Chancellor Philip Hammond has announced the Conservative government’s 2017 budget (the last Spring one), pledging to “build a stronger, fairer, better Britain”.
Hammond commented that there were record numbers of people, and record numbers of women, in employment and that real wages were forecast to rise despite inflation (all positive news!).
The only real surprise was there was no mention of Brexit but fyi I’ve summarised the need-to-know HR elements from the speech here….
Skills and Education
‘T-Levels’ to be introduced for those aged 16-19 who plan to go into a technical field.
Hammond said “The next step in raising productivity and living standards in the UK is to focus on quality education and the teaching of technical skills. Long ago our competitors, such as Germany and the US, realised that to compete globally a country needs to link technical skills to jobs.”
Lifelong learning was also discussed. “In changing labour markets retraining is vital,” Hammond said. The Department of Education (DfE) will be given £40m to pilot and test various lifelong learning projects.
As expected, the CIPD and CBI have both welcomed the extra investment in technical skills.
Schools – the future talent pool
Hammond pledged funding of £320m for free schools, announcing 110 new schools on top of the 500 already announced. This will include specialist math schools and selective schools for the most academically gifted students. Hammond said increasing STEM (science, technology, engineering and maths) skills is a priority.
Returnships
Hammond pledged £5 million pounds towards helping people back into work after a career break, highlighting the benefit this would provide to women returning to the workforce after having children.
Self-employment
Hammond set out plans to increase tax rates for the self-employed. He said the lower tax rates paid by self-employed people will cost the tax payer £5 billion this year, and that there was no longer enough difference in benefits accessible to employed versus self-employed workers to justify this. He said the government wants to even-out the tax burden on employers and self-employed contractors to make the system “fairer”.
So, from April 2018, NI contributions will rise for the self-employed by 1% to 10%, and to 11% in 2019. Hammond said this would cost the average self-employed person only 60p a week.
Obviously, this could be a blow to the gig economy that uses the self-employed. There's a mismatch between there needs to be clarity between the different employment and tax positions so that these gig-economy businesses and their employees know where they stand.
The tax-free dividend allowance for directors/shareholders will decrease to £2,000 from £5,000 from April 2018. BAD NEWS.
National Living Wage
As mentioned in the Autumn Statement (and in our previous articles), the national living wage rises to £7.50 in April (I’ve announced the other rate changes previously).
The personal allowance tax rate will also rise to £11,500 and the higher rate tax threshold to £45,000. Hammond said the government was on track to meet its manifesto commitment of £12,500 and £50,000 respectively by the end of parliament.
I’m sure the ‘meat on the bones’ will be added regarding some the announcements today so I will keep you posted in due course.
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