On March 15th, 2023, Chancellor Jeremy Hunt delivered his spring budget speech. Whilst much had been leaked to the press before the speech took place, we still waited to see what would be said and how we would be affected as individuals and families.
And employers and business owners watched and waited to see if there would be any measures taken to offer some respite from any post pandemic and post Brexit struggles they might be facing.
The budget was billed as the ‘Back to Work’ budget with Chancellor, Jeremy Hunt saying the measures proposed in his budget will get people back to work.
During the great resignation, during the pandemic lockdowns, over half a million people in Britain left the workplace and Britain is the only Group of Seven Nation where the economy has not yet recovered to pre-pandemic levels. (Other nations in the Group of 7 (G7) are Canada, France, Germany, Italy, Japan and the USA).
With staff shortages proving to be a big problem for companies across various sectors, the aim is to get young parents, people with lıng term sickness and disabilities and the over 50s back into the workplace.
This is the task facing the government of a nation where there are over 1 million job vacancies and one in five people is either out of work or not seeking work.
The Chancellor says companies can grow faster and therefore reignite the economy if these vacancies are filled. So, with that in mind, the budget was all about the barriers that are preventing people from looking for work and accepting jobs.
Especially if you are an employer at an SME (small or medium sized company) you might have been watching this most recent budget more carefully after the first budget saw an announcement of the increase in the main rate of corporation tax.
Would SMEs be getting any respite in this most recent budget announcement?
Would there be any other pieces of good news to give employers a hope of a brighter future ahead?
Let’s take a look at some of the main announcements from the March 2023 Budget.
We can begin with a little bit of good news. If you were expecting an announcement that the UK would be going into recession, you got the opposite. So, a bit of positive news for employers – it looks as though recession can be avoided.
After initially predicting a recession, the Office For Budget Responsibility (OBR) said the UK economy would shrink by 0.2% this year. A shrink of 0.2% does not technically count as a recession.
Once this year is complete, the forecast period stretches as far as 2027. It is forecast that each year after this current year, up to 2027, the economy will grow year on year. Some years will see a bigger growth than others but all will see growth.
Will We See A Fall In Inflation?
In his budget speech, Chancellor, Jeremy Hunt predicted inflation would more than halve by the end of this year.
This can be seen as a boost for businesses, economically, and employers can dare to feel a bit more optimistic. Depending on the sector you are operating in, a fall in inflation increases your spending power for necessary goods to run your business.
A fall in inflation should also translate to customers having more spending power to purchase your goods and services. If there is any ease in the current cost of living crisis, it doesn’t take us to tell you that an ease in the cost of living crisis will be welcomed across the board. Whether that is for the running of your business or in your personal life.
A Continuation In The Freeze On Fuel Duty
In March last year, a 5p per litre reduction in fuel duty was announced. Fuel duty was 52.9p per litre.
The Chancellor announced a freeze in this duty for a further 12 months and said it would not increase with inflation.
The RAC say fuel costs are a huge burden to both families and businesses so, whilst this is not a giveaway to motorists, it is aimed at boosting the economy. Fuel costs to businesses are inevitably passed on to consumers.
And for those of you who are employers in a sector where staff need a car to get to the workplace – either because of location and/or shift patterns – this could help your recruitment and staff retention.
There are many young peopö who are looking for work experience or seasonal work who are excluded from certain roles because they can’t afford to get to the workplace.
Chancellor Jeremy Hunt stated the freeze in fuel duty will save the average driver around £100 each month.
An Increase in Free Childcare
An increase in free childcare could make a big difference for employers looking to fill vacancies. There are lots of young people out there who are starting families and, afterwards, parents are not returning to the workplace.
For many situations, this is because they simply can’t afford to. The cost of childcare means young parents are unable to get back into the workplace. This is a lot of young talent that employers have been unable to tap into.
At a time when employers are struggling to recruit staff to fill so many vacancies across various sectors, it makes sense to get young parents back into the workplace.
It’s an all round win – it benefits the economy, it benefits you as an employer to have access to more young talent and it benefits those young parents who don’t want to be excluded from the workplace and who want to build a career.
The Chancellor declared that up to 30 hours a week of free childcare a week will be available to England households from when a child is 9 months old until they are 5 years old and attending school. It is said that this will affect around 60,000 parents, and in theory, this could give employers more access to talent.
Because young families will be entitled to some fundşng for childcare, this could give them a bit more spending power which is also beneficial for businesses.
