In London at least, my impression is the demand is so great that many places are desperate enough to hire anyone with x years of tech (usually Java) on their CV, with usually just a screening by a non technical manager. It could be this is changing though, especially with increased supply after the recent IR35 changes in the public sector. And usually, these are not the kind of places good contractors want to work anyways.

I don't think most people are suggesting that these former employees turned contractors would be rubbish. Just that they aren't willing to put up with the BS of "going the extra mile" or whatever without being paid for it.