Chancellor Alistair Darling’s Budget plans for business

When chancellor Alistair Darling makes his Budget speech tomorrow (12 March), it will be the first time in a decade that anyone other than Gordon Brown has stepped up to unveil the contents of the famous battered red briefcase.

But what measures affecting employers are likely to be announced, and what would leading business groups like to see from this year’s annoucement?

Welcome breather

Gerwyn Davies, public policy adviser the Chartered Institute of Personnel and Development, believes HR professionals could see little that directly affects their day-to-day jobs – an outcome he thinks many will appreciate.

“This Budget should come as a welcome breather for employers, who in recent times have had their hands full with a raft of employment legislation emanating from Europe,” he said.

But Davies anticipates little or no announcements around the skills agenda, as there has already been a concentrated focus on this area over the past year.

“We are very much into a period where initiatives following the Leitch Review are under way and bringing in results,” he said.

However, he was hoping for some news about extra investment into public service reform, specifically on making extra cash available to tackle absenteeism in the public sector. With the number of days public sector employees take off work much higher compared with the private sector, he said there was need for investment in occupational health advisers in this area.

Employee assistance

There have also been some murmurings that tax exemptions on employee assistance programmes may be done away with, but the CIPD opposed this and has strongly supported the lobbying carried out by the Employee Assistance Professionals Association to resist any such move.

However, according to Inez Anderson, a corporate tax director at accountants Smith & Williamson, there is a good chance we could see the chancellor attacking employer-provided benefits, which have previously been exempt from tax – for example, the Home Computer Initiative and changes relating to mobile phones.

She said: “We are already aware there is an ongoing review of employee assistance programmes, and that the government intended to introduce legislation last year to tax employer-provided health checks. These changes would not bring in significant additional cash, but every penny counts.”

Green taxes

It will be interesting to see how far the Treasury wants to push the green tax agenda. Most commentators expect some measures aimed at reducing or offsetting carbon emissions, but whether this stretches as far as taxes on company cars or workplace car parks is widely regarded as unlikely.

The theme of a minimalist Budget is continued by the CBI, which called on Darling to produce a ‘slimmed down’ document. The employers’ group said Darling had “virtually no room for manoeuvre”, either to raise taxes to repair the gaping hole in public finances, or to cut them to stimulate the economy as it faces a sharp slowdown.


Professor Patrick Dunleavy, chair of the Public Policy Group at the London School of Economics, said he believed the Treasury would remain tough on public sector pay and strive to keep all pay deals hovering around the 2% mark. “This will help control inflation and public finances and, with an election most likely to happen in 2009, the government will want to start building a war chest – so it won’t be splashing out,” he added.

TUC wish list

The TUC, meanwhile, has called on the chancellor to splash the cash and increase the weekly limit on statutory redundancy pay from £330 to £500. Redundancy payouts are calculated according to an individual’s wage, but there is a statutory maximum limit to what counts as a week’s pay – currently £330. The TUC said this was below most people’s earnings.

Other measures on its wish-list include: a halt to the government’s efficiency programme, which has seen tens of thousands of job cuts across the Civil Service increased funding to improve the enforcement of workers’ rights fully funded equal pay reviews and a new approach to public sector pay.

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