WHAT IMPACT DOES THE AUTUMN STATEMENT HAVE?
The Autumn Statement has been unveiled, and we have seen the largest ever increase to the national living wage, and additional support for those who have left the work force!
Following the announcement of the new policies, we have analysed some of the impact they could have.
National living wage to increase
The increase will be from April 2023. With a 9.7 per cent increase to £10.42, this rise is great for employees, however some companies will face financial difficulties, and some would have to reconsider their workforces and could face a lot of layoffs in the months following.
Those who are paid low salaries of course will welcome the increase, however many business owners especially those owned by self employed people simply cannot afford this high increase, and often do not even pay themselves a wage, with the rise of energy bills and inflation, sadly the additional staffing cost could see the end of them.
As employers we need to make sure that there is support in place as a business to encourage good financial health, alongside adhering to fair procedures and interact properly with staff.
Support for those who left the workforce
Hunt has promised a £280m investment into the Department for Work and Pensions who play a critical role in supporting people back into work this will assist in the crack down on benefit fraud, as well as investing a further £11bn in benefits.
A thorough review is being carried out of people who have left the workforce and to improve their prospects of landing a job. People receiving universal credit will be advised to routinely meet work coaches.
Intervention is needed to overcome some of the obstacles that leavers encounter when returning back to work, employers really need to change the perception of the over 50’s being unemployed, and enable support and flexible working and addressing age bias in hiring and investing. Evidence suggests that working parents, carer’s and older employees enjoy flexible work arrangements and are more likely to require them. This shows how critical it is for the government to follow through on its earlier promise to support the development of more flexible workplaces.
National insurance and inheritance tax frozen
Small firms are seeing greater costs across the board, from office rent to larger than expected pay raises in response to the Chancellor’s intention to boost taxes. He says the tax increases announced in today’s budget would worsen the situation for SMEs in the UK at a time when they are already struggling to stay afloat amid the stagflation crisis.
Further announcements in today’s budget include that the national insurance and inheritance tax thresholds would remain unchanged for an additional two years, until April 2028, while the £150,000 top income tax rate level will be reduced to £125,140.
As well as retaining the pension triple lock and hiking the state pension to £871 to keep up with inflation, Hunt also promised a rise to pension credit of 10.1 per cent.
Lowering the additional rate of income tax threshold will clearly impact high earners, and the freezing of that threshold would capture more people more quickly over time too, It should be highlighted that nothing in today’s statement alters the basic issues that now affect employees.
Having weathered immense challenges during the pandemic, employers have been offered no respite in today’s announcements. Employers will face increasing employment costs over the coming years because of the freeze in the national insurance thresholds. As wages inevitably continue to rise, largely as a result of the effects of inflation, the impact of this freeze on employer costs looks set to become increasingly pronounced, and a difficult time ahead for a lot of small to medium businesses.
Urgent action is required to reform the apprenticeship levy, and offering training across the workforce as we really need to look at the rising technical skill shortages.
For families that are struggling to make ends meet but do not qualify for state help or are not explicitly touched by the hike in the national living wage, the Chancellor’s initiatives continue to make life more difficult.