Industry responds to the Chancellor

We have the reactions from the industry’s leading associations

Responding to Sunak’s speech, Tania Bowers, APSCo’s Head of Public Policy said:

“We are optimistic about the Government’s plans – a highly trained and skilled workforce will obviously support the economic recovery but we are concerned that the delivery mechanism may be too rigid to allow recruitment firms to get involved in the delivery and implementation of the scheme. Young people working through recruitment firms would have the ability to work in a variety of different environments and gain multiple skills – our members are tapped into a multitude of employers across a wide variety of sectors and would be in a position to support and facilitate the scheme. We also hope that recruitment firms will be able to access the funding available for training for young people – and that it applies to PAYE employers so that agency workers can be included”

“We are disappointed the Chancellor has not introduced  more flexibility around the Apprenticeship Levy – we believe that the way in which levy funds can be used should be broadened to help re-skilling opportunities and facilitate the ‘skills pivot’ we will need to get people back to work. Currently the scheme can only be used to upskill employees on formal apprenticeship programmes so agency workers are excluded and the levy can’t be used for shorter term training, which would have been so useful during furlough.”

“While we wholeheartedly welcome the Job Retention bonus which will help retain jobs, we were disappointed that the Chancellor chose not to reduce employer costs through an amendment to national insurance contributions  – reducing employer costs while also putting more money in people’s pockets would have been a welcome intervention at this stage.”

“We know from our experience of previous downturns that infrastructure spending drives job growth and so we welcome the investment designed to ensure a ‘green recovery’.  However, the spending announced is still lower than that announced by Alistair Darling during the financial crisis and the Government must support the recovery by continuing the spending initiatives outlined in the 2020 budget.”

Neil Carberry, CEO of the Recruitment and Employment Confederation, said:

“We asked the Chancellor to focus on jobs, and he has done so. Moving on from the furlough scheme as the crisis develops is essential – people need stable jobs for the long-term, not the sort of short-term subsidies that were needed for lockdown. The employee retention bonus and the kick start scheme are good ideas – and it is right to focus support on young people. The kick start scheme will use temporary work as a stepping stone to get young people into work again –  an approach the REC knows to work. The effect of unemployment on a young person’s career and earnings can be catastrophic.

“We’re delighted the Government has recognised the vital role recruiters play in helping people find their feet when they become unemployed. After months of  working closely with DWP, today’s announcement of a specific fund for the delivery of private sector employment support to jobseekers will help address unemployment and support the industry to keep doing what it does best.

“Other measures announced today are proportionate steps to support short-term goals on getting spending flowing and investment in skills. Big longer term questions about sustainable growth and employment remain on issues like the apprenticeship levy and national insurance – the Chancellor will have to return to these in the Autumn. One disappointment in the speech, however, is the lack of any indication about the economic boost that will be delivered by re-opening workplaces. Many firms want to know when Government will feel able to boost employee confidence by switching from working from home if you can, to going to work if it is safe.”

FCSA Chief Executive, Julia Kermode comments:

The job retention bonus for employers who bring back workers from furlough will be a real incentive for businesses who employ people directly and will offer some much-needed financial support during this difficult time. However, for umbrella employers and agencies who operate a very different employment model, the £1,000 per employee bonus falls significantly short of the total financial cost for an umbrella employer or recruitment agency to continue to furlough their employees until the CJRS scheme ends on 1 October 2020.

For those employers of contractors who are in a financial position to continue to furlough, this announcement will be welcomed and will provide some financial support at least whilst they continue to furlough and to re-engage those contractors as soon as the work opportunities arise.

There will, however, be many umbrella employers or agencies, even with this cash bonus, who simply cannot afford to continue to furlough without putting their business at financial risk. This is once again an example of the government’s failure to take into consideration this vital employment model and, as a consequence, potential putting thousands of contractor jobs at risk in a sector that has already suffered enough in recent months.

Furthermore, there was no mention of any additional financial help for the self-employed or limited company directors who seem to be forgotten. This is surprising given the widespread media coverage of those falling between the cracks of the government support measures already in place.

It is also disappointing that the government has not announced anything to help those employees who have already been made redundant as a consequence of the coronavirus pandemic. We are aware of many contractors outside of the 16 – 24 age group who are now without work and struggling to get back into employment. These people must not be overlooked; the government must look at ways to incentivise to businesses to re-engage our highly skilled and experienced contractor workforce.

Finally, umbrella employers and agencies who supply contractors into the tourism and hospitality sector will welcome the reduced VAT rate of 5% which will help them with their cashflow in the coming months.

Peter Cheese, chief executive at the CIPD, said:

“The £2bn kickstart fund is a bold measure to help get young people into work but employer engagement will prove critical. Similar schemes in the past have floundered as employer pick up was low or largely limited to low-paid opportunities in the public or charitable sectors. This scheme may face similar difficulties if it fails to engage with the private sector, especially at a local level. The Government will need to draw on local partnerships and networks to make it work for young people and small employers in particular.”

“There also needs to be strong support to help young people prepare for what happens after the scheme is finished as it is not an automatic free-pass to a permanent role in six months’ time. The pledge to double the number of work coaches will help to a point but this support will only go so far if people cannot access training and development opportunities as well.

“The Government needs to do much more on support and investment in life-long learning if it is serious about helping people re-skill and upskill to find work as we go through this period of significant change.”

“Efforts to incentivise employers to invest in new apprenticeships are welcome. However, to ensure the best use of public funds we believe that these should have been more tightly focused and more generous: aimed at boosting apprenticeship take up among SMEs, where uptake has historically been low, and focused on opportunities for young people.

“We are not convinced the Job Retention Bonus will provide sufficient incentive to encourage employers to bring workers back from furlough beyond those they would be planning to bring anyway.

“A simpler way of protecting jobs, and especially those of younger people, would be to extend the Job Retention Scheme for key sectors such as hospitality and leisure beyond October. We believe this would be a more effective use of public funds rather than the Job Retention Bonus.”

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