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Recruiters & business leaders react to the budget

Key business and recruitment leaders have shared their thoughts below.

REC Senior Policy Adviser, Ben Farber says, “Overall it was a decent budget for business and workers today, with moves both to shore up growth in major UK employment sectors and ensure work pays for individuals of all income levels.

“The &pound7 billion to help manufacturers with energy costs is a definitely a good thing for recruiters, as is the doubling of the annual investment allowance for businesses. Investment in house building provides a boost to the construction industry and the fuel duty freeze will be welcomed by many recruiters beyond just those in the driving and logistics sector.

“New investment in STEM skills and creating more apprenticeships is welcome and shows that the message about skills shortages in key growth areas is beginning to be heard by policymakers, though there is still much more to be done.”

The Association of Recruitment Consultancies (ARC) welcomes the announcements made by the Chancellor in the budget today so far as they relate to supporting businesses. However it is disappointed that Mr. Osborne has not made any change in respect of VAT charges for the supply of agency workers to non VAT registered organisations, including government departments, local authorities and charities.

Adrian Marlowe, chairman of ARC, said, “Agency workers are a specific resource that should be readily available to all these organisations, but the inability to recover VAT deters their use as VAT is currently chargeable on the pay provided to the worker. This is particularly so, ARC maintains, in the case of the NHS in respect of which HMRC has in February embargoed the recovery of VAT where agency workers are used. Marlowe continued, “All these organisations need every penny they have to provide the services they are required to deliver on increasingly tight budgets. Whilst the Treasury recovers the VAT, and as such this helps towards the deficit, public services are affected not just by imposed budget restrictions but also by this tax.”

“We have long campaigned for reinstatement of the VAT staff hire concession which was dropped by the government in 2009. Partial exemptions were reintroduced for limited medical services a few years ago but we believe its reintroduction across the board for those types of organisations that cannot recover the tax but provide frontline services would not only make available more resources but also lead to improvement in services and greater employment.”

British Chambers of Commerce Director General John Longworth said, “Business wanted a Budget that was disciplined, focused, and geared toward the creation of wealth and jobs – and that’s what the Chancellor has delivered.

“With a huge confidence gap still separating employers from young job-seekers, we are very pleased to see the Chancellor heed our call to help firms take on and train tomorrow’s workforce. Overcoming that confidence gap means more investment in young people, more apprenticeships, and more jobs, which are critical with more than 900,000 16-to-24-year-olds still out of work.

“Osborne’s focus on investment, exports, house-building and economic resilience passes the business test. By making a better business environment his top priority, the Chancellor has recognised that successful and confident companies are the key to transforming Britain’s growing economic recovery into one that is felt in homes and on high streets.

“As with any Budget, there were some populist measures that were not at the top of business’s wish list. Luckily, these were far outweighed by considered measures to support business growth and wealth creation.

“Many of these measures are excellent for now, and for the future. Yet the nurturing of a truly great economy requires more action than one Budget can deliver. At the upcoming General Election, Britain’s entire political class must commit to a long-term programme that delivers better infrastructure, a stronger skills base, access to finance for growing companies, even more export support and a clear, consistent tax environment. Otherwise some of the Chancellor’s welcome moves might not have the desired effect in years to come.”

Ed Cox, Director of IPPR North, said, “The Chancellor promised a budget for the regions and for resilience. But this rhetoric is wearing very thin. Whilst growth forecasts may look better one year on, the recovery is looking very different depending on the part of the country you live in with today’s unemployment figures showing a 2.3 percentage points gap between the North East and the England average. And in truth there were very few announcements that are likely to narrow that gap and nothing to boost the powers and funding devolved to Northern cities.”

On transport spending, he said:
“The &pound270 million credit guarantee for the Mersey Gateway Bridge – welcome as it is – will do very little to reverse the gaping disparity between infrastructure investment in London and the rest of the country. Changes to air passenger duty are welcome too but fall some way short of the kinds of regional variation that might encourage airlines to operate new flights out of Northern airports.”

On business investment, he said:
“Encouraging businesses to increase investment is crucial if the recovery is to be sustained and spread. Doubling the investment allowance for businesses to &pound500,000 a year is a good move and extending business rate discounts and enhanced capital allowances in enterprise zones are welcome too. However, a one-size-fits all approach ignores the fact that different areas have different barriers holding back their growth. If Osborne doesn’t invest in the regions, businesses won’t either. Infrastructure and R&D investment remain painfully skewed towards the capital at the expense of the regions.”

On help to buy, he said:
“Current house hunters will welcome Osborne’s announcement of an extension to Help to Buy, the government’s controversial scheme to support people to buy homes they could not ordinarily afford. But as the policy will add fuel to house prices the affordability crisis in parts of the London and the South East could easily spread North. Rather than pumping up prices of houses, the government should be building more properties that people can afford.”

Peter Searle, CEO of Adecco Group UK & Ireland, commented, “We welcome the announcement by the Chancellor in today’s Budget to remove National Insurance contributions for under 21’s and to extend grants for small businesses to support 100,000 more apprenticeships. However, the Chancellor has failed to acknowledge the extent of the situation as thousands of school and university leavers still continue to struggle in their search for employment.

“Today’s ONS statistics show there are still around one in five (19.8%) jobless 16-24 year olds in the UK, demonstrating that the Government still needs to invest to ensure much-needed apprenticeships opportunities are made available for all young people and the education system equips people with core employability skills to ensure people can develop to their full potential and successfully enter the jobs market.”

