Chancellor releases first Spring Statement
The chancellor has released his first Spring Statement to Parliament.
With regards to the economy, the Office for Budget Responsibility has increased its forecast for growth for the year to 1.5%.
Employment has increased by three million since 2010. The unemployment rate is close to a 40-year low. The OBR predicts there will be over 500,000 more people in work by 2022. The OBR expects inflation to fall over the next 12 months, and wages to rise faster than prices over the next five years.
Borrowing has fallen by three-quarters since 2010. In 2009-10 the UK borrowed £1 in every £4 that was spent. The OBR expect that we will borrow £1 in every £18 this year. Debt will start falling as a share of GDP next year.
In April 2018 the National Living Wage will rise to £7.83, worth £600 extra a year for a full-time worker. National Minimum Wage rates for under 25s and apprentices will also rise – the largest increase in youth rates in 10 years. Over 2 million people are expected to benefit from April’s increases.
The tax-free personal allowance – the amount you earn before you start paying income tax – will rise to £11,850 from April 2018. This means that in 2018-19, a typical taxpayer will pay £1,075 less income tax than in 2010-11.
In relation to skills, there will be £500m for T-levels and £50m to help employers roll out placements for T-level students. There will also be £80m to support small businesses engaging apprenticeships.
Recruitment & Employment Confederation (REC) director of policy, Tom Hadley, commented, “It’s encouraging that the government has so far not brought forward a consultation on IR35 in its spring statement. We hope that the government is instead focussing on a more holistic approach to employment status, tying into recommendations from the Matthew Taylor review.
“We’ve been saying for a long time that introducing changes to IR35 in the private sector would be premature, as the impact of the public sector changes is not yet fully known and there are still issues with implementation that need to be rectified. The majority of our members say it was implemented badly and the employment status for tax tool is still not up to scratch. These issues need to be rectified and we look forward to working with the government on this and continuing to represent the views of our industry.
“The focus on education and skills, including additional funding for construction skills and T-level preparation, are welcome – especially in light on ongoing staff shortages picked up on in our monthly data. We will continue to push for the Apprenticeship Levy to evolve into a broader training levy that recruiters can use to boost skills and progression of temporary and contract workers on their books.”
Jo Sellick, managing director of Sellick Partnership, added, “As expected, in his Spring Statement, the Chancellor exploited the currently positive state of our economy and resisted calls from the opposition (and even some Tory party members) to invest in public services, instead choosing to ignore the huge crisis our public services face. There is no denying that, as Philip Hammond said, productivity is key to boosting our economy; but it should not be ignored that productivity would be much higher if our public services were running more smoothly.
“In a bid to get the public on side, Hammond opted to dangle a carrot, suggesting that more funding could be injected into the NHS, our education system and other public services come the Autumn Budget - but there were no guarantees, and it was delivered under the proviso that the British public must work hard enough for the funding to be granted.
“I credit Hammond for acknowledging the flaws in the new apprenticeship system, and committing £80m of funding to support businesses in taking on apprentices. The levy introduced last year has actually led to a decline in apprenticeships, but the positive impact of placing three million young adults in apprenticeship schemes by 2020 has the potential to be huge - enabling British businesses to fill skill gaps and develop home-grown talent, which must be a priority as we anticipate losing a lot of skilled and reliable European workers post-Brexit.
“I also welcome the creation of half a million more jobs by 2020 and the new focus on training, although the Chancellor avoided going into much detail on how the government would facilitate this. This will need to be a priority if we want to continue boosting our economy - however slowly - after we leave the EU.”
David Clift, HR director at totaljobs, said, “We share the government’s commitment to getting more people into work and will continue to work with employers to meet the ambitious target of an additional 500,000 people in employment by 2022. This number is achievable and we continue to see strong appetite by UK employers to bolster their teams and make new hires, in spite of economic uncertainty. In fact, we anticipate 2018 to continue to be a positive year for workers throughout the country with 20% more jobs available now than a year ago. The increase of the national living wage is further proof of the employee-centric approach the government is taking and we applaud this decision.”
Samantha Hurley, director of operations at the Association of Professional Staffing Companies (APSCo), commented, “Yesterday’s speech conveyed a clear realisation that the strength of the UK economy is directly related to the talent agenda – and we support proposed measures to develop the skills we need to thrive amid a rapidly advancing economy.
“We welcome the publication of a consultation on how the tax system supports self-funded, work-related training and the explicit recognition that a skilled workforce benefits both individuals and the wider UK economy. Greater support for individuals who want to upskill or retrain can only be good news for the professional recruitment sector, particularly at a time when an increasing number of professionals are choosing to work on a contract basis, without the Continuing Professional Development (CPD) support that is usually associated with permanent employment.
“Elsewhere, the creation of a National Retraining Partnership - and the fact that £80 million of funding has been pledged to support small businesses in engaging an apprentice, with a further £500 million a year being directed towards the introduction of T-Levels - suggests that the government is serious about pipelining skills for future prosperity.
“We also welcome the government’s commitment to work with the Office for National Statistics to create a more sophisticated measure of human capital so that future investment in skills development can be better targeted. I have no doubt that through calculating the economic pay-back from investing in people, the Treasury will see huge economic benefits.
“Overall, we’re pleased to see that the government is committed to backing the enterprise and ambition of British business, and investing in the talent that will create further opportunity.
“While the Written Ministerial Statement did confirm that a consultation on off-payroll working in the private sector will be launched ‘in the coming months’, there are still no firm timelines attached to this. APSCo maintains that a move to extend recent legislative changes to the private sector at this time is ill-conceived, and we will be sharing this view, and the evidence behind our position, when the opportunity does present itself.”
Picture courtesy of Pixabay