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REC welcomes key wins for industry in Autumn Statement

The REC has welcomed the Autumn Statement delivered today by Chancellor George Osborne, which included several initiatives that respond directly to the calls made by the recruitment industry to boost growth and jobs, cut bureaucracy and help young people hit hardest by unemployment.

The Government has shown a willingness to take on board some practical suggestions for helping businesses to take on staff, including through flexible resourcing arrangements as well as by addressing the complexities of employment rules and creating targeted incentives.

In its submission to the Chancellor ahead of today’s statement, the REC called for an early review of the Agency Worker Regulations, simplification of pensions reform, and fiscal incentives for companies taking on young people, all of which have been agreed by Government. The industry also secured a key win in the run up to today's statement as the Government announced a comprehensive review of recruitment legislation.

Kevin Green, the REC’s Chief Executive, commented: “We are pleased to see the Chancellor has listened to the views of the UK recruitment industry and has responded with some targeted action both today and in recent weeks to make it easier for companies to take on new staff. The commitment to review the bureaucracy and paperwork elements of AWR is a welcome step in helping reduce the burdens of these rules which detract from recruiters' fundamental role of placing people in work.

 “The Government has also responded to the recommendations of our Youth Employment Taskforce to create fiscal incentives to help employers take on young people. The new Youth Contract is a step forward although we will continue to call for additional measures to stimulate demand.

“This week has also seen the Government restructure the timing of pension reforms given the pressures on businesses and the need to avoid adding to the costs of hiring. We will continue to push for a simplification of pensions reform proposals and for Government to take a fresh look at how auto-enrolment measures can be implemented within the recruitment sector in a way that avoids unnecessary bureaucracy and limits any market distortions.”



Comments from Alastair Johnstone, CEO at financial recruitment company Allemby Hunt, regarding the Chancellor’s Autumn Statement:

&middot Banks have choked off the best intentions of both labour and coalition governments

&middot Banks have sought to repair their balance sheets at the expense of their customers

&middot Statistics around % of applications approved are at best misleading.  Those unlikely to meet very high qualifying criterion are actively discouraged to apply

&middot Those who don't need the finance are actively encouraged to apply for it to meet bank lending targets

&middot Directors are expected to provide so much security it feels like we should offer up our wives and children as collateral

&middot Banks have taken away discretionary lending from Relationship Managers who know their clients and instead adopt a "Computer says no approach"

&middot Banks have become driven by credit analysts who don't understand the real world (I know I used to employ them)

&middot The view projected by the banks is very different to the reality at the coalface

&middot Banks have become risk averse which may seem appropriate but there is a huge difference between understanding the risk and closing the door on supportive lending backed by future cashflow



“Plan A Plus in all but name”

The CBI today gave its full reaction to the autumn statement.

John Cridland, CBI Director-General, said:

“This autumn statement works with the realities of today and provides an imaginative framework for UK businesses as it strives to secure growth and jobs. This is “Plan A plus” in all but name.

“The downgraded forecasts and outlook were no surprise, but the Eurozone crisis is still hanging over us. The Government’s dogged commitment to budget deficit reduction remains the only way to maintain the UK’s triple A credit rating and low interest rates on international money markets.”

Commenting further, Mr Cridland added:

On the economy:

"Given the continued uncertainty in the Eurozone, the downgrades to the UK’s economic forecasts reflect the current difficulties. Growth will stall through the winter and economic conditions will be weak for some time.

“With spending plans unchanged over the period of the parliament, the Chancellor is sticking to Plan A, and we welcome the reallocation of spending on infrastructure.

“Debt will peak at a higher level than previously thought but will still be declining by the end of the parliament. The Government is still able to meet both fiscal rules and protect credibility in sovereign debt markets, which is so critical to private sector confidence.”

On infrastructure:

“Investing in our infrastructure will act as a stimulus to growth. The projects announced will not just boost immediate activity and jobs, but a longer-term infrastructure plan will support our construction sector in the years to come.

“We’ve called for new forms of investment to attract up to &pound200 billion into the UK’s infrastructure in the next five years. Making it easier for pension funds to invest in UK infrastructure is a great idea, but we need to get the detail right.”

On support for medium-sized firms:

“We are delighted that our campaign to gain support for medium-sized businesses has been heeded and we warmly welcome the Business Finance Partnership and measures to support exports.

“Having a strong mid-sized sector is vital for the long-term health of the economy. The Chancellor’s announcements mark the first step in turning mid-sized firms into a new engine for growth, worth up to &pound20bn by 2020.

“The &pound1bn Business Finance Partnership is an innovative approach to providing mid-sized firms with a broader range of long-term finance options.

“Additional funds to provide targeted help for mid-sized firms to export could boost their ability to do business overseas.”

