Emergency Budget comment: A budget for jobs
Emergency Budget Comment
Emergency Budget comment from the REC: A budget for jobs
The Recruitment and Employment Confederation (REC) has welcomed Chancellor George Osbornes proposals in his Emergency Budget to help the UKs jobs market through reducing tax liabilities on private sector businesses and creating a stable tax environment for them to plan.
Commenting on the Budget as a whole, Kevin Green, Chief Executive of the REC said: "We are delighted that the Government has put tackling business taxation at the heart of this budget. It is clear that the private sector will need to grow jobs as the public sector sheds them, and this Budget sets the framework for this to happen." More specifically on the proposals Kevin Green has made the following comments: On the rise in the NI thresholds "We are delighted that the Government has got rid of the planned tax on jobs. The planned rise in National Insurance Contributions would have simply added cost onto hiring temporary staff for every hour they work. We need measures which encourage employers to take on more staff to tackle unemployment. The rise in the threshold will assist this." On corporation tax "The reduction in the rates of corporation tax and small business tax will certainly make Britain a more attractive place to do business. This will bring new jobs to our economy. In addition the plan to reform corporate taxation over the next five years to make it simpler, clearer and more stable, is very welcome. It will offer businesses the basis on which to plan for the future." On public sector resourcing "The Chancellor is right to freeze public sector pay for two years, a measure which many in the private sector have already experienced and we are encouraged to see that public sector pension costs are being reviewed. But the biggest impact on the public sector will still be the slashing of expenditure, in some departments, of up to 25 per cent. The public sector needs to use this tight spending environment to fully review how it runs and operates. Simply salami-slicing the spend will not bring about the structural change the sector needs to serve in the 21st century. The public sector needs to become more efficient and know how to attract the talent it requires. In the longer term, the jobs market in the public sector should be as flexible and adaptable as our successful private sector model."
On the rise in VAT to 20 per cent "This will hit some jobs hard, especially the supply of agency staff into the charitable and financial sectors. The REC recognises the need to raise revenue, however greater allowances should be made for those businesses and organisations who cannot recoup the VAT they are charged, especially when that charge is applied to jobs." On the income tax threshold The REC also noted that many temporary workers would be winners with the rise in the income tax threshold, Kevin Green continued "many temporary workers use agency work to dip in and out of work on a part time basis. The rise in the income tax threshold means that they will leave the agency at the end of the week with more money in their back pocket." On welfare reform "We welcome the focus on reducing the growth in benefit costs and moving people into work. However the REC believes that a complete review of how the benefits systems interacts with today's work of work is needed. Many people use temporary work as a stepping stone into a career and more permanent work. However at the moment the risks are too high, with it taking too long to move on and off benefits. We need a benefits system which will allow people to work the hours that they find, without having to wait weeks to move back onto benefits if the work dries up."
"Chancellor should be congratulated on his restraint - this is excellent news for IT job growth in London"? Paul Winchester, managing director of IT recruiter Greythorn said: The state of the UK economy doesn't exactly make for happy reading: debt has risen above 900bn, the new Office for Budget Responsibility has downgraded the 2011 growth forecast from 3.25 per cent to 2.6 per cent, and the deficit currently stands at 10.4 per cent of GDP. So Im glad Osbornes banker-bashing levy, which aims to raise 2bn by asking banks to pay a levy based on the size of their balance sheets wasnt as bad as some of us in the City had feared. This is excellent news for IT job growth in London, driven as it is by the banks.
The more unattractive Osborne makes the UK look to the international banks, the more money the government will lose in terms of income tax and national insurance contributions as they move jobs abroad. Mumbai and other emerging centres of finance will welcome the banks with open arms. A larger levy on the banks would have been a populist move that would have done much more damage to City jobs and Britains economy lets not forget the City contributes about 9 per cent of Britain's GDP. The Chancellor should be congratulated on his restraint.
An intelligent budget which gives freelancers hope for a fairer time ahead - says PCG today welcomed the first Budget of the Coalition Government. We were also delighted that the Chancellor George Osborne declared Britain is open for business. John Brazier, Managing Director, commented: George Osborne delivered an intelligent and decisive Budget which has tried to tackle the historical deficit this country faces. He stated he wanted to create certainty and stability and we believe that many of his measures will do this. The roadmap for corporation tax and the laying out of income tax changes over the course of the Parliament are welcome and will help PCG members in their businesses. PCG also welcomed the reiteration of the Government, in the Budget Red Book, that they are committed to a review of IR35 as part of a small business taxation review, we are due to hear more about this shortly. The Government also confirmed in the Red Book that they would be setting up an independent Office of Tax Simplification, something PCG supports.
Anne Redston, Visiting Professor of Taxation at Kings College London, told PCG: This budget has left freelancers and contractors relatively unscathed on the tax front. The promise of a small business review has been firmed up, and the Office of Tax Simplification is long overdue. In this budget the Government has set out the big picture now they can start colouring in the details. The one area of uncertainty which concerns PCG is where the public expenditure cuts will take place. The Government has committed itself to bringing the deficit back into balance by 2015 and this would be done through 77% spending cuts against 23% in tax rises. Simon McVicker, Head of Public Affairs at PCG, observed: We will only real know the severity of these public sector cuts when the spending review is completed in October but many public sector contracts may end due these cuts and at least in the short term Government contracts will be severely limited.