Yesterday’s autumn statement has drawn plenty of comment from the employment sector with many concerns focused on whether the measures will help tackle the skills and labour shortage and make more likely the possibility of redundancies this winter. Also, debate is growing over who will bear the brunt of the measures: working people or the better off?
Frances O’Grady, TUC general secretary:
‘Super rich let off the hook’
“Ministers have announced the bare minimum on the national minimum wage and universal credit. The basic amount of universal credit will be worth £43 a month less than in 2010.
“The super-rich have once again been let off the hook – token tweaks to tax will do little to dent their bank balances.”
The TUC pointed out that its recent analysis showed that many frontline staff, who had already endured “brutal decade” of pay cuts and pay freezes, would see the value of their pay packets shrink again if the government imposes a 2% pay settlement for 2023/24:
- Hospital porters’ real pay will be down by £1,000
- Maternity care assistants’ real pay will be down by £1,200
- Nurses’ real pay will be down by £1,500
- Paramedics’ and midwives’ real pay will be down by nearly £1,900.
Kitty Ussher, Institute of Directors:
‘Skills shortages unaddressed’
“There remains a hole in government policy around how to address adult skills shortages. We would like to see a comprehensive and systematic plan to anticipate and address labour shortages across the whole economy, not just – as he announced today – in the NHS. We are calling on government to establish an independent Shortage Occupations Agency to advise on a granular list of priority skills and to be bolder in what it will do to achieve change, including incentivising organisations to train up their staff to meet national skills shortage needs.
“Raising the productive potential of the economy through supply-side measures is the way to reduce both inflationary pressure and the pressure on government borrowing for budgets to come.”
Dr Zara Nanu, CEO, Gapsquare, XpertHR:
‘Women could be disproportionately affected’
“With salary increases yet to match the 11.1% inflation rate, all eyes are on the chancellor to see how this will be mitigated. But this is especially critical for those in the public sector, who only saw a 2% pay growth increase in May to July 2022 (compared to the private sector’s 6%). Further to this, the public sector employs two times more women than men, and so will be more affected by the projected public sector cuts.
“With this Sunday marking Equal Pay Day in the UK, it’s vital that all sectors are taking action to reduce pay gaps and work towards equal pay. The minimum wage increase to £10.42 starting with April 2023 is welcome – but do we need it sooner.”
Lee McIntyre-Hamilton, Keystone Law:
‘Unemployment could rise’
“The announcements have increased the risk of a significant rise in unemployment as more employers are likely to decide that the cost of taking on new employees and/or retaining existing employees is unsustainable given the increasing costs coming down the line. The one small positive for employers is that the chancellor has retained the £5,000 annual employment allowance which provides an exemption from employers NIC. This, at least, should proportionately offer the greatest help to smaller employers.”
Dr Carole Easton, Centre for Ageing Better:
‘We need older workers to stay employed’
“We are pleased to see the chancellor confirm working age benefits will rise with inflation.
“The government is right also to address the worrying post-pandemic rise in economic inactivity, with 50-64-year-olds making up more than 90% of the total rise in inactivity between 2019 and 2022. This creates skills shortages, limits economic growth, and increases the likelihood that many people will face financial insecurity in later life.
“The announcement of a thorough review of workforce participation by the Department for Work and Pensions is welcome but is likely to only go some way to addressing the complex factors driving older workers to leave employment. We know that current back-to-work support is inaccessible or unappealing to too many older workers.”
Alex Davies, CEO, Wealth Club:
‘Invest to avoid tax’
“The announcement is brutal for higher earners and investors. Around 250,000 more people will be paying the top rate of tax, many allowances will be frozen until 2028 and the dividend and capital gains tax allowances are being slashed. The good news is there are still plenty of perfectly legitimate ways you can reduce the tax you pay, from investing in pension and ISAs to crystallising capital gains liabilities now rather than next year. If you are prepared to take more risk, consider investing in early-stage businesses through VCTs, EIS and SEIS. Not only are they very tax efficient, but also your money goes to entrepreneurial companies, which is great for economic growth and job creation.”
Gordon McFarlane, Public Service People Managers Association:
‘HR must be a champion for wellbeing’
“While it is right to prioritise the importance of high quality, efficient public services, we need to recognise that can only be achieved by having talented public servants to deliver them. As organisations plan the changes they need to make in order to balance their budgets, HR needs to be a champion for measures which will preserve and enhance the health and wellbeing of the workforce and remind leaders that great people are what power great public services.”
Alexandra Farmer, solicitor, WorkNest:
‘Redundancies likely before April’
“With the rise in the national living wage mentioned in the budget, I expect a number of businesses will assess their workforce. Do they need all the employees they have? We could be looking at an increase in redundancies over the next few months. It’s likely businesses will want these completed ahead of the rise in April to limit costs (ie redundancy payments and notice payments would otherwise be calculated using the higher rate of pay once it comes into effect).
“It’s not an option to not pay the living wage for employees over 23. Furthermore, I expect all other rates to rise in similar fashion, albeit those rates don’t appear to have been announced yet.”
Fred Dures, founder, PayePass:
‘Wrong to swerve tax avoidance’
“The government is desperate to raise tax receipts but is doing little to stop tax avoidance schemes – dodgy operators who deliberately prevent the Treasury from collecting hundreds of millions, if not billions, in tax every year.
“The chancellor will be acutely aware of the eye-watering hole in the public purse as a direct result of tax avoidance schemes, many of which pose as umbrella companies. But for whatever reason, combatting these schemes clearly isn’t a priority for the government.
“These schemes don’t just reduce the Treasury’s tax take – they pose a huge risk to contractors, recruitment agencies and the businesses engaging temporary workers. Doing more to tackle these firms is a no brainer. Why it’s being overlooked is beyond me.”
Dr Tony Syme, University of Salford Business School:
‘Austerity is wrong approach’
“While inflation runs eight points higher than yields on UK government bonds, there are already the processes in place to reduce the debt ratio without austerity. Over the coming years though, as inflation should return to ‘normal’ levels, the focus should be on how to raise productivity and living standards in the UK.
“UK productivity growth was extremely low in the 2010s by any standard and austerity was a major contributory factor. A return to austerity will only make that problem worse and, as the above relationship show, will make financial sustainability even harder to achieve.”