With the UK having some of the world’s most expensive childcare costs, some argue that this announcement in the budget hasn’t gone far enough so it will remain to be seen how positive the move is.
And there will be a wait to see how successful this move will be because the plan won’t start to roll out until 2024 and it wşll be September 2025 before the plan is fully rolled out. The Chancellor said that this is because an increase in both childminders and nurseries is necessary.
One positive, however, is that the payments for childcare will be made to parents upfront rather than in arrears. This should be particularly helpful to low income parents who are receiving Universal Credit because it removes a cash flow barrier.
Young people can feel poısitive about getting back into the workplace because the funds will already be there for the care of their child whilst they are working.
The cap was increased from £646 per child to £951.
Young parents with children of school age could benefit from a pledged an expansion of wraparound care for older children at the beginning and end of school day.
This could also benefit employers because it will allow young parents to be more flexible with their working hours, knowing their child is being looked after.
It will be 2026 before the changes in staff to child ratios are brought in.
Encourage People Back Into Work Who Have Long Term Sickness Or Disability.
As with young parents who have felt unable to return to the workplace, there are also lots of young people out there who are out of work because of long term sickness issues or because they have a disability.
This is a large pool of talent that employers are missing out on. A lot of these people want to work and use their talents but, in the past, have feared losing their financial support if the return to the workplace doesn’t work out.
The Chancellor announced people who have long term sickness or a disability will now be allowed to find work without losing the financial support they are already receiving.
Incentives For Investment, Research & Development
Are you a business that invests in your own business growth? If so, then the Chancellor has announced incentives that will benefit small and medişum sized businesses in particular.
There is now an increase in the Small Business Investment Allowance to £1 million.
Businesses can deduct the full value of any investment they make up to £1 million. These investments include things like specialised machinery needed for your company, IT investments, vehicle investments. Anything that helps your business function more effectively and grow.
The Small Business Investment Allowance will be in place for the next three years.
Depending on the nature of the SME you are running, you could also benefit further with another credit. If you spend more than 40% of your expenditure on research and development, you will get credit worth £27 for every £100 you spend on that research and development.
An encouragement for employers to invest in the success of their business.
Tax Free Allowance On Pensions Increased
The annual tax free allowance on pensions increased from £40,000 to £60,000.
The £1 million cap on pensions before extra tax is added has also been scrapped. The Chancellor said that this is to encourage people like teachers and doctors to remain in the profession longer.
This move was criticised by the ISF (Institute for Fiscal Studies) who say this move will have little, if any, impact on keeping people in work.
The IFS say it will mean people can retire earlier rather than staying in work – having the opposite effect.
Support For Energy Bills For A Further Three Months
The support for payment of energy bills will remaşn in place for a further three months. If you are an employer running an SME, you may be one of the people that are angry not to have more support with cutting energy bills or paying these bills.
Many small businesses have ceased to trade over recent years with the increase in energy bills being cited as one of the reasons.
10.1% Increase In Alcohol Tax But Frozen Tax On Draught To Help The ‘Great British Pub’
If you are an employer in the hospitality and catering sector, you will be only too aware of the struggles the sector is facing right now.
The Chancellor announced a 10.1% increase on alcohol tax but also announced a tax freeze on draught beers in order to support the ‘Great British Pub.’
The duty on draught beer is now 11% lower than the duty for supermarkets to encourage people to return to drinking in pubs.
If you are operating in this industry, you will know whether this is going to help the ‘Great British pub’ or not. It is described as a ‘Draught Relief’ that wouldn’t have been possible had we still been in the EU. Part of a new ‘Brexit Pubs guarantee.’
£63 Million For Swimming Pools With A Leisure Centre
The UKs public swimming pools are under threat and famous swimmers such as Rebecca Adlington have campaigned to save the pools, arguing that swimming is not just a sport but also an important life skill. She has criticised the government in the past for cuts that have put centres with pools at risk and has also opened her own centre.
The £63 million announced by the Chancellor is a support fund to help keep leisure centres with a public swimming pool going.
If you are an employer in this sector, your public centre may benefit from this support.
The Budget announcement took place with a backdrop of strikes taking place across various professions so there is still work to be done to negotiate with respective unions to give those staff the salaries and working conditions they are looking for.
As for his Budget announcement, Chancellor Jeremy Hunt said, “I deliver that today by removing obstacles that stop businesses investing, by tackling labour shortages that stop them recruiting, by breakşng down barriers that stop people working; and by harnessing British ingenuity to make us a science and technology superpower.”
Do you think the announcements made in the Spring Budget announcement will achieve this aim?