On credit easing:

“The National Loan Guarantee scheme is a necessary pre-emptive strike to safeguard bank lending to SMEs. With the pressure on bank balance sheets, this practical and immediate help should bolster business confidence.”

On measures to support energy-intensive industries (EIIs):

“The Government has recognised that the UK’s energy-intensive users need help, as a result of the unilateral increases in manufacturing energy costs from the carbon floor price and electricity market reform. We now need to understand how this money will be allocated to those most at risk.

“It’s vital we keep industries in the UK which produce the steel that goes into wind turbines, the lubrication that helps their blades turn and the cement that makes their foundations.

“It’s good that the Government has committed to review the impact of its electricity market reforms on energy-intensive firms. Ensuring these industries are included in future energy policy is an important part of the UK continuing to lead the rest of the world on climate change.”

On aviation policy, CBI said:

“We have ambitions to build the UK’s export capability and without a world-class hub airport in the South East to service the needs of travellers to all emerging market destinations, this cannot happen. UK businesses will be relieved that the Government has come off the fence on this issue. All options should be closely examined and an informed decision needs to be made as soon as possible.”

On housing:

“Unfreezing the housing market is an important step on the confidence-building ladder. Mortgage indemnity guarantees are the best way to bridge the deposit gap for first-time buyers.

“By encouraging mortgage lenders to offer higher loan-to-value mortgages, the mortgage indemnity guarantee scheme will insure them against their losses if borrowers fail to repay their loans.”

On youth unemployment:

“The Youth Contract is excellent news for young people across the country. The Government has developed our idea to incentivise businesses to take on the young unemployed. This will encourage firms to take a chance on inexperienced young people and help tackle the scourge of youth unemployment.”

On employment law reform:

“The Government’s employment law review is a move in the right direction and should give firms confidence to take on more staff. Businesses up and down the country will welcome changes to employment tribunals but will be looking for tangible evidence of change sooner rather than later.”

On enterprise and innovation:

“The commitment to introduce an above-the-line research and development (R&D) tax credit will have a positive impact on the attractiveness of the UK as a place to invest.

“Extension of the successful Regional Growth Fund by a further &pound1bn will encourage business investment and create new jobs, particularly in manufacturing.

“The Government has taken a welcome step in introducing 100% capital allowances in selected Enterprise Zones.

“The additional &pound75m to help small businesses demonstrate new technologies will help firms to commercialise their ideas.

“Extending the Enterprise Finance Guarantee limit will increase the number of medium-sized firms able to benefit. 

“The new Seed Enterprise Investment Scheme will provide an alternative to bank lending for higher-risk start-up companies.”

On pay and pensions

“In the light of weak growth, further restraint on pay awards in the public sector is a tough but necessary step.

“In the longer-term, it is essential that pay reflects local labour markets. The Chancellor is right to ask the pay review bodies to explore how this could be done.

On bank levy:

“Banks must play their part in restoring the public finances, but like any other business they need certainty to help them plan with confidence.”

On business rates:

“Continued business rate relief for smaller firms is another measure that will help drive growth.”

On fuel duty:

“The cut to the increase in fuel duty will be welcomed by businesses and motorists alike at a time when fuel costs are a real burden.”

On the Green Deal:

“The Green Deal should be a win-win, by providing a real boost for manufacturers, installers, and retailers, while helping people save on their energy bills. The Government is right to heed the CBI’s call for incentives, and we should ensure that this money is used to help kick-start the market.”



Dave Thornhill, MD of Simplicity’s comment on the Chancellor’s Autumn statement:

“The Chancellor’s Autumn Statement proves that the belt tightening approach by the Government ahead of the & lsquo;economic storm’ was a prudent if harsh measure in terms of capping interest rates but there is much more that needs to be done if UK business is to be fit enough to create opportunities to support conditions required for growth and consequently to help boost employment.

“The fact that economic growth forecasts have been revised to less than one per cent is a bleak and sobering prospect, but indicates the severity of the state of our country.

“With respect to the recruitment sector, the fact that the construction sector, infrastructure spend and other capital schemes are to get a an injection of substantial sums of money is a significant step in the right direction and has to be welcomed. I’m glad to see that funding will be underwritten for SME businesses, which is exactly the stance we have taken through our funding mechanism for start-up recruitment agencies.

“The key headlines show that  this Government hasn’t abandoned business on the altar of credit easing, so much of what has been suggested must be welcomed. It is also up to businesses to be brave at times like this and not to succumb to the whims of the various commentators who would have British business dead and buried a long time ago.

“We are more resilient than that, and the recruitment sector is at the heart of the recovery programme, which will help us weather this ferocious storm.

