What the Budget Means for Recruitment and Jobs
From a rise in the National Living Wage to a £3bn investment in skills and training, there were many boosts for the recruitment and jobs sector revealed by Chancellor Rishi Sunak in yesterday’s budget.
As well there might be, considering how COVID-19 lockdowns and social distancing measures have stunned and even devastated many sectors over the past 18 months or so. And to that end, some of the worst hit – hospitality, the leisure industry (gyms) and retail can look forward to a 50% discount on business rates over the next 12 months.
Rise in minimum wage rates
The headliner was the rise in the National Living Wage to £9.50 per hour for those aged 23 and over (a rise of 59p). Those under 23 years old will see a bigger jump (of 82p to £9.18 per hour). Apprentices too will see a jump (of 51p to £4.81 per hour. All will come into effect in April next year.
Upskilling boost for better jobs
The £3bn investment in skills and education is all part of Sunak’s ‘Plan for Jobs’ which involves more money for apprenticeships – £2.7bn by 2024-25. At the same time, the apprentice hiring incentive for employers has been extended until January 2022. This means that employers who recruit apprentices will receive £3,000 per eligible learner.
It was also made clear that the government will continue to cover 95% of apprenticeship training costs for employers who don’t pay the apprenticeship levy. And, as further encouragement for SMEs to fund apprenticeships, there will be a boost to the recruitment process.
Chief Executive of accountancy training firm First Intuition, Gareth John, @first_intuition says: “Given the growing difficulties employers in the accountancy and finance sector have been experiencing retaining talent, the extension and increase of the incentives for new apprentice hires through to 30 September 2021 was extremely welcome.”
The extra ‘Plan for Jobs’ funding also extends to creating boot camps for learning new skills and introducing new ‘T-level’ qualifications for 16 to 19-year-olds. The aim of all this being to create a ‘high wage economy’ for the future.
Universal credit changes to encourage working
Those who work and are entitled to Universal Credit (such as single mothers) will be allowed to work longer hours without losing as much benefit. Sunak also announced in his October budget that the ‘taper rate’ is to drop from 63% of earnings per hour to 55%. That means a boost of 8p in every pound earned and is due to kick in by the beginning of December this year.
Potential pay rise for public sector workers
Lifting the pay freeze means some of the 5.5 million public sector employees may be on the receiving end of a future wage rise. It’s not guaranteed but from April next year it will no longer be impossible.
Tax increases for all employees
As predicted, there will be tax increases next year in a bid to claw back some of the overspend during the pandemic, particularly for the furlough scheme.
National Insurance is to increase by 1.25%. This means that those earning £20,000 per year will be £130 worse off. For those with a salary of £30,000 they will lose £255 and those earning £50,000 per year will pay an extra £505 in tax.
The increased NI will end in April 2023, at which point it will be renamed the Health and Social Care Levy.