Chancellor John Healey’s Budget has been met with mixed reaction from the recruitment sector with enthusiasm muted by perceived impact on job creation and hiring confidence.
Maxine Bligh, Interim Chief Executive at the Recruitment and Employment Confederation (REC) said she believed the budget would leave jobseekers waiting ‘far longer than necessary’ for a strong jobs recovery as the government is still not creating the right conditions for firms to grow, hire and invest with greater confidence.
“The Chancellor has failed to hit the bullseye on business confidence to hire today,” she said. “There is still too much regulation landing on employers’ desks because of employment reforms that place process ahead of practical outcomes. The government should have exempted agencies from guaranteed hours rules to help young people keep entering the labour market through temporary work. Critically for employment costs, the Budget does not provide a broad phased restoration of the employer National Insurance threshold. Employers are also still waiting for greater flexibility within the Growth and Skills Levy and increased support for shorter, targeted training programmes. Together, those measures would have done far more to encourage hiring and investment.”
Bligh noted that the small business rates relief for retail, hospitality and leisure would help in the short-term. The latest Report on Jobs shows retail recruitment has been under pressure for some time, with both permanent and temporary retail vacancies last in growth territory in July 2023. In hospitality, permanent vacancies last increased in August 2024 and temporary vacancies in December 2024.
“Yet the rises in minimum wage rates announced today are an additional pressure on embattled employers already facing daily pressures from geopolitical uncertainty and escalating costs of doing business,” she said. “Government must not allow the National Minimum Wage to become a disincentive to hire younger jobseekers.
“There is still too much delay in taking the big decisions that could help get the jobs market firing.”
For APSCo, Tania Bowers, Global Public Policy Director, welcomed measures in the Chancellor’s Budget designed to ease cost-of-living pressures and support business growth, including the introduction of a new Founders Relief on Capital Gains Tax and the expansion of the EMI2 share option plan.
The trade body was also positive about the lack of increase in direct taxes on employment and recognised the Government’s continued focus on workforce planning, labour market participation and investment in growth-driving sectors such as AI, defence and life sciences.
“The Chancellor was right to focus on helping people and businesses manage rising costs, particularly with significant energy price increases and continued pressure from interest rates,” said Bowers. “We welcome support for entrepreneurs through the new Founders Relief and the expansion of EMI2 share options, which should help innovative and scaling businesses attract investment and talent.
“However,” she continued, “there remains considerable uncertainty around employment policy. The most significant provisions of the Employment Rights Act, including fire and rehire reforms and guaranteed hours, are still to be implemented in 2027 and beyond, making it difficult for businesses to plan with confidence.”
Bowers said their members feel the administrative burden is increasing rather than decreasing around employment. That said the role of technology and AI in helping recruiters and employers navigate increasingly complex obligations across employment law, right-to-work requirements, and data protection means the organisation was positive about the Government’s £600 million investment in AI safety and measures to increase AI adoption.
“Ultimately, success will be measured by whether these measures help create conditions for stronger hiring, increased workforce participation, and increased business investment in the UK,” concluded Bowers.