Some of the headlines:

the UK economy was now forecast to grow by 0.9% this year - compared with 1.7% forecast in March and 0.7% next year down from the 2.5% March forecast. This would be followed by 2.1% in 2013, 2.7% in 2014, and 3% in 2015.

&pound5bn plan to improve national infrastructure over three years. Further &pound25bn could be spent in future years

Credit easing programme to underwrite up to &pound40bn in low-interest loans to small and medium-sized firms

&pound1bn business finance partnership to help secure funding for medium-sized firms

Regional Growth regeneration fund to get &pound1bn in extra funding

&pound250m support package for energy-intensive firms

Business rate holiday relief for small firms to be extended to April 2013

Bank levy to be increased in January

&pound1bn "youth contract" to subsidise six-month work placements for 410,000 young people

Plans to raise the state pension age from 66 to 67 would be brought forward up to ten years to 2026 but there will be a &pound5.30 increase in the basic state pension to &pound107.45, in line with the 5.2% inflation rise in September.

There is nothing which has surprised us in this statement as there is clearly little room to manoeuvre. There have been recent indications that the government is prepared to review employment legislation and it is to be hoped that review will encourage employment flexibility against the recent trend in the opposite direction."



Autumn statement – reaction from Helen Reynolds – Chief Executive of HB RIDA, a private equity vehicle that invests in SME recruitment businesses:

While I would welcome the package of measures to support employers to hire young people, the most obvious answer for me would be to a return to apprenticeships.  The Governments obsession with  getting young people to university is pointless if half the graduates we are turning out have no employable skills. We have a shortage of engineers, plumbers, electricians and mechanics – and a complete oversupply of graduates with non-vocational degrees – it isn’t rocket science.  The Government wants to compete with China in terms of producing graduate educated young people.  The problem is that China is turning out young g people with degrees in engineering and technology – not sociology and media studies!

While the CIPD seems to think that employment deregulation is a bad thing, for SMEs it has to be a step forward.  A broad brush approach to employment regulation whether you have five employees or five thousand has never been a fair state of affairs and while employee engagement is important, it is also important for small businesses to be able to manage their human resource effectively and practically. The notion that introducing compensated no fault dismissal  for the very smallest firms will risk economic recovery is ludicrous.



Comment from Linea Resourcing in reaction to the Chancellor’s autumn statement


Mike Gorshkov, managing director of Cardiff-based Linea Resourcing, says: “The recent unemployment figures we’ve seen are a stark reflection of the struggling economy and a lack of employable skills in the education system.

“While unemployment continues to rise, employers that do have vacancies using mainstream skills have the luxury of choice in a market flooded with job seekers.

“We’ve found that many employers are selecting employees with a proven track record of experience and a solid work ethic backed up with relevant referees, which school leavers often lack when leaving the education system – putting them at a disadvantage and widening the skills gap.

“The support measures outlined by the Chancellor, including the & lsquo;youth contract’ which will see young people and job seekers given more meaningful experience in the private sector are a very welcome at this time. 

“These steps to develop an education system that equips school-leavers with the skills and strong work-ethic is a good start to develop what we need to compete on a global stage.

“We’re also pleased that the government has announced more investment and measures to support infrastructure planning and construction across the country. We hope that its allocation in Wales will give the unemployed more access jobs on these infrastructure projects.”


Autumn statement will appease businesses but will it produce sustained growth?

Carmen Watson, Managing Director of Pertemps Recruitment Partnership, said, “On the face of it, there is plenty in the autumn statement to engage the many businesses who have been hard hit by the troubled economy and running very tight ships in terms of staff numbers. Companies that have been frustrated at a lack of investment being seen at local level will be heartened by the increase in Regional Growth funding and access to finance that allows them to bypass the high street banks.

“Although the statement acknowledged the severe problems in the jobs market, there hasn’t been enough to tackle the problem. The youth contract announcement will go some way in helping the young unemployed but there are still many other low-skilled vulnerable groups currently out of work in high numbers that need training and new work opportunities. The autumn statement has begun to deal with the confidence issues that have plagued business but in the current business environment, this will only be one, albeit important, step on the road to recovery.”


In response to this afternoon's Autumn Statement by the Chancellor of the Exchequer, Colin McAdam of Glasgow's McAdam King Recruitment said:

"There has been a lot of comment and speculation about George Osborne's plans for a 'youth contract' in the lead up to the Autumn Statement. Now everyone in the recruitment sector will be looking to see what credibility the scheme has.

"If the initiative is going to be a success, and have any kind of lasting impact on youth unemployment, it's essential that the government listen to what employers need and what they can realistically hope to offer any young employees who join the company through the scheme.

"Helping young workers to experience the workplace environment can be useful but the scheme has to offer some opportunity for skills to be developed and careers to advance. That can only happen if government listens to what opportunities employers can provide within the six-month time frame."


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