The Chancellor has hinted that this week’s Budget will be a ‘back-to-work’ plan that will offer more help with childcare costs and encourage the over-50s and those with disabilities back into the workforce.
Jeremy Hunt has said he wants government spending to focus on removing barriers to certain groups from moving into or returning to work, with many sectors still facing chronic labour shortages.
He said: “For many people, there are barriers preventing them from moving into work – lack of skills, a disability or health condition, or having been out of the job market for an extended period of time.
“We need to plug the skills gaps and give people the qualifications, support and incentives they need to get into work.”
Personnel Today looks at what has been revealed so far in the 2023 Budget:
Childcare
Hunt has indicated that the government will start paying childcare costs upfront for people claiming universal credit, in a move away from the current scheme where they must pay for their childcare first and then claim a refund, putting them at risk of getting into debt.
The level of support has been frozen at £646 per month per child for those claiming the benefit, and this is expected to increase. Benefit claimants will, however, be required to attend more meetings with work coaches and attend skills bootcamps to support them back into work.
2023 Budget
Managers call for ‘help to hire’ courses for over-50s recruitment
Older people set for return to work as cost of living bites pensions
Hunt said he was unlikely to announce further childcare support for families who don’t qualify for universal credit as this would be “expensive”, despite prohibitive childcare costs being a key reason many parents cannot afford to return to work.
The Early Years Alliance said it would like to see “a wider package of measures” in the 2023 budget to bring costs for all parents, while shadow education secretary Bridget Phillipson has called the current childcare system “broken”.
Older workers
Additional training places will be made available in the 2023 budget to people over 50 to teach new skills in sectors such as construction and technology, the government has said.
This comes after the Chartered Management Institute last week argued that the government should fund ‘help to hire’ bootcamps for small businesses to recruit and retain older workers.
In December, a House of Lords committee found that early retirement was the biggest driver of rising economic inactivity and labour shortages.
Pensions
Reports have also suggested that Hunt could use a “carrot and stick” approach to enticing over-50s back into work, by increasing the tax-free allowance on how much someone can save into their pension pot before they are hit with a tax charge.
This is currently £1.073 million and set to be frozen at this until 2026, but Hunt has hinted at a potential rise in this threshold, saying “we will look at the conditions necessary to make work worth your while”.
Disabled workers
The work capability assessment, which determines if an individual has a disability that impacts their ability to work and also whether they are entitled to benefits, will be scrapped.
James Taylor, of the disability charity Scope, said this was “the minimum change needed to even begin improving a welfare system that regularly fails disabled people”, while TUC general secretary Paul Nowak said it would be welcome “if it means an end to assessments that cause anxiety instead of helping people achieve their aspirations”.
What about tax and national insurance?
Some financial observers have suggested that Hunt will use the budget to set out new capital allowances for businesses to offset a rise in corporation tax, but the Treasury has remained quiet on whether it might make changes to personal tax allowances and employers’ tax and national insurance contributions.
Terry Payne, global MD of recruitment company Aspire, said tax breaks could be another route to solving labour shortages.
“To stimulate hiring and keep people employed in difficult times, employers’ National Insurance could be reduced. By lowering what is ultimately a tax on employment, businesses would be less inclined to make redundancies,” he argued. “This keeps people in jobs and paying income tax, benefitting the Treasury.”
‘Find the right balance’
Dr Maria Paola Rana, lecturer in economics and finance at the University of Salford Business School, said she hoped the Chancellor would “find the right balance between keeping the financial markets happy, providing the country with the necessary support during a cost of living crisis and ensuring economic growth in the longer term”.
Barret Kupelian, senior economist at PwC, said the government recognised that increasing levels of economic inactivity are linked to employees’ ill health.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
He said: “We can expect some measures, such as health MOT programmes, to specifically support those who can return to work and also potentially targeted welfare measures to convert part-time workers into full-time workers.”
HR Shared Services opportunities on Personnel Today
Browse more HR shared services jobs
