic risk consultant, Stephen Rookes, is deflated.

“[Limited company contractors] will feel like an ‘afterthought,’ in this supposedly grand economic plan of Jeremy Hunt’s announced today,” Rookes wrote last night to Free-Work, in a private LinkedIn message.

“This lack of targeted support from the chancellor is a missed opportunity to help small, [incorporated] businesses.

“[Such businesses must continue to single-handedly] manage their financial risks, including unpredictable income, tight cashflow, and the impact of inflation; all of which is continuing to squeeze margins as a result of rising operational costs and clients’ reluctance to agree increases in rates.”

‘Professional tech freelancers likely to exceed new £90,000 VAT threshold’

The boss at Strategic Risk and Compliance Consultancy (SRC), Rookes believes even the arguably most relevant announcement to PSCs (item 7, above) will be a moot point for top IT contractors.

And at the same time, as limited companies, he says their tax on profits isn’t reducing - just as there’s no HMRC respite for their dividends either.

“The increase in VAT threshold will only help very small businesses,” SRC’s boss began.

“It certainly won’t help professional freelancers who are likely to exceed the new £90,000 threshold.

“And the lack of movement in regard to reducing the corporation tax 25% main rate…[is just plain concerning].

“Likewise, it appears, that Hunt’s plan announced last year to reduce - again - the amount entrepreneurs can take tax-free from dividends to only £500, is still going ahead from April 6th 2024.”

‘Financial strain on limited company contractors’

On the eve of Spring Budget 2024, Jenner Accountants called for the 1.25% ‘covid charge’ on dividends to be cancelled out.

But now, another contractor accountancy firm, DNS Associates, confirms that thanks to the chancellor yesterday, PSCs will keep paying out for the pandemic.

“The 1.25% increase in dividend tax rates, originally intended to support the NHS, still adds financial strain on limited company contractors [even though the equivalent for employees has already been reversed],” said DNS’s Sid Agarwal.

“The government's decision to reduce NI rates while retaining the higher dividend tax rates is hypocritical.

“And it increases the burden on limited company contractors.”

‘Hunt hardly ground-breaking’

Also an accountant, Christian Hickmott, Integro Accounting’s managing director was more forgiving – yet not complimentary.

“The chancellor…largely played it safe at Spring Budget 2024 in terms of his announcements.

“A raise in the VAT threshold for example; a reduction to the higher rate of CGT [on property from 28% to 24%], and a higher threshold for the child benefit penalty. All welcome while hardly ground-breaking.”

‘Patchwork of measures that don’t add up’

Neil Carberry, CEO of the Recruitment & Employment Confederation shares the feeling that Hunt’s announcements were slightly out of sync.

“There were plenty of initiatives in the Budget today that business will welcome.

“From AI skills support in professional services, to growth support on finance for small businesses and a patchwork of sectoral measures.

“There were many sensible steps. But taken together,” he concluded yesterday, “they didn’t add up to the industrial and workforce strategy we really need.”

‘Spring Budget 2024 lacking in support for the highly skilled’

Tania Bowers of APSCo knows exactly what Carberry means.

And sounding downbeat, the global public policy director suggested the UK’s temporary techies will know too.

“While the chancellor may have begun with the suggestion that his Budget will focus on a high-wage, high-skilled economy, it… [ended up] lacking in support for the highly skilled contract market.”

Also asked by Free-Work what he makes of Spring Budget 2024, a plain-speaking Adrian Smith, of Randstad Digital - clearly not a fan of looking a gift horse in the mouth preferred: “It’s better than nothing.”