Rachel Reeves has announced the details of the first governmental spending review since 2021, providing much-needed funds for the NHS, schools and infrastructure, but what does it mean for jobs, skills and employment?
The chancellor said the government is making a “record” investment in the NHS “increasing real-terms, day-to-day spending by 3% per year for every single year” of the four-year plan, reaching £226bn by 2029.
Funding for schools in England will increase by 0.4% in real terms on average over the next three years, reaching £69.5bn.
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Home Office spending will go down by 1.7% in real terms over the next three years, but police “spending power” will increase on average by 2.3% per year.
But for all the detail that is provided in the Spending Review document, commentators in the employment field identified some of the gaps in the government’s plans.
Ben Willmott, head of public policy at the CIPD, said: “There’s a danger the plans overlook some of the biggest challenges facing businesses across all sectors of the economy. These include the need to improve the skills and health of the workforce and accelerate the wider adoption of new technology and management best practice.
“Tackling these challenges requires a joined-up workforce strategy for the UK, underpinned by improvements to policy around skills, business support, employment relations, occupational health and labour market enforcement.”
He added that there’s an urgent need for Skills England to set out how it will support employers to invest more in apprenticeships and upskill their existing staff.
“There was also a conspicuous absence in the Chancellor’s speech of any additional resources for Acas or the labour market enforcement system to support the effective implementation of the raft of new employment regulation facing businesses,” said Willmott. “Smaller businesses in particular will need access to support and clarity on when new regulations are coming into force to ensure they don’t fall foul of the new laws.”
‘Little on workforce’
Neil Carberry, chief executive of the Recruitment and Employment Confederation, said: “The government is correct when it says that only growth can right the fiscal balance and fund our public services. You can’t tax businesses into growth – especially when those firms need to be investing. Any spending commitments made today rest on the backs of the future success of British business.
“Today’s announcements get us halfway along the track. Investment in transport has a big effect, boosting workforce mobility, bridging skills gaps, and driving productivity. Commitments to long-term energy, technology and green investments matter because they give firms certainty to invest behind stable government plans.”
He added: “The missing piece of the puzzle in all this, is delivery. Despite talking about the need for a deep pool of talent, there was little on workforce today – yet we know this is the critical part of getting where we need to go without further tax rises. And not just on skills – where the prospect of apprenticeship levy reform is exciting but we await practical details. The upcoming Industrial Strategy is the opportunity to do this – dealing with workforce development as an economic essential, not only an employment rights issue.”
Reeves said young people needed skills to succeed, and pledged £1.2bn by 2029 for upskilling, saying this would “support more than a million young people into training and apprenticeships so that their potential, their drive and their ambition is frustrated no longer”.
This includes funds to help more than 1.3 million 16 to 19-year-olds access high-quality training.
Stephen Evans, chief executive at Learning and Work Institute, said he was pleased to see the extra funding, “yet there doesn’t appear to be much, if any, extra funding for adults to improve their skills. Whereas we know that when adults learn, our society and economy thrive.
“The Chancellor faces tough economic and fiscal conditions and is right to prioritise. That raises the importance of broader action to raise employer investment in training, and to better join up programmes so they have a bigger impact. Eighty per cent of our 2035 workforce have already left compulsory education, and skills funding in England has been cut by £1bn since 2010. Details on the growth and skills levy, and any plans to help employers reverse the 26% fall in their spending on training since 2005, will also need to wait for a skills strategy later this year.”
Litmus test
Rain Newton-Smith, CBI chief executive, said: “Today’s Spending Review signals a downpayment on hardwiring the growth mission into government priorities. Against a challenging backdrop, the choice to prioritise investment in clean energy, R&D, as well as delivering a much-needed boost to housing, transport, and infrastructure is the smart play that will raise the long-term ceiling of the economy.
“The litmus test now will be following through on delivery in partnership with industry at pace. That must be underpinned by a comprehensive strategy for driving investment in adult skills and addressing high energy costs, which were missing from today’s announcement.”
She added: “The fact is that the innovation, investment and jobs necessary for significant growth will come from business, not Whitehall, and the government must pull all the levers it can to unlock investment.”
“Businesses are labouring under the cumulative burden of rises in NICs and Minimum Wages. With the Autumn Budget now coming sharply into focus, the Chancellor should prioritise squashing tax rumours and speculation that risks stymieing confidence and subduing investment decisions.”
Matthew Taylor, chief executive of the NHS Confederation, said: “Health leaders recognise that the NHS is being prioritised for investment over other parts of the public sector. The funding boost is welcome given the precarious state of public finances and will help the NHS to cope with rising demand from an ageing population, often with multiple or more complex physical and mental health conditions.
“But difficult decisions will still need to be made as this additional £29 billion won’t be enough to cover the increasing cost of new treatments, with staff pay likely to account for a large proportion of it. So on its own, this won’t guarantee that waiting time targets are met.”
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