Work on a critical London Underground programme repairing Bakerloo Line trains has been delayed due to an exodus of agency workers in the wake of tax changes earlier this year.
Transport for London (TfL) has admitted that “a significant number” of vital employees left TfL as a result of IR35 changes, revised tax legislation affecting public sector contractors.
The IR35 reforms came into force in April, with the Treasury aiming to tackle the “high levels of non-compliance” with the current rules, and putting the onus on public bodies to operate IR35, to determine whether a worker is inside or outside of it.
TfL has slashed its number of temporary workers by nearly half in a year, stopping using those workers who operate through personal service companies. It has said this means a weekly saving of £3m as the transport body seeks to reduce its reliance on agency staff.
But concerns have been raised that it would result in a deprivation of talent in key areas, with the potential to cause setbacks to engineering projects.
And in its investment programme report for the first quarter, TfL admits that work on the London Underground rolling stock renewals programme has been pushed back because of the dearth of necessary workers.
It said a large number of critical weld employees had departed the transport body specifically due to the IR35 changes. As a result, TfL is currently working on mitigations to “reduce the impact on the project”, but the timeline for the work has been delayed by several months as a result.
Simon McVicker, director of policy at the Association of Independent Professionals and the Self-Employed (IPSE), said that with the tax rules being "incredibly complex", the situation was not surprising.
“We warned that the delays caused by blanket approaches to determining IR35 status could end up costing organisations more money, not saving it," he said.
McVicker suggested the problem was widespread, and IPSE was “well aware of many people across the public sector who have left contracts”.
An HMRC spokesperson said: “There is no evidence of a drift from the public sector and there have been no delays to IT projects due to the new rules.There is no change to contractor pay other than to make sure the correct tax is paid.”
The Bakerloo Line has the oldest trains on the network, with 1972 stock still on the track. Trains are due to be replaced as part of a hefty upgrade programme spanning the Piccadilly, Bakerloo, Central and Waterloo & City Lines.
But until then, a series of improvements are meant to be rolled out across the fleet to maintain the Bakerloo Line’s reliability.
TfL's target to complete Bakerloo Line improvements was originally April 2020, but that was then revised to November 2018 when work was started on two trains at a time.
The agency worker exodus then pushed the forecast back to July 2019, though City A.M. understands that there has been improved stability in staffing levels of late, enabling TfL to trim back the delay to April 2019, though still months back on its forecast.
A TfL spokesperson said: “The original completion date for our project to overhaul Bakerloo Line trains was April 2020. Since then we have introduced a more intensive work programme and have reduced our reliance on agency staff. This means that the work is now scheduled to be completed by April 2019 allowing passengers to benefit from quicker, more reliable journeys.”