The IR35 reform appears to be having an impact on the public sector contractor market.
A survey from the Association of Professional Staffing Companies (APSCo) revealed 70 per cent of recruiters has seen a downturn in contractor placements within the public sector since April.
The poll of 1,494 recruiters also revealed since the changes that 46 per cent have seen rates increase by more than 15 per cent.
“As we feared, it seems that these changes have had an adverse effect on the supply of contractors to the public sector,” said Samantha Hurley, director of operations at APSCo.
“The increase in rates that has been noted can be attributed to two factors: the scarcity of resource created by candidates moving into the private sector, and the market adjusting by passing on additional tax and national insurance costs to the public sector client.”
Reforms introduced early in the year mean public sector employers are responsible for deciding the employment status of contractors they use and this has impacted on how they are taxed.
In addition, APSCo’s research discovered 78 per cent believe extending the reforms to the private sector could have a significant impact on contractor supply and demand.