Budget 2009 breakdown

The so-called ‘Budget for jobs’ provided some support to create new jobs and offered some help for employers to train the long-term unemployed. But how far did the chancellor really go to put employers’ concerns at ease? The Personnel Today budget breakdown reveals all.

Skills

What didn’t happen: The Budget statement was detail-light on skills. The chancellor failed to make the flagship Train to Gain programme more flexible for larger employers, enabling them to access funding for training chunks rather than whole courses, as employment bodies had called for Nor did Darling grant tax credits for employers that train their staff, as the British Chambers of Commerce had asked. HR directors’ wishes have not been granted regarding awarding cash-back for firms that train their staff.

What did happen: Employers can claim up to £1,500 in training subsidies for each new employee they take on that has been claiming Jobseekers Allowance for six months or more, but this had already been announced. Some 50,000 traineeships in social care will be offered to the long-term unemployed.

Rating: 1 star (out of five)

Tax/regulation

What didn’t happen: The government did not commit to scrapping the rise in national insurance contributions in 2011, as the CBI, BCC and manufacturer’s body the EEF had called for. There was no mention of the Agency Workers Directive or the Equality Bill, despite business groups calling for help for employers to meet demands placed upon them, such as publishing diversity statistics when bidding for government work.

What did happen: Firms can continue to defer tax bills. For small businesses, the government will delay the increase in corporation tax. Also, loss-making companies can reclaim tax on profits in past three years  this could amount to £4,000 each year, available until 2010.

Rating: 2 stars

Green issues

What didn’t happen: The government will not provide tax credits for relevant firms to conduct research and development into greener technologies, potentially creating thousands of jobs, as the EEF had wanted. Nor did the chancellor put a figure on how many jobs would be created.

What did happen: More than £1.4bn was earmarked for support for the low-carbon jobs, including the development of a low-carbon and green manufacturing sector, and help for businesses to become more energy efficient. Funding will be set aside for local authorities to create 100,000 new jobs in CSR-related fields, 10,000 of which will be green jobs.

Rating: 2 stars

Employment

What didn’t happen: The ‘Budget for jobs’ did not go far enough, according to unions and employers’ groups. The TUC had called for a £25bn public investment programme to create jobs, yet instead, rising mass unemployment will continue to drain public finances, the union body said.

What did happen: Buried within the Budget report, public sector employers will ensure that 25% of their external recruitment is targeted at individuals without a job. A total £1.7bn funding for job centres to combat the growing number of unemployed was announced, which will also be used to save the existing flexible new deal scheme, where companies are paid to find work for long-term unemployed adults.



  • Youth unemployment: Under 25s that have been out of work for more than a year will get job or training from January, Darling said. Some 250,000 jobs will be made available in hard-to-fill vacancies, such as social care, costing £260m.
  • Infrastructure projects: The government will give £600m extra support to kick-start building on housing projects stalled by the credit crunch, which will create more jobs. However, this is far short of the £20bn called for by the British Chambers of Commerce (BCC).

Rating: 3 stars


The news they didn’t want employers to hear



  • Government HR job cuts: The chancellor said he was looking to save £15bn annually by 2013-14 from ‘efficiency savings’: in other words, thousands of HR and back-office job cuts, as well as the creation of more shared-services centres, which will lead to more redundancies as roles are duplicated.
  • Short-time working: The chancellor ignored calls from the Chartered Institute of Personnel and Development, the CBI, and manufacturers’ body the EEF to introduce subsidies for short-time working, making it harder for firms to retain key staff during the recession.
  • Statutory redundancy pay: The maximum amount used to calculate SRP will increase from £350 per week to £380 per week, increasing the cost of laying staff off for many employers.

What the experts said

John Philpott, chief economist, CIPD
“The chancellor’s scope to announce a major ‘Budget for jobs’ was limited and is unlikely to prevent unemployment rising above three million by next spring.”

Gilbert Toppin, chief executive, EEF
“Manufacturers will be disappointed that the chancellor has hit them with the double whammy of failing to provide support for short-time working while increasing the costs of redundancy.”

Richard Lambert, director-general, CBI
“We are disappointed that the chancellor had nothing to say on next year’s increase in national insurance contributions for employers, which is a tax on jobs.”

Ruth Spellman, chief executive, Chartered Management Institute
“There is a risk that by guaranteeing employment and training for those under 25, the measures will simply displace problems of re-skilling and unemployment to another part of the jobs market.”

Brendan Barber, general secretary, TUC
“[The Budget] is still some way short of what was needed to maximise the fight against unemployment and ensure that we emerge from the recession as a fairer, greener and better-balanced economy.”

Nigel Meager, director, Institute for Employment Studies
“If youth unemployment continues to rise, the amount of money per potential beneficiary may be rather small. In the longer term, it is more beneficial to find them ‘real’ jobs.”

David Coats, associate director, policy, The Work Foundation
“The £1.7bn for Jobcentre Plus to help with the extra numbers claiming benefits is sensible and the job guarantee aimed at the under-25s out of work for a year is very welcome.”

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