HR professionals will already be familiar with the headlines from yesterday’s Spring Budget – that chancellor Jeremy Hunt announced a second 2p cut to employee national insurance contributions, from 10% to 8%.
While on the surface the cuts mean a better wage packet for millions of working individuals, what do yesterday’s fiscal announcements really mean for employment, skills and the labour market?
Budget 2024 reactions from HR, tax and employment experts have been mixed, varying from “bland and beige” to “disappointing” and one even describing the raucous atmosphere in the House of Commons as a “ruckus”, adding that they have “attended better behaved toddler parties”.
‘Deeply cynical’
Many observers feared that yesterday’s offering might be an attempt at winning over voters in what is likely to be an election year.
Chief among these was TUC general secretary Paul Nowak, who called the budget “deeply cynical”.
He said: “The chancellor knows he won’t have to live with the consequences of the savage spending cuts he’s already imposed across large parts of our public services.
Budget announcments
“At a time when our schools, hospitals and councils are on their knees, we needed a serious plan to rebuild Britain. All we got was wishful thinking on productivity and pre-election gimmicks.
“This was the last roll of the dice from a desperate government that has presided over 14 years of economic failure on growth and living standards. The Tories’ record speaks for itself.
“The worst real wage squeeze in modern history. The worst growth since the Great Depression. Crumbling classrooms and record NHS waiting lists. The country deserves so much better.”
Nowak added that the NI cut would be unlikely to ease the financial pressure on families. “No-one wants tax cuts at the expense of their local services,” he said. “We need a proper long-term plan to raise wages for everyone and to restore public services.”
‘Hit the post’
Neil Carberry, chief executive of the Recruitment and Employment Confederation, said the chancellor had “hit the post” if his aim was to stimulate investment and drive growth.
“There were plenty of initiatives in the budget that business will welcome. From AI skills support in professional services, to growth support on finance for small businesses and a patchwork of sectoral measures,” he said.
“There were many sensible steps. But taken together – they didn’t add up to the industrial and workforce strategy we really need.”
Carberry added that the cut to NI contributions was the “right call” and would help the lower paid, but said employers could themselves do with some support.
He said: “REC members agree with the chancellor that taxes on labour are too high – but would have welcomed the acknowledgement that this is also true for businesses, many of whom are really struggling with a cauldron of rising costs. From a minimum wage that has risen 20% in two years to inflation and higher business taxes – there needed to be more to really get investment going.”
Public sector skills investment
Reacting to Hunt’s announcement that billions would be invested in improving public sector efficiency, Anthony Painter, director of the Chartered Management Institute said this would not be realised “unless we match investment in high-quality management skills with consistent public and private investment”.
“Unless we begin to prioritise management capability we will not be able to close productivity gaps with the leading industrial nations,” he said, pointing to recent CMI research showing how the UK suffers from chronic underinvestment in management and leadership training.
“The pressures facing public services, and in particular the NHS, are having an outsized impact on UK workplaces. Absenteeism, lost productivity, and growing uncertainty about the ability to access care when people need it are contributing to a worrying picture for both employers and employees,” he added.
“AI and other tech innovation is so important and the investments announced today in that regard are welcome. So is having management and leadership able to maximise their impact and we need to hear more about plans there.
“If there’s a theme we need to adopt far more decisively in the coming years, it’s one of determined focus on high-level skills and transformative investment. Elements of this were visible today and in the Autumn Statement. But we still have much, much further to go.
Ben Willmott, head of policy at the CIPD, agreed that the budget was lacking on investment in skills.
“There is a real and urgent need for a workforce plan for the UK to raise employer investment in skills and support workers’ wellbeing and participation in the labour market,” he said.
“We urgently need the government to heed the long-standing calls of employers and business groups and reform the apprenticeship levy to reverse the collapse in the use of apprenticeships in SMEs and among young people since 2017.
“This vital reset would help boost training and development in all its forms and ensure that more apprenticeship opportunities go to the group that most need and benefit from them, young people.”
