Government and campaigns
This afternoon, the Chancellor Jeremy Hunt unveiled his “Autumn Statement for growth.” Normally the lesser of the year’s two fiscal events, you’d be forgiven for thinking this was a Budget as some significant announcements were made – an indicator that the General Election countdown to next year is well and truly on. The Chancellor focused on “reducing debt, cutting taxes, and rewarding business.” Oh, and he dusted off the term ‘levelling up’ which was ‘downgraded’ by his predecessor. There were certainly some pro-business announcements made – not enough of what REC members wanted on skills like Apprenticeship Levy reform, but more to help clients which we hope will convert into demand for people. But the downgraded growth forecasts demonstrate the scale of the challenge the country is still facing. There were a few REC asks included in the statement, and it’s always encouraging to see our Report on Jobs data cited in the official Treasury documents (page 12)! Here’s a roundup of some of the key takeaways.
In statement packed with measures, the Chancellor unveiled some of his ‘rabbits’ early and last week confirmed an extension to the Restart Scheme for a further two years - a key REC ask. Our own award-winning Restart scheme, working alongside employability services provider Maximus, has helped place 1,700 long-term unemployed people into work since 2021 and proves how effectively public and private sectors can work together to get people working. The Chancellor mentioned increased ‘support’ to get more people working together with tougher sanctions for those who don’t secure work. There’s always a careful balance to strike between genuinely helping people get into work and increasing sanctions for people who cannot engage with their local job centres or don’t get what they need from the system or time pushed work coaches.
The Chancellor now thinks we have enough money in the bank to make full capital expensing permanent. This is rather than for just the three years announced at the Spring Budget. Capital expensing enables businesses to claim 100% capital allowances on qualifying plant and machinery investments. While this is undoubtedly a welcome move for many businesses, full expensing won’t benefit every sector. However, that’s where the freeze on the small business multiplier when calculating business rates comes in, which will provide further support for small businesses for another year. In addition, the current 75% relief for eligible Retail, Hospitality and Leisure properties is being extended for 2024-25.
The government is also taking action on late payments – something we know matters to our members. From April 2024, government will introduce a requirement for firms bidding for government contracts over £5 million to demonstrate that they pay their own invoices within an average of 55 days, coming down to 45 days in April 2025, and 30 days after that.
Government will legislate to allow HMRC to reduce PAYE liability of a deemed employer to account for taxes paid by a worker and their intermediary where an error has been made in applying the off-payroll working rules. Over summer, the REC responded to HMRC’s tax off sets consultation, which we had pushed for as members of the IR35 forum, so it’s good to see government listening, by enabling HMRC to correct mistakes made in status determinations.
In addition, government announced an increase in HMRC’s debt management resource, enabling government to take action against promoters of tax avoidance. This is another welcome step but makes the need for government action on regulating umbrella companies even more crucial. We had to wait for a number of years before getting a consultation on umbrella regulation, now we’re waiting for a government response. Today’s announcement makes it even more critical that the response comes quickly and is followed by swift legislative changes.
Support for workers
While there’s a well-known saying that you can’t be all things to all people, that seems to be exactly what the Chancellor was determined to do with today’s statement, announcing support for as many people as possible – the self-employed were no exception. From 6 April 2024, government will reduce the main rate of Class 4 self-employed National Insurance Contributions (NICs) from 9% to 8% and will completely abolish Class 2 NICs. In addition, the Chancellor is introducing emergency legislation to cut the main rate of Class 1 employee NICs from 12% to 10% from 6 January 2024.
Before you pop the champagne (which will at least be cheaper thanks to a further freeze on alcohol duty) – there were some notable absences from today’s statement. Most importantly, if the Chancellor is really serious about boosting productivity, then we need a proper workforce strategy, one which genuinely recognises and addresses the people challenges we face in our labour market. Similarly, focusing on getting more apprentices into engineering and growth sectors, while failing to reform the Apprenticeship Levy, won’t actually address shortages, tackle inactivity, or boost business investment.
We’re meeting with Treasury officials next week, so we’ll have an opportunity to ensure members views on the detail of some of today’s announcements, and the policies that were missing, are represented.
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