What does the Government’s budget mean for HR?

The Chancellor George Osborne delivered the Budget on 16th March 2016. Here are some of the announcements HR professionals need to be aware of:

In an effort to boost economic growth and support businesses, the Chancellor announced plans to cut the main rate of corporation tax from 28 to 20 per cent, reducing to 19 per cent in 2017 and 18 per cent in 2020. With a view to raise productivity, create job opportunities and increase wages for the next generation, the Chancellor also announced plans to simplify UK’s ‘complex’ tax system by setting out a ‘business tax road map’ to parliament and employers. 

To give the next generation ‘choice and flexibility in their savings’ the Chancellor increased the ISA limit to £20,000 per year and will launch a new flexible Lifetime ISA for those under 40 years old. The new ISA allows people to save up to £4,000 each year and receive an additional 25 per cent bonus from the government. Savings, including the government bonus, can be accessed both to buy a first home and in retirement. Osborne said the initiative acknowledged the “agonising choice” for many young people who are forced to choose between the two. However, Mark Beatson, chief economist for the CIPD, said: “…we need to look at how people can be given the means to invest in themselves. The government should consider a ‘Help to Learn’ fund that can give individuals at different stages of their working lives access to the careers guidance, training and development they need to move into skilled jobs and progress at work.”


Brexit threatens supply of skilled talent to UK - ManpowerGroup Research

Research from ManpowerGroup shows that in the first half of 2016, the hiring intentions amongst Britain’s employers are at their strongest since 2007. However, there are doubts if this demand for talent can be fulfilled if Britain votes to leave the European Union in the upcoming referendum. James Hick, ManpowerGroup Solutions Managing Director said: “…while there’s clearly the demand for workers, we also need to protect the supply of talent. Employers of all shapes and sizes rely on the free movement of people inside Europe to find the skills they need…we simply won’t be able to replace overnight the skills these people bring to the UK if we leave the EU, and it’s our economy that will suffer.” Latest employment statistics from the ONS show that of the 521,000 jobs created in the last 12 months, 215,000 were filled by people from elsewhere in the EU. 

Their research also suggests that Government’s policy on the National Living Wage (NLW), which is to be introduced in April 2016, is encouraging some employers to consider alternative recruitment options, with some organisations opting to hire young workers to avoid having to pay the NLW. 


Government announces a 1 per cent pay rise for public sector workers, which unions have termed as ‘miserly’

Public sector workers, including doctors, dentists, nurses and members of the armed forces will receive an average 1 per cent pay rise from this year. The only exception will be prison service staff who will get 1.36 per cent as an ‘exceptional award’ for a ‘highly ambitious’ overhaul of the prison system. Greg Hands, chief secretary to the Treasury, said the announcement follows recommendations from pay review bodies. “The independent OBR [Office for Budget Responsibility] estimates that 200,000 public sector jobs have been protected thanks to our average 1 per cent pay policy so we can continue to deliver crucial public services,” he said. 

However, unions have termed the 1 per cent pay rise as being ‘miserly’. Unison’s head of health, Christina McAnea, said: “This 1 per cent pay rise falls way below what health workers need and deserve after years of pay cuts, especially as changes to national insurance and pension contributions will absorb much of this miserly increase.”