Wednesday 27th October 2021 – all eyes were on Parliament as Chancellor Rishi Sunak announced the Autumn budget and Spending Review.
As is usual, the following hours and days have been filled with press articles and analysis of what was said. A ‘budget calculator’, how are households affected, what is the effect on businesses and various sectors of the economy.
Perhaps, for this budget, more people than usual have taken a keen interest in what would be said. We are now living in a period where the cost of living has risen sharply so people wanted to see how Chancellor Rishi Sunak’s announcements would help (or hinder) them.
Official forecasters have forecast the cost of living to increase by 4% over the next year and Chancellor Rishi Sunak needed a budget that would ease the very real concerns for lots of people. Prices have already increased in shops and for energy.
Obviously, employers will also have been following keenly to see what measures the chancellor was taking as the UK economy (and those of other nations) open up post pandemic. Post-Brexit, challenges remain, also.
The current Conservative Government is pushing an agenda of ‘Levelling Up’ which is said to be about redressing imbalances within the economy.
The Autumn Budget and Spending Review was said to be about taking measures to continue that levelling up so that members of different communities and localities are not left behind, can take pride in their local area and can become more productive. This not only benefits those local communities but also the economy as a whole.
Employers clearly play a huge role in the productivity of different localities and their contribution to the productivity of different regions. Do you feel the Budget announcements have equipped you with the tools to be able to play your part?
Let’s take a look at the different angles taken by some of the larger media outlets when assessing the budget announcement by Chancellor Rishi Sunak.
Tax Freezes & Supply Chain
Sky News highlighted how the UK was going to rebound from the effects of the pandemic as quickly as possible. This is going to be done by the lowering of taxes with the intent that work pays and people’s efforts will be rewarded. This budget stated that, according to Rishi Sunak.
As an employer, how do you think this will affect you? Whatever sector you are working in, do you think this will make it easier for you to attract young talent to your roles? Critics have pointed out that the freezing of income tax for five years means that some who are awarded pay rises during this time could find themselves in a higher tax bracket.
The lowering of taxes is also to help with the problem of inflation caused by the rising energy prices and the reopening of economies and the budget announcement stated that it is this that has caused the supply chain problem.
Have you felt the effects of the supply chain problem in your business? You might even be an employer in warehousing and distribution where you are struggling to attract lorry drivers or warehouse staff.
The government has said whilst the problem can’t be solved overnight, they can help by improving conditions for lottery drivers with measures like better equipped lorry parks which will help to attract drivers into the profession.
If you are an employer for a company that relies on vehicles or you are situated in an area where most of your staff need to rely on their own transport to get to your workplace, a freeze in fuel duty could be beneficial to you as prices at the point of sale at the petrol pump are still increasing. It’s hoped this can help families as well as small businesses.
It was a controversial move but the Chancellor also cut air passenger duty for domestic flights. This could save money for those businesses that use domestic flights. If you use long haul flights, however, there is a higher tax for these.
If you or your staff travel internationally as part of your business, do you think this wouıld encourage you to do more video conference calls that you may have become more familiar with during the lockdown and pandemic restrictions?
Universal Credit And Pay Packets
Depending on the size of the company, this is an area of interest for employers or an area for the HR department to deal with.
BBC News addressed the Chancellor’s announcements with regards to Universal Credit, the National Minimum Wage and the National Living Wage.
There will be a Universal Credit Taper Rate which means any of your staff who are also entitled to Universal Credit will see their Universal Credit reduce as they earn more money. The rate has been reduced to 55 pence from 63 pence so, in this sense, your staff who receive Universal Credit should be better off, financially.
The BBC pointed out that around 2 million workers will benefit from this rate cut but, on the other hand, around 2 million people will not benefit because they either don’t have employment or they are in employment and they are not earning enough to benefit from the taper rate cut.
National Living Wage and National Minimum Wage
This is an area that will have an effect on both employers and employees. All young people in the workplace who are working for the minimum amount are set to receive an hourly pay rise.
If you are an employer with a small business, this could have a direct impact on you, if the roles your staff are doing are entry level roles or roles that typically pay minimum wage amounts.
National Minimum Wage and NLW wage increases are as follows:
- National Living Wage for those aged 23 and above will increase from £8.91 per hour to £9.50 per hour
- National Minimum Wage for those aged 21-22 will increase from £8.36 per hour to £9.18 per hour
- National Minimum Wage for those aged 18-20 will increase from £6.56 per hour to £6.83 per hour
- National Minimum Wage for under 18s will increase from £4.62 per hour to £4.81 per hour
If you employ Apprentices, the minimum wage for them will increase from £4.30 to £4.81.
If you are an employer in the hospitality industry and you serve alcohol at your business then the Chancellor’s announcements with regards to alcohol duty will have an effect on you.
Working in the hospitality industry, you will be only too aware of the effects of Covid and Brexit on the industry. Closures due to the pandemic and the loss of overseas workers due to Brexit have impacted the hospitality industry hugely.
Bearing in mind the announced hourly wage increases do you think the Chancellor’s announcements will benefit pubs, restaurants and other places that serve alcohol?
Higher energy prices and higher wages could mean an increase in prices at the bar for the customer.
Chancellor, Rishi Sunak, announced that from February, 2023, there will be lower duty on lower strength draught beers and ciders, as well as sparkling wines. He has called this ‘draught relief’ in a bid to support the community pub industry who do around 75% of their trade selling draught. He said this is a long term investment in British pubs.
Whilst there is no immediate increase on alcohol duty, higher percentage alcoholic drinks such as stronger red wines, fortified wines and white ciders will see an increase from February 2023.
If you are an employer in the hospitality sector, what effect, if any, do you think this will have on your business?
Retail, Hospitality & Leisure
If you are a business owner in the retail, hoıspitality or leisure industries then Chancellor, Rishi Sunak announced a year long 50% discount on business rates. From 2023, he also announced there will be more frequent re-evaluations every three years to make the system fairer and timelier.
He also announced a new business rates improvement relief so that businesses can make improvements to their property and not pay any extra business rates for 12 months.
These measures will affect places such as pubs, restaurants, gyms and other leisure facilities.
What Does The Future Hold?
As well as the specific areas mentioned above, this Opinion article in Bloomberg stated that the Budget announcements included public investment in infrastructure, regeneration, innovation and skills training.
These are all areas that could benefit you as an employer and benefit young people who are looking to get into the workplace. Skills training is essential for the continued productivity of the UK as a whole.
Many challenges remain as the world continues to emerge from the pandemic and as the UK works its way through Brexit. Bloomberg states that the impact of Brexit is twice as bad as that of Covid so there is a lot of work to do.
‘Levelling up’ is all about making sure that the large swathes of the country that are left behind with regards to life expectancy, skills levels and productivity are given the investment and opportunities to be able to increase these.
The spending must be effective and targeted in the right places. Young people in these areas must be taught the skills and given the tools and opportunities that allow them to get meaningful employment and build successful careers. And employers must be encouraged to invest in young people and to get involved in local communities.
The coming months and years will tell if that investment was effective…