Chancellor Jeremy Hunt delivered his spring budget this week, and with it revealed a focus on getting Britain ''back into work'', outlining a series of initiatives which will have direct impact on employers and HR departments. Hunt announced his four pillars for growth – 'enterprise, employment, education and everywhere' – created with the view to support those who are economically inactive or out of the labour market back into work.
When discussing the current labour market, Hunt said: “We have around one million vacancies in the economy, but excluding students there are over seven million adults of working age who are not in work; that’s a potential pool of seven people for every vacancy'', with his hope that the new reforms would “remove the barriers” that are stopping people from working.
Six Key Takeaways for Senior Business Leaders
‘Universal support’ scheme announced to help disabled or those with long-term sickness into work
“With Zoom, Teams and new working models that make it easier to work from home, this is possible now more than ever,” said Hunt, when discussing supporting those with disabilities or long-term illness back into work
With this in mind, a new voluntary employment scheme for disabled people and those with health conditions in England and Wales has been announced, called Universal Support. Hunt announced that up to £4,000 per person will be invested to support 50,000 people per year to find a “suitable role to cater to their needs”.
Hunt also outlined changes to the welfare system, such as abolishing the work capability assessment, which would support claimants back into work “without fear” of losing their financial support.
Keep people in work with more support for occupational health
Hunt revealed a £406m plan to “tackle” health issues keeping people out of work – with a particular focus on mental health, musculoskeletal conditions and cardiovascular disease, stating “We also want to help those forced to leave work because of a condition such as a back pain or a mental health issue; we should give them support before they end up leaving their job.”
He noted that occupational health provided by employers has a “key role to play” in these changes and announced plans for two new consultations on how to improve availability for that support, with double the funding for SMEs.
A new type of apprenticeship for over 50s
In an effort to attract “older workers” back into the labour market, the government will launch a new type of apprenticeship for the over 50s: Returnerships. “No country can survive if it turns its back on the wealth of talent and ability. I want to make it easier for those who wish to – to work longer,” Hunt explained when announcing the initiative. This scheme will see existing programmes be refined to improve accessibility for older workers, as well as new work academies and skills workshops.
The chancellor explained that the Returnership programme would focus on “flexibility and previous experience to reduce training length” to give over 50s the support they require to find a “recognisable path” back into work.
Lowered pension tax to keep the highly skilled in work
Hunt announced an increase in the pensions tax-free annual allowance from £40,000 to £60,000 to incentivise highly skilled workers to stay in work, stating that “No one should be pushed out of the workforce for tax reasons.”
It was also announced that the lifetime allowance charge will be removed before being abolished altogether, which Hunt explained should encourage people to stay in work and simplify the tax system by removing some of the “complexity” of pensions tax.
Support for working parents via reduced childcare costs
In what he proclaimed is a “revolution in childcare… today's childcare reforms will increase the availability of childcare, reduce costs and increase the number of parents able to use it”, Hunt announced that 30 hours of free childcare for every child over the age of nine months with working parents would be available by September 2025, introduced in the following phases:
April 2024: 15 hours of free childcare for working parents of two-year-olds
September 2024: 15 hours of free childcare for working parents of children aged nine months to three years
In addition, local authorities and schools will also be funded to increase wraparound care and tackle the barriers caused by the limited availability for parents of school-age children at present.
Raise corporation tax to incentivise investment
While there has been pressure from some Conservative MPs to drop plans to increase corporation tax rate from 19 per cent to 25 per cent, Hunt confirmed that the rise would go ahead for companies with more than £250,000 in profits in April, insisting that just 10% of UK businesses would pay the full 25 % rate. “Our corporation tax did not incentivise investment as effectively as countries with higher headline rates; the result is less capital investment and lower productivity than countries like France and Germany,” said Hunt.
The chancellor also revealed a new full expensing initiative to allow all money spent on IT equipment and machinery will be deducted in full from taxable profits.
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