Recruiter industry reaction to Chancellor’s Spring Statement.

Spring forward.

Overshadowed somewhat by other Parliamentary activity, and with a big spend geared to an agreement which still seems as elusive as ever, the Chancellor’s Spring Statemenet this week was, as Julia Kermode, chief executive of The Freelancer & Contractor Services Association (FCSA) said. “a fairly low key affair.” Despite this there are a number of elements put forward which recruiters should note and look out for. 

“We were pleased to hear that changes to the Apprenticeship Levy that were announced at Budget 2018 are to be brought forward and will take effect from April 2019,” said Julia Kermode, chief executive of The Freelancer & Contractor Services Association (FCSA). “This means that the amount levy-paying employers can transfer to their supply chains will increase from 10 per cent to 25 per cent which is good news for umbrella employers and recruitment agencies who often find themselves paying the levy but unable to reap any benefits.”

“Good regulation is at the heart of government action on jobs, so firms will welcome the commitment to consulting on the future of the National Living Wage,” commented Neil Carberry, REC’s chief executive. “Recruiters also want the Chancellor to listen to firms on upcoming tax changes for contractors to deliver a level-playing field. Without clients taking responsibility for contractors paying the right tax, law-abiding firms may be undercut. REC will make this point forcefully in the run-up to the Budget.

“The Chancellor’s recognition of the resilience of the UK labour market was hugely welcome,” Carberry continued. “With 600,000 new jobs to fill by 2023, addressing skills policies will be vital. We will be interested to see what the National Retraining Scheme looks like in practice as REC members will have a big role to play. And while it is good news that the limited package of reforms to apprenticeships announced in the last Budget are to be brought forward, we still need to have the debate about changing the failing apprenticeship levy policy into a flexible skills levy that really works for business and workers.”

Kermode also notes in the detail of Mr Hammond’s Spring Statement documentation that there is a commitment to report by 30 March 2019 on the time limits for the recovery of lost tax involving offshore matters with other time limits, including those imposed by the 2019 loan charge and the retrospective nature of that charge.

“If the report concludes that going back 20 years is unjust it would be good news for those contractors who have been unwittingly caught up in such schemes,” she comments. “Whilst FCSA does not condone any scheme that works to avoid paying the right amount of tax we also don’t want those caught up in the schemes to be faced with significant and impossible financial difficulties. I was also pleased to hear the Chancellor pledging to ‘tackle the scourge of late payments’, which will be welcome news to those freelancers and SMEs who have suffered at the hands of larger firms. Everyone deserves to be paid on time for the work they do. For far too long, many larger companies have ridden rough-shod over freelancers and SMEs and this needs to stop.”

Elsewhere, Samantha Hurley, director of operations at APSCo also highlighted the Chancellor’s admission that ‘investment in people’ is central to boosting UK productivity.

“The announcement that changes to the Apprenticeship Levy – which will allow employers to transfer 25% funds to others in their supply chains – will be brought forward to April 2019 is welcome,” she said. “As we have repeatedly stressed to HMRC, the fact that a company’s ‘size’ is directly related to its payroll means that many staffing firms have Levy pots so large that they cannot realistically use all the funds upskill their own people. While not perfect, this new system at least means that more of this money can be directed towards skills development, as the initiative was originally designed to do.”

Hurley also praised the government’s commitment to build on the UK’s ‘fundamental strengths and competitive advantages’ through embracing the technologies of the future and, crucially, equipping British workers to use them.

“While our members will take heart in assurances that economy remains robust – with a further five years of growth predicted and 600,000 further jobs expected to be created by 2023 – there is no escaping the precarious position we find ourselves in as March the 29th nears ever closer,” she said. “Hammond’s stark warning that a no deal Brexit is likely to result in higher unemployment and lower wages should not be taken lightly. However, the professional sectors that our members recruit into are unlikely to be impacted to the same extent as some others in this scenario.

“The Chancellor’s resolve that the government remains focussed on attracting those with the skills we need in the UK economy after the UK leaves the EU – no matter where they come from – is promising. As is his commitment to consulting with business to ensure that any new immigration system is fit for purpose. APSCo is, of course, always keen to engage with government to ensure that the interests of our members are represented in parliament.”

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