Chancellor Philip Hammond has delivered the Spring Budget 2017, which means good news for small business, wages and plugging the UK’s talent shortage.
According to the Government website, some of the key measures include; investment in technical education for 16- to 19-year-olds rising to over £500million, a £300million investment for new academic research placements including PhD places and creation of new fellowships, and loans for part time and doctoral students from 2018.
CIPD Skills Adviser, Lizzie Crowley comments: “It’s great to see recognition that tackling the UK's skills challenges is a top priority. However, the majority of the workforce of 2030 is already in work, and whilst the £40million investment in lifelong learning is welcome, we question the balance of government spending priorities, given the focus needed on helping people already in work.”
The Government also recognises the need to increase the number of returnships for those who have been on a career break, with £5million set aside for those that need help.
Jane Goldsmith, EY’s Financial Services Talent Partner, comments: “Returnships provide an effective bridge back into the workplace. We’ve seen this in our own business. The feedback from our pilot programme has been really positive, both from participants and the business. It’s helped us tap into a talent pool of highly experienced individuals. Providing further support to business, to explore these career routes, is a welcome step.”
Dr Carole Easton OBE, Chief Executive at Young Women’s Trust, believes that more effort towards helping young women should be a priority: “High numbers of young women are facing serious...financial problems because of low pay and job insecurity,” she explains. “With inflation set to rise and wage growth slowing, it seems that things are likely to get harder for young women, not easier.”
She says that the trust is concerned that the maintenance loans for T-levels will only be available to those completing higher-level qualifications, meaning many young people, and particularly women, most in need of support will struggle to finance their training.
Acting Chief Economist of the CIPD, Ian Brinkley agrees that pay is likely to be strongly squeezed over the next few years. “With rising inflation, likely to bite, real pay is projected to grow by just 0.2% in 2017 and 0.4% in 2018,” he explains.
“It is particularly concerning that real household disposable income, the measure which best indicates how much money people have in their pockets, flat lines at zero per cent growth in 2017. What follows is a relatively weak return to growth through to 2021, and there is a clear risk that any financial hit, either as a result of Brexit or otherwise, could have a very damaging effect on fragile household budgets.”
Furthermore, Brinkley says that the productivity plan is showing no measurable impact on the economy’s future productivity performance.
The rise in the National Living Wage from £7.20 to £7.50, may help with this issue, suggests Steve Foulger, HR Director at allpay.
"The additional thirty pence an hour has the potential to reduce staff turnover, boost employee engagement and reduce sickness absenteeism, whilst benefiting the economy as it incrementally boosts disposable income,” he adds.
Changes to tax structures of self-employed workers will see their main rate of National Insurance contributions (NICs) increase. Brinkley believes that more people are likely to become self-employed or involved in other forms of atypical employment in the future and tax issues highlighted will only become more problematic.
Other tax changes include the call for evidence to review tax relief for employee expense claims. Mark Groom, Tax Partner at Deloitte thinks that issues could arise: "It’s early days yet, but if there is a concern with expense claims, with the advent of tax digitalisation, this could be tackled by requiring employees to upload evidence through their personal tax account to substantiate claims for tax relief.”
Steve Thompson-Martyn, Managing Director of Career Directed Solutions, spoke to us about the camouflaged message for job prospects the Budget held. “In what was to be the last Spring budget, the impact on the jobs market looked and felt more like a wet Wednesday in Rhyl. The headlines suggest disincentives for those in self-employment or running small enterprises. Both options of meaningful employment have been borne out of necessity rather than a monumental shift to a new entrepreneurial generation. The continued pressure that companies have on fixed costs dictates seeking alternative solutions and the self-employed meet this need.
“The sums involved in these changes are not deal breakers but the intent from the Chancellor signals intent to target a sector that by necessity relies on a ‘no thrills’ benefits package. This focus will doubtless cause many constituency MPs, and in turn local authorities and their enterprise teams, some concern. This, together with the business rates changes, makes entry into enterprise less of an attractive proposition.
“The obvious good news is hidden in the detail. The £2billion investment in social care will lead to increased jobs. This could however be offset by the attack on the leisure industry where rises in alcohol duty, and again business rates will have a challenging impact, particularly on mid-size leisure groups, and will almost certainly lead to estate re- sizing and with it a reduction on jobs.”