“The Government needs to take action to close the skills gap which pervades in the UK, ensuring we have the right talent to meet the jobs available and remain globally competitive.”

Phil Orford, chief executive of the Forum of Private Business, said, “The headlines for business today are on energy policies and export. There are sizeable gains for UK manufacturers here in particular over the next few years. On export the Chancellor has thrown his weight behind getting more businesses exporting. Our membership is confident about growth but much of that growth is UK based so we needed to see such a commitment, though we will continue to work with the Treasury and others to develop even healthier export subsidies for business.

“Overall this was a budget that offers some help to all levels of business, with perhaps a slight focus on the mid-size energy intensive and manufacturing businesses, rather than the very small ones. However, it does help to tackle the cost of energy and makes good on the commitment trailed before the Budget to support those that look to invest, either in the UK – with a more extensive Annual Investment Allowance – or abroad, with a &pound3bn export support budget.”

Samantha Hurley, head of external affairs at the Association of Professional Staffing Companies (APSCo), says, “In today’s budget George Osborne has made some key announcements relating to employment, benefits packages, and apprenticeships. The budget is one which will benefit savers, manufacturers and those who are looking at apprenticeships. It could also be seen as a budget which encourages people to raid their piggy banks.   All of this will affect how appealing employment packages are in many different ways and so may impact on APSCo members. 

“The Chancellor announced that the Government also intends & lsquo;to review the rules underlying the tax treatment of travel and subsistence expenses, and will call for evidence on remuneration practices to inform any future reforms’.  APSCo is not unduly surprised that travel and subsistence expenses are on the Government’s agenda for review, and we will obviously keep a close eye on this on behalf of our members as it may impact on the umbrella industry, which utilises such schemes.

“The legislation on both onshore and offshore intermediaries wasn’t mentioned specifically in the Chancellor’s speech however it is included in the online paperwork. APSCo will be discussing this issue, and HMRC’s recent response at its members meeting tomorrow afternoon.

“APSCo’s Budget summary will be emailed to all members first thing Thursday morning. Copies will also be posted, available at tomorrow’s members meeting and will be available for download from the APSCo site."

David Rudick, VP International Markets, Indeed.com, said, "We are pleased to see the initiative announced today by the Chancellor to provide 100,000 new apprenticeships in support of the existing government framework to help more of Britain’s unemployed into work. There is no doubt that more needs to be done to smooth the transition between education and work for young people – a focus on apprenticeships is a welcome step in the right direction.

"Currently, Indeed.com advertises 30,000 apprenticeship positions for over 12 million monthly job seekers here in the UK. Our data shows that Management and Financial Services remain the top sectors for internships, currently accounting for around 40% of all internships in the South East alone. This is despite industries such as architecture and engineering experiencing the widest skills gap, showing the highest number of job vacancies and the greatest number of applicants for each open position. We also found that 6% of internships in the Southeast are computer/technology internships, which reflects the growing start up economy in London.

"But this huge boost to apprenticeships must be supported by the careers advice that is delivered in schools. Schools and employers must work more closely together to demystify the job search process, and ensure that careers advisors are better equipped to offer the appropriate training and careers advice schemes. Providing the appropriate direction to school leavers will help the next generation decide what career is right for them, not mistaking the first available job for the right job.”

Andrew Hunter, co-founder of Adzuna, commented, “On the surface, the labour market is forging forwards. The number of people claiming Jobseekers Allowance has experienced its fastest drop since 1997, and the unemployment rate has fallen. In addition, the OBR predicts real wages will catch up with inflation this year. But beneath the statistics, there remain some underlying problems. Youth unemployment may have fallen to a four-year low, but 16-24 year olds are still three times more likely to be unemployed than the rest of the workforce. And our data shows that advertised salaries fell to a 17-month low in January. The creation of 100,000 new apprenticeships for younger workers is a nod in the right direction, but we still need to do far more, both to support our youth and increase salaries overall.

“Osborne may be pleased that income inequality is falling, but the ongoing North-South divide is still crippling the labour market. Competition for jobs in the North remains intense, with more than more than 27 people competing for each vacancy in areas such as Wirral and Salford. Osborne paid lip-service to this problem, but jobseekers in these areas may well be disappointed.”

Nigel Heap, managing director of Hays UK & Ireland, commented, “We have witnessed growth across our business for the first time in several years and many of our clients are in the same position so we are not surprised that growth estimates have been upgraded. Today’s Budget offers some worthwhile measures but we were hoping for more that would drive business growth and encourage employers to take on more staff.

"We are encouraged by the investment in house building, the extension of the Help to Buy scheme and the investment in repairs and maintenance. All of these will have a direct impact on our Construction & Property business, driving the need for skilled workers.

"We are pleased that the Government will create an institute for research into Big Data, which recognises its importance. However, its impact will be limited in the short term and in the meantime the digital arena is severely plagued by skill shortages, which is impacting on our business and reducing our clients’ ability to exploit Big Data.

"Under 21s have been taken out of employers’ national insurance contributions, which supports the recent work to promote apprenticeships and combat youth unemployment. However, we were hoping to see further cuts to National Insurance contributions for employers, which would reduce the financial risk for SMEs when taking on new staff and create more opportunities for thousands of people.

"We had hoped that the Budget might also include measures to ensure degree pricing is structured towards science and engineering courses, where there are severe skills gaps and jobs currently going unfilled.” 

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