At the end of October, Phillip Hammond delivered the Autumn budget for 2018, and although there was little mention surrounding the uncertainty of Brexit, he stated: “the era of austerity is finally coming to an end.” Forecasting an improved financial position, the budget supported businesses with further incentives and delivered their commitment to increase the Personal Allowance and boost the National Living Wage.
With unemployment at its lowest rate since 1975 and wage growth at its strongest in 10 years, the budget proved to be positive for living standards and businesses. Increasing by 4.9 per cent compared to the current level, the National Living Wage will rise to £8.21 from April 2019, providing employees with an annual increase. The Personal Allowance threshold will also increase to £12,500 per year, providing a slight decrease in tax deductions for employees.
Since 2010, there are now 3.3 million more people in work and Mr Hammond predicts that another 800,000 new jobs will be created by 2022, helping our economy thrive and living standards improve.
The chancellor also said the IR35 changes in the private sector have been postponed until April 2020. These changes are to be put in place to bring private sectors in line with public sector bodies and agencies, so some businesses (with more than 250 employees) will have responsibility when it comes to operating off-payroll working rules for contractors, agencies and third parties. The extended period for these changes is said to give people and businesses time to prepare, with support from HMRC ahead of implementation.
The Government also set out plans to help develop the skills needed through reforming and strengthening apprenticeship programmes. By halving apprenticeship fees to five per cent for small businesses and investing £695 million, the government hope to improve the role of apprenticeships in the post-2020 skills landscape.
Group Marketing Director at Totaljobs, Martin Talbot, commented on the budget: “Today’s budget proved hugely promising for both jobseekers and employers, with a target to deliver 800,000 more jobs in the UK by 2020. With the signalled end of austerity, predicted sustained real wage growth, and unemployment at its lowest rate in over four decades, now is an excellent time for candidates looking for a new opportunity.
“The £695 million initiative to help small firms hire apprentices will enable more workers to learn vital skills in the industries they choose to specialise in, and will allow more employers to take on apprentices and provide necessary training and development for the younger workforce.”
Speaking on the budget, highlighting the postponed IR35 changes and apprenticeship levy, Neil Carberry, Recruitment & Employment Confederations Chief Executive, said: “Businesses across the country will welcome the pro-enterprise tone taken by the Chancellor this afternoon. While we would have liked to see more on reforming the apprenticeship levy to allow the training of temporary workers, delaying the changes in taxation for private sector contractors is a big win for business.”
To help the high streets, which have been struggling in recent years due to the increase in online shopping and high business rates, the Chancellor set out a strategy to reduce small business rates by a third over a two-year period, helping the likes of independent shops restaurants and cafes. A £675 million ‘future high streets fund’ will also be introduced in April 2019 to help local areas transform their high streets and encourage higher footfall.
Overall, the budget presented positive changes for businesses with many due to come into place over the next couple of years. Of course, Brexit will likely play a part in how these changes affect businesses, but until we know the certainty of Brexit plans for our country and economy as a whole, we can’t judge this. From increasing the national living wage to investing in the high street, the announcements Mr Hammond delivered are positive and focus on the future.
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