REC Autumn Statement Submission

Ahead of the Autumn Statement, taking place on 22 November, the REC has written to the Chancellor, Rt Hon Jeremy Hunt MP, sharing our latest labour market analysis and setting out 3 key areas where government action is needed. The Autumn Statement provides an opportunity to build on the commitments made in the Spring Budget earlier this year and for the government to take further action to grow the economy, improve productivity and mitigate the cost-of-living crisis.

On behalf of our members, we have set out asks around:

Boosting investment via a stable taxation system, modernising public procurement and embracing AI

The UK needs to recognise the changes to the labour market that have taken place with an increasing number of people working in flexible ways. The tax system needs to be modernised to reflect current working practices. This includes reviewing the IR35 rules and the CEST tools to allow individuals to have greater clarity around their tax status and reduce the potential for accidental or intentional non-compliance.

The government also needs to modernise the public sector procurement process. Rate caps in the NHS, for example, were set in 2016 and have not been updated to reflect changes to the labour market. The NHS workforce plan currently seeks to exclude agencies in the long term. This is the wrong approach, and the government needs to instead recognise the important role agencies can play in building an effective and sustainable public sector workforce.

AI is also a key area for the government to embrace. As the use of this technology becomes increasingly commonplace, the government needs to make sure a fair and effective assurance framework is in place to allow AI to boost productivity and growth.

Prioritising people by reforming the apprenticeship levy building on the Spring Statement's childcare proposals and addressing other barriers

The apprenticeship levy has long been a target of the REC, and we continue to stress the need for reform to make the apprenticeship levy into a flexible skills and training levy. This would open it up to a wider range of workers, leading to a higher-skilled and therefore more productive workforce.

Incentivising businesses to invest in green skills is also crucial for the development of the UK economy. The transition to a green economy is critical for economic growth and for the UK to meet its net-zero objectives. Encouraging businesses to invest through green-tax credits and creating a clear definition of what constitutes a green job is necessary to build the skills profile the UK needs for the future.

Childcare reform was one of the key announcements from the Spring Budget, and the government now needs to build on the commitments made in Spring. Further opening up access to the 30 hours of childcare allowance and the tax-free childcare scheme will boost labour market activation and help people back into work.

Likewise, improving access to the Access to Work scheme will boost labour market activation. This is an existing scheme that provides an excellent service in helping people with disabilities in to work. However, more needs to be done to promote this scheme and ensure it is helping the maximum number of people possible.

Taking a risk-based approach to regulation to create a more efficient labour market enforcement framework. 

The introduction of regulation for umbrella companies has been a key ask of the REC for several years. This includes the introduction of umbrella specific regulations and the creation of a single enforcement body to help enforce non-compliance issues in this sector. This would reduce the existing non-compliance issues we see in the umbrella sector including worker rights breaches and concerns around tax evasion and avoidance.

To go along side umbrella regulation, we also need to see reform to wider-employment legislation to reflect modern working practices and the increase in temporary forms of work. Reviewing, revising and updating employment legislation to specifically account for agency workers and other temps will reduce non-compliance, improve awareness of worker rights and reduce the complex and confusing admin that exists around some of these rights in their current format. 

You can read the full submission here.