Over-50s support lacking
Dr Carole Easton, chief executive of the Centre for Ageing Better, was disappointed that the chancellor did not expand on support for the over-50s to return to or stay in work that was announced in last year’s budget.
She said: “This would have been invaluable in tackling the labour and skills shortage our economy needs resolving. In reality, this was not what the chancellor delivered and the risks to our economy of an unsupported and under-utilised workforce are greater than ever.
“Overhaul of employment support for jobseekers aged over 50 is desperately needed as outcomes are so poor at present but we’re still waiting to hear how older workers specifically will be served by promised investment in these programmes.”
“We have to do better by our older workers – for the sake of all workers who will approach retirement in the coming decades as well as for the sake of businesses and the wider economy.
“We need a national, targeted programme of 50 Plus employment support and clear targets to drive up performance across the board – to ensure that workers in their 50s, 60s and beyond are given fair opportunities to contribute and thrive in the workplace.”
Childcare boost
As with last year’s budget, childcare was high on the agenda in a bid to support more workers with caring responsibilities back into the workforce.
Ronni Zehavi, co-founder and CEO at HR software company HiBob, welcomed the news that the government would support childcare providers to cover extended free hours.
But he added that this focus needed to be sustained, commenting: “Our research finds that in the UK, childcare isn’t just creating a gap in our workforce, it is also creating a divide, as 78% of child free workers feel they have to work additional hours to compensate for working parents.
“Further, with women taking on a disproportionate share of unpaid caregiving, one in five working mothers are considering leaving their job due to childcare issues. It’s clear the issue of childcare is thwarting the UK’s economic potential, leaving women at risk of being excluded and overlooked in the workplace.
“Women’s issues need to remain on the agenda – and now, businesses need to take action to support women in the workplace, alongside the government, to level the playing field.”
Long-term absence
A health insurance company felt the budget lacked measures to support people experiencing long-term sickness absence, despite announcing its Back to Work plan last year.
Clare Lusted, head of product proposition at Unum UK, said: “The chancellor dedicated £2.5 billion to this plan to expand employment support for the long-term sick and disabled. Executed properly, we believe this will help people experiencing ill health to return to health and to the economic, social and wellbeing benefits of work.”
Lusted added that while she welcomed the continued commitment to the Back to Work plan, the government needed to offer employers more direct support to help their own workers return to productivity.
“Our feeling is that businesses are better placed to know what their workers need, being closer to them, and so would benefit from reforms that give employers discretion to provide solutions that best suit their people,” she added.
“Ultimately, employees still power the UK’s economy. Increased productivity is a fantastic end goal for the country and its workers, but productivity cannot be achieved in a vacuum. It requires support for employees to ensure their health and happiness, which in turn helps people thrive and businesses and the economy prosper.”
Budget banter
Ben Chaplin, managing director at Croner-i, thought “the banter was better than the budget”, saying the announcement lacked substance and made “big claims … that were already known”.
He said: “Extending the childcare regime and reviewing child benefit limits on a household basis rather than individual basis (but not until 2026!) combined with increasing the limit from £50k to £60k will hopefully encourage more people into the workforce.
“Overall many will feel that today’s budget is a bit of an anti-climax with no real changes to the status quo.”
On the subject of banter, Gerard O’Hare, legal director at WorkNest, was intrigued by what he calls “Mr Hunt’s casual fat-shaming of Keir Starmer”.
He is referring to Hunt picking up on recent comments from Labour peer Peter Mandelson, who suggested the opposition leader could “shed a few pounds” to improve his presentation in the run-up to a general election.
O’Hare said the jibe was “clearly unscripted and unwise”, adding: “Fat shaming in the workplace poses significant risks for employers from impacting employee mental health and morale, to grievances and even tribunal claims.
“Banter is often used as justification for juvenile behaviour, but is no excuse nor is it a get out of jail free card.
“Regardless of intent, comments or actions that target an individual’s weight create a hostile work environment that can get employers into hot water. Perhaps Mr Hunt should stick to the script next time.”
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