The budget from Chancellor Rachel Reeves has raised more concern among recruitment and HR leaders for its impact on growth in the country. Speaking following her announcements, Recruitment and Employment Confederation (REC) Chief Executive Neil Carberry said that while the Chancellor had put growth at the heart of her speech, he felt there was too little to get business investing. At the same time he was concerned that a forest of small changes will make the business tax system even more complex, destined to raise more revenue from employers who do the right thing, such as offering pensions or training more apprentices that their levy will pay for. Changes on tax credits for investors and employee ownership will also make building and passing on a great small businesses more challenging.
“This lack of action sits alongside too little progress on key areas such as reforms to the Employment Rights Bill and ever rising costs of employment, driven by government decisions, that are causing a spike in redundancies over the past year,” Carberry said.
At the same time, Carberry identified some areas of progress. Moves on Business Rates, short course access to skills levy funding and funding for employment support schemes all appeared to be positive. However, Carberry also noted these steps require private sector support and engagement.
“The Chancellor went out of her way to mention investment in increasing NHS appointments, but the Budget documents repeat the misleading claim that government is saving money with its attack on agency staffing,” he said. “Like so much of this Budget, an approach that involves and engages the private sector would yield so much more and help close the fiscal gap on the back of a more prosperous country.”
Peter Cheese, chief executive of the CIPD, the professional body for HR and people development, was also concerned for rising employment costs: “The Chancellor has further raised employment costs for business but not done enough to articulate how to encourage growth and investment and boost productivity across the economy,” he said. “Measures to boost growth and support businesses have never been more important, in light of strong headwinds to recruitment and investment in workforces.
“Employment costs have increased across the board in the past year but there is still no coherent plan from the Government on how it will work with employers to improve productivity across the economy, to help businesses invest in skills and support technology adoption,” he added.
Cheese said the Chancellor’s support for the UK industrial strategy’s key high growth and green energy sectors was welcome but that there was little to suggest the Government has a plan to support employers in improving skills development, opportunities and productivity for the 75% of the workforce that isn’t in these chosen industries. “Unless this is addressed, it’s hard to see how there will be sustained improvement to economic growth or living standards,” he said.
“The Government will also need to continue to consult, and even compromise on some elements of the Employment Rights Bill, to ensure they don’t put employers off hiring, particularly young people and other groups perceived as presenting higher recruitment risks,” Cheese concluded.
