What does the Autumn Budget mean for recruiters?

Nov222017

The chancellor delivered his first Autumn budget this afternoon laying out his vision for an economy that is fit for the future. While the biggest announcements were around housing (good news for our construction members), there were a number of tax, skills and infrastructure related announcements relevant to the recruitment industry. Here’s our summary:

Tax

  • IR35 - the government announced that there will be a consultation looking at non-compliance with the IR35 legislation in the private sector in early 2018. As detailed in the chancellor’s ‘red book’, the consultation will ‘take account of the needs of businesses and individuals who would implement any change’ and ‘draw on the experience of the public sector reforms’.
  • The government also published a discussion document on employment status and tax, following on the Matthew Taylor review. We hope this will mark the start of a more holistic approach to tax and employment status.

We are pleased that the government has heeded our calls to not rush through changes to the IR35 in the private sector and to have a broader consultation on non-compliance. We are also glad that government is looking at the impact IR35 has had on the public sector.

We are ready to represent the recruitment industry to improve these rules and protect the flexibility of our labour market and the wider economy. We will put our energy into making sure that the voice of our industry is heard during the consultation period.

Tune into our webinar on 30 November for further details and complete our survey if you supply contractors to the public sector to help us gather evidence.

Others points to note:

  • The chancellor said that the VAT threshold for small businesses would not be reduced in the next two years but that the government would consult on the matter. 
  • The chancellor announced a further crackdown on abuse of the NICs employment allowance and disguised remuneration tax avoidance schemes – issues we highlighted in our pre-budget submission.
  • A package of measures were introduced to soften the blow of the business rates revaluation scheme. This will include a further £2.3 billion of support to businesses and a change in the way business rates are calculated.  

Skills and productivity

There was some good news on the skills and education front, though few surprises as the new funding commitments had been trailed in advance. 

The chancellor committed to:

  • An extra £20m for further education colleges to prepare for T-Levels.
  • Investment in maths teaching and delivery in schools.
  • Tripling of trained computer science teachers in secondary schools to 12,000
  • A national retraining scheme bringing together the government, TUC and the CBI to include £76m to boost digital and construction skills.

Our Future of jobs report highlighted the skills challenge faced by the UK and the need for additional funding and new approaches. 

The chancellor also restated the government’s commitment to improving the UK’s lagging productivity. Investment in skills, infrastructure, new technologies and a new industrial strategy will be key to the government’s approach to tackling this.

Apprenticeship levy

We were pleased to see the chancellor say that the government will continue to work with employers on how the apprenticeship levy can be spent so that the levy works effectively and flexibly for industry. We look forward to working with the government on this.

National Minimum Wage

The chancellor confirmed that the government will accept all of the Low Pay Commission’s recommendations for National Minimum Wage rates to apply from April 2018.

With our jobs data showing declining business confidence we are glad the government have taken a cautious approach to National Living/Minimum Wage increases.

Health and social care

There was speculation that the government would increase the pay of nurses but there was no commitment to do this in the chancellor’s speech. He did say however that the Health Secretary Jeremy Hunt was in discussions with health unions on pay structure modernisation for Agenda for Change staff to improve recruitment and retention.

We will continue to call on the NHS to create an environment in which all staff are paid appropriately for the work they do, are made to feel valued, and receive the training, flexibility and support they need. This will be crucial in producing a workforce that is healthy, happy and able to deliver the best possible outcomes for patients.

You can read the budget statement in full here. We will continue to keep members up-to-date as details emerge via consultations and draft regulations.

This entry was posted on Wednesday, November 22nd, 2017 by:

Karen O'Reilly is the REC's Stakeholder Engagement Manager

Karen O’Reilly works with the policy team to represent the interests and concerns of  members to policymakers and stakeholders in a number of sectors including executive search, interim management, financial and legal services, HR and office support. She also works on cross-sectoral issues including employment tax and social mobility and inclusion policy. Prior to joining the REC, Karen worked at the British Chambers of Commerce.  

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