The chancellor has confirmed plans to help get people back to work in his 2023 Budget, including the expansion of free childcare hours, ‘returnships’ for over-50s, and more support for people with disabilities or long-term health conditions.
Jeremy Hunt announced that 30 hours of free childcare for working parents in England will be expanded to cover all children over nine months old from September 2025. This will apply to all households where all adults in the household work at least 16 hours per week.
This entitlement will be introduced in phases. Parents of two-year-olds will receive 15 hours of free childcare from April 2024, while children aged nine months and over will be included from September 2024. All parents of children aged nine months to four years will be entitled to 30 hours of free childcare by September 2025.
Earlier this week he announced that the government would start paying childcare costs upfront for people claiming Universal Credit.
He said the UK has one of the most expensive childcare systems in the world, which forces many women to give up work and harms the economy.
Hunt said: “For many women, a career break becomes a career end.
“Our female participation rate is higher than average for OECD economies, but we trail top performers like Denmark and the Netherlands. If we matched Dutch levels of participation, there would be more than one million additional women working.”
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The government will change childcare ratios from 1:4 to 1:5 to help nurseries struggling with recruitment, although implementation will be voluntary.
Funding for wraparound care for school-age children will also be increased, so all parents of school-age children can drop their children off between 8am and 6pm by September 2026.
Disabilities and health conditions
To support people to remain in work for longer, the work capability assessment, which determines if an individual has a disability that impacts their ability to work, will be scrapped. The government will publish a white paper on disability benefits.
It will fund a new programme in England and Wales, called universal support, which will help people with disabilities into work. Once the scheme is fully rolled out, 50,000 people per year will be able to access help to find a suitable role.
Funding for a pilot looking into subsidies for smaller businesses to offer occupational health services will be doubled, and the government will bring forward two consultations on how to increase OH provision.
The 2023 Budget also includes a £406m plan to tackle the biggest health reasons that keep people out of work, including mental health and musculoskeletal care will also be introduced.
The DWP’s ‘mid-life MOT’ programme will be available to more Universal Credit claimants, while a digital MOT tool will be available.
Apprenticeship-style programmes, called “returnerships“, will help people aged over 50 to learn new skills and return to work, while the tax-free allowance on how much someone can save into their pension pot before they are hit with a tax charge has also been increased. The annual allowance will be increased from £40,000 to £60,000.
The tax-free allowance was a particular problem in the NHS, which has seen doctors and consultants retiring early, reducing hours, or turning down overtime for tax reasons.
Hunt said the UK expected to avoid entering a ‘technical’ recession this year, according to the Office for Budget Responsibility, with the economy forecast to grow by 1.8% next year.
Inflation is set to fall to 2.9% by end of this year. High inflation, Hunt said, has been the “root cause” of industrial disputes this year, and the government would work hard to settle industrial disputes, “but only in a way that does not fuel inflation”.
Not mentioned in Hunt’s Budget speech, a new migration package that includes adding five construction occupations to the Shortage Occupation List and expanding the range of short-term business activities that are covered under the UK’s six-month business visit visa offer.
Reaction to the 2023 Budget
Kate Shoesmith, deputy chief executive of the Recruitment and Employment Confederation, said: “The danger that labour and skills shortages could cost the UK economy up to £39 billion per year from 2024 – around the same as two Elizabeth lines – looks to have focussed minds in government ahead of this Budget.
“Moves towards a childcare system that help low- and middle-income parents and guardians get into and progress in work are long overdue and very welcome. With the number of new jobs adverts last month at a 14-month high, we need more of this kind of labour market activation support. The upfront payment for childcare for those on universal credit will certainly help.”
“Moves towards a childcare system that help low- and middle-income parents and guardians get into and progress in work are long overdue and very welcome. With the number of new jobs adverts last month at a 14-month high, we need more of this kind of labour market activation support.” – Kate Shoesmith, REC
Shoesmith said that more needed to be done to address skills gaps.
“Offering flexible skills training, by reforming the Apprenticeship Levy, is long overdue. Students preparing for the exam season face uncertainty about the future jobs market. The government needs to better equip them for the skills that are critical to our future, such as in green jobs and a green economic recovery,” she said.
“The announcements today go some way towards considering how we overcome labour shortages – but it needs to be at the very heart of the government’s growth strategy. And business must respond by putting people and staffing issues at the top of their agenda.”
Tony Wilson, director at the Institute for Employment Studies, said: “There is a lot to welcome in today’s Budget and participation review. We called for investment and reform in how we support people who are out of work and to reduce the costs of work, and in both these areas the government has announced major and positive changes.
“We need a much better approach to how we help employers to fill their jobs and make work better, but also to take forward the protections promised in the all-but-abandoned Employment Bill – in particular for insecure workers, pregnant women and those seeking more flexible work. So today feels like a missed opportunity to make work better, more secure and more rewarding.”
Dr Zara Nanu, CEO of Gapsquare, suggested the importance of childcare should be reflected in the remuneration these workers receive.
“Many daycares are struggling for staff, and how their work is valued and paid for is part of this struggle. While the chancellor has plans to provide the necessary support working parents needs, it needs to be echoed in the support providers give to their workers who will step up to help care for these children,” she said.
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Commenting on the occupational health announcement, Professor Denis Kinane, founding scientist at Cignpost Farnborough, said: “We welcome the government’s decision to launch subsidies to help small and medium-sized enterprises (SMEs) to introduce occupational health services and provide basic health appraisals.
“Ill health among working-age people is costing the British economy about £150 billion a year. That’s the equivalent of 7 per cent of GDP. Furthermore, recent statistics state that long-term sickness is leaving 1.6 million UK adults over 50 unable to work. Through employing preventative care and offering diagnostic testing in the workplace, not only can businesses reduce the chances of serious health problems from arising in the first place, but they will also profit from increased staff retention and productivity gains.”
