Few surprises for employers in pre-election Budget

Danny Alexander and George Osborne ahead of today's Budget. Photo: Jonathan Hordle/REX
Danny Alexander and George Osborne ahead of today's Budget. Photo: Jonathan Hordle/REX

The Chancellor’s final budget before the election offered few surprises for employers, with George Osborne boasting that “Britain is walking tall again”, having created 1.9 million jobs over the duration of this parliament.

Citing figures released today by the Office for National Statistics (ONS), he said that it was a “massive moment” that “Britain has the highest rate of employment in its history”. The claimant count for unemployment, according to the ONS, is the lowest since 1975.

Unemployment fell by 102,000 to 1.86 million in the three months to January, the ONS said, although average earnings continued to grow slowly, increasing by 1.6% (excluding bonuses) compared with the same period a year ago.

The Chancellor also had positive news to share on economic growth. According to the Office for Budget Responsibility, UK GDP growth this year will be 2.5%, higher than the 2.3% rise predicted for 2015 last year, he said.

Among the headline measures that might affect businesses and their staff were:

  • A pledge to clamp down on employment intermediaries or recruitment agencies who abuse tax reliefs on travel or subsistence, or claim false self-employment.
  • Confirmation that up to five million existing pensioners will be able to swap fixed annual payments for a cash lump sum.
  • The personal tax-free allowance is to go up to £10,600 in two weeks’ time, £10,800 next year, and then £11,000 in the year after next – a tax cut for 27 million people, according to the Chancellor.
  • We are “on course for a minimum wage that will be over £8 by the end of the decade”, plus confirmation that the apprentice rate will see the biggest increase ever.
  • Investment in regional growth, such as a new Energy Research Accelerator in the Midlands and business rate perks in Manchester and Cambridge.
  • Inflation was projected to fall to 0.2% in 2015.

Budget 2015 reaction

Tom Hadley, director of policy and professional services at the Recruitment and Employment Confederation, said: “The Chancellor’s focus on tax avoidance by employment intermediaries will be critical to ensuring a level playing field for recruiters who play by the rules.

It’s astonishing that productivity wasn’t referenced even once in the Chancellor’s speech” – Mark Beatson, CIPD

“Progress here is long overdue and such a public commitment to clamp down on agencies and umbrella companies that exploit travel and subsistence schemes is very welcome news. It’s something we called for in our Manifesto for Jobs last Autumn and we’re glad to see the Government take action.”

Mark Beatson, chief economist at the Chartered Institute of Personnel and Development, said: “The Government is right to cheer the rise in employment but there are still some big questions that they have failed to answer on productivity.

“It’s astonishing that productivity wasn’t referenced even once in the Chancellor’s speech, and yet this is the biggest challenge that the economy and businesses face now.”

Chris Jones, chief executive of City & Guilds, said: “Today’s budget had a common theme – job creation. From investment in large-scale infrastructure projects, to cuts in business rates for SMEs, to abolishing National Insurance for employing an apprentice – all will open up new employment opportunities, and that’s fantastic.

“However, creating jobs is one thing, filling them is another. To fill these jobs, we need people with the right skills. The Government has already invested significantly into apprenticeships, and that’s great. But they are only part of the solution. We need to go further to bridge the gap between education and employment.”

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