REC comments on Spring Budget 2023

Commenting on today’s Budget, Kate Shoesmith, Deputy Chief Executive of REC, said:

“The danger that labour and skills shortages could cost the UK economy up to £39 billion per year from 2024 - around the same as two Elizabeth lines – looks to have focussed minds in government ahead of this Budget.

“Moves towards a childcare system that help low- and middle-income parents and guardians get into and progress in work are long overdue and very welcome. With the number of new jobs adverts last month at a 14-month high, we need more of this kind of labour market activation support. The upfront payment for childcare for those on universal credit will certainly help.

“Reform to pensions tax will help a number of people but the winners from this reform are not the only group that need urgent help.

“This tight labour market isn't going away and demand for staff has continued through the first quarter of 2023. Offering flexible skills training, by reforming the Apprenticeship Levy, is long overdue.

“Students preparing for the exam season face uncertainty about the future jobs market. The government needs to better equip them for the skills that are critical to our future, such as in green jobs and a green economic recovery.

“Many businesses want an immigration system that flexes to the needs of the economy. It is worth reflecting that people seeking refugee status are banned from working while they wait months, and often years, for a decision on their asylum claim. This is despite polling last year found that 81% of the public support the right to work for people seeking asylum in the UK.

“The announcements today go some way towards considering how we overcome labour shortages – but it needs to be at the very heart of the government’s growth strategy. And business must respond by putting people and staffing issues at the top of their agenda.”

Ends

Notes to editors:

Overcoming shortages - How to create a sustainable labour market – July 2022.
In this report, we show exactly how much damage could be done if we don’t step up. With a 10% surge in demand for staff across the economy, and the labour market restricted by shortages, we could see a 1.2% fall in expected GDP and productivity by 2027 – costing the economy anywhere between £30 billion and £39 billion every year. This figure is just short of the entire current defence budget, or two whole Elizabeth Lines.

Labour Market Tracker: New job ads hit a 14-month high as businesses still need to hire – February 2023.

Report on Jobs: Firms' hesitancy to hire weighs on permanent staff recruitment in February – March 2023

Lift the Ban - In March 2022, YouGov polling found that 81% of the public support the right to work for people seeking asylum in the UK.

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