What Does the Autumn Budget Mean for Employers?

An up-skilled workforce, a higher National Living Wage, and flexibility on the apprenticeship levy; the autumn budget made big promises to boost UK worker’s productivity, spelling significant change for employers.

These announcements came alongside pledges to increase investment for infrastructure, housing, and potential changes to the tax system, to name just a few aspects of the budget.

We’ve outlined 3 of the issues we believe will be key to businesses looking to grow their staff.

  1. The National Living Wage – a cautious climb

Businesses with employees on the National Living Wage will pay slightly more from April 2018, when the NLW will go up by 4.4%, from £7.50 to £7.83.

The decision follows recommendations from the Low Pay Commission, an independent research body. In the face of declining business confidence, the Recruitment and Employment Confederation (REC) sees the chancellor’s decision to raise the National Living Wage on a slow scale as a wise move.

Here’s a breakdown of how the National Minimum Wage will be increased:

  • 4.7% – 21-24 year olds: £7.05 to £7.38 ph
  • 5.4% – 18-20 year olds: £5.60 to £5.90 ph
  • 3.7% – 16-17 year olds: £4.05 to £4.20 ph
  • 5.7% – apprentices: £3.50 to £3.70 ph

Apprentices gained the steepest pay rise or any group, with a significant 5.7% increase from £3.50 to £3.70 per hour. In addition to increasing their pay, the chancellor has also suggested that greater flexibility will be allowed in training apprentices, as the levy rolls out.

  1. Flexibility in the Apprenticeship Levy?

Employers won’t reap the benefits of the levy through their temporary and contract staff, unless changes are made to the scheme. With temporary contrasts lasting typically less than the one-year minimum approved apprenticeship period, employers and agencies could lose out on the chance to up-skill their staff, under the current structure.

However, Wednesday’s budget gave some room for optimism, as the government appeared to acknowledge the need for some wiggle room.

“The government will continue to work with employers on how the apprenticeship levy can be spent, so that the levy works effectively and flexibly for industry, and supports productivity across the country.”

Will the chancellor take the Confederation of British Industry’s suggestion to change the scheme to a “flexible skills levy”? It seems unlikely we will see a drastic overhaul of the current plans, but compromise is definitely on the table.

  1. Tackling the skills shortage – how the government plans to invest in a future-proof workforce

Hiring managers and recruiters nationwide can testify to how hard it is to find candidates with the right skills. As technology becomes more and more sophisticated, the REC has called for serious investment in a lifelong retraining initiative.

The government’s ground-breaking National Retraining Scheme looks to address this issue. The scheme is a partnership between the government, the Trade Union Congress and the Confederation of Business Industry, and plans to invest £76 million in boosting digital and construction skills. The government also pledged £406 million in mathematics and technical education, £20 million towards technical “T-Levels” for further education colleges and £84 million to up-skill computer science teachers.

The increased investment is extremely welcome. We hope to see an increase in employer’s access to a more skilled and productive workforce over the coming years, and will be watching to see how the apprenticeship levy is rolled out.

To read the budget in full, click here.