What we would like to see in Spring Budget 2017

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Wednesday, 01 March 2017

What we would like to see in Spring Budget 2017


On 8 March, the Chancellor of the Exchequer, Philip Hammond, will set out his Budget. Many are expecting a lighter budget than usual as it is the last one at this time of year. Subsequently, government will hold an Autumn Budget. But with Brexit negotiations on the horizon, all eyes will be on the Chancellor’s proposals, especially as “political and economic uncertainty” is the top challenge for a third (36 per cent) of UK businesses.


In light of this, the REC has written to the Chancellor and requested he prioritise the following key developments.


1. Labour market policies and an immigration system that enables businesses to recruit and retain the people they need to succeed.  Our data (e.g. Report on Jobs) shows skills shortages in many sectors. Government should prioritise investments in careers advice and guidance for young people that draws upon accurate and up-to-date labour market information, work-related training funds for existing staff and support for those furthest away from the labour market. It is equally important that as we near full employment, the forthcoming Brexit negotiations should prioritise an immigration system that is fit for purpose and drives greater economic and social prosperity.

 

2. An apprenticeship levy that helps everyone to progress. The levy is one mechanism for ensuring future investment in skills but as currently constructed, it will do little to help those who could most benefit from the funds it will raise.  Despite the fact recruiters will have to pay the levy on all staff including the contingent labour on their payroll, agency workers cannot participate in a quality apprenticeship as the typical length of assignment does not equate to the duration of an apprenticeship. Government needs to rethink the mechanism for collecting the levy to address this issue. As Matthew Taylor conducts his review into Modern Employment Practices for government, the needs of all individuals in the labour market – including the growing number who work flexibly – must be considered.

 

3. A 21st century tax system that is fit for purpose and supports those who choose to work as contractors, freelancers and interims and the businesses supplying them. ‘Making Tax Digital’ ushers in a period of fundamental reform. Government should learn from prior experience and ensure changes are not rushed through. In a similar vein, the public sector is facing unprecedented upheaval if they implement the changes to Personal Services Companies and IR35. With just one month to go, the digital tool is still being tested, only draft legislation is available and there is mounting evidence that these changes will add cost and bureaucracy to an already over-stretched public sector. We propose the government delays implementation for one year, at least until the tool is fully tested and evaluated. This would also allow government to align the timetable for 1R35 reforms with its proposed review into taxation and self-employment and that of Matthew Taylor’s into Modern Employment Practices. Many of the employment practices seen today are a direct product of our existing tax system. Therefore, we call for a broader, cross-departmental review which better aligns these different work streams.

 

You can keep track of Spring Budget 2017 and what it means for recruiters – we will be live tweeting key announcements from 12.30pm on 8 March via @RECPress

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