A lack of revenue-raising measures meant that Chancellor Rishi Sunak’s third budget was decidedly less headline-stealing than usual. In fact, most recently, the March 2021 package saw taxation soar by £65bn – the highest total increase for 28 years.
However, Sunak’s address still contained a raft of initiatives to grab the attention of employers, many of which could prove to be critical as businesses continue to navigate a challenging pandemic climate.
Our Group sister company, WorkNest Law, have summarised the key points for organisations from the Autumn Budget.
Business rates
Among the more notable of the Chancellor’s measures was a temporary cut to business rates for the retail, hospitality and leisure sectors. This was arguably the most significant, and certainly the most immediate, of the announcements in terms of its effect on organisations.
The initiative will see the rates slashed by 50% until April 2023. During this time, eligible businesses will be able to claim the discount on bills up to a maximum of £110,000 – a cut worth almost £1.8bn in total.
This was just one part of a package of business rate reforms. In addition, revaluations will now take place in three-year increments, and a new investment relief will be introduced to encourage businesses to adopt green tech.
Barring pandemic support measures, this is the single biggest cut to business rates in over 30 years, said the Chancellor. He also noted that the new package makes for a “simpler, fairer tax system”.
With the retail, hospitality and leisure sectors having suffered immeasurably as a result of COVID-19, these measures should act as a welcome boost, allowing overheads to be slashed as businesses attempt to stage recovery.
Skills
Perhaps the most comprehensive aspect of this year’s Autumn Budget came in the form of skills and education – another vital area where the business world is concerned.
Sunak confirmed an extra £3.8bn for skills funding, including £1.6 billion for new T-level courses, £170 million for apprenticeships and £550 million for reskilling adults.
There will also be a new ‘Scale-Up Visa’ aimed at making it quicker and easier for businesses to acquire highly-skilled, foreign-born talent.
As he addressed the Commons, the Chancellor called this “the most wide-ranging skills agenda this country has seen in decades”.
Crucially, such measures could help the UK address the widening labour gap, which, according to IES data, currently equates to around 900,000 people. This will invariably prove vital for businesses and the economy alike.
However, criticism remains, and many argue that more must be done. For instance, CIPD chief executive Peter Cheese argued that there is “still a glaring gap” between the government’s policies and its ambitions.
“There needs to be an economy-wide, joined-up strategy to encourage and enable more firms to adopt strategies where the workforce is recognised as something to be invested in and drives value, rather than a cost to be minimised,” he said.
Wages
Finally, Sunak announced a series of changes to rates of pay in the UK, spelling higher costs for many employers.
Most notably, it was announced that the National Living Wage (the government-mandated minimum wage for people ages 23 and over) will, as of 1 April 2022, rise to £9.50 per hour – a 59p hike.
Crucially, the boost represents a 6.6% rise, more than accounting for the current inflation rate (3%).
According to Sunak, the rise will be worth more than £1,000 per year for a full-time worker, and will benefit over two million of the lowest paid workers in the country.
“It is a major commitment to the high wage, high skill, high productivity economy of the future,” he said.
Younger workers and apprentices will also receive a pay boost. The minimum wage for people aged 21-22 is set to increase to £9.18 per hour (an 82p rise), and the Apprentice rate will rise to £4.81 per hour (a 51p rise).
Finally, the Chancellor also confirmed the end of the public sector pay freeze after a year-long pause.
These will be crucial elements to factor into cashflow projections as businesses attempt to return to pre-pandemic levels of operation.
