Skip to main content

The Autumn Budget 2021: Will It Help You?

The Autumn Budget 2021: Will It Help You?
Click to enlarge
Marketing Consultant - babelmonkey

The Prime Minister’s ‘New Economy’ entails ‘higher wages, higher skills and rising productivity'. Sounds good. As always, the question is ‘how’? The Budget should tell us.

The Chancellor announced the Autumn 2021 budget on Wednesday in a largely upbeat manner. So we thought we’d take a look at it and see what it will mean for us all, day-to-day, how it will affect the employment market and jobs, and whether that positive manner was justified.

Scale Up Visas

Due in Spring 2022, this policy is designed to make it easier for ambitious UK firms to attract skilled foreign workers. Mr Sunak stated it would “make the visa system for international talent the most competitive in the world.”

This is good news for companies requiring highly skilled workers, such as in the technical or scientific sectors. However, we’re currently seeing a significant shortage of workers at the lower-skilled end of the market in Hospitality, Care, Manufacturing, and in seasonal roles. This visa system is not going to alleviate this challenge. The recent fuel crisis and odd gaps on supermarket shelves have highlighted our lack of HGV drivers, a severe skills gap that does not seem to have a quick fix. Indeed, whilst making provisions for certain aspects of the haulage sector, the budget announcements have done little to affect this issue. What has happened is a further freeze in fuel duty, and the HGV Road User Levy has been suspended for a further 12 months from 1st August 2022. In addition, the Government has pledged a £32M investment in roadside services, including funding for HGV parking facilities – but none of these measures directly addresses the current driver shortage although the latter may contribute to attracting new candidates to the field. The question is whether it would be sensible to recognise HGV drivers as ‘skilled’ to allow firms to apply the Scale Up Visa policy.

National Living Wage increase

In April 2022, the NLW is due to rise to £9.50 per hour for workers over the age of 23. That represents a 6.6% increase. National Minimum Wage rates are also increasing:

  • 23 years and older: £9.50
  • 21 – 22 year olds: £9.18
  • 18-20 year olds: £6.83
  • 16-17 year olds: £4.81

The apprentice rate for apprentices under 19, and those 19 and over in their first year of apprenticeship is rising to £4.81.

The increases are good news for lower paid workers but for employers, taken with the increase in employer National Insurance Contributions, it’s likely some may struggle to maintain their current level of workforce. This is especially true as it’s likely to hit the businesses operating in sectors hit hardest by the pandemic and of course, Brexit: Leisure, Hospitality, Retail, and, also, Care. This will be offset somewhat by the announcement of a 50% discount on business rate tax for these sectors. It’s easier perhaps, to see the cumulative effect of the squeeze by considering that, in total, this means the annual gross earnings of a full-time worker on the NLW will have increased by over £5000 since its introduction in April 2016. For workers, the reality is the 6.6% increase in wages is going to feel significantly smaller given the rate of inflation rose 3.1% over the last 12 months and the Bank of England thinks the figure could be 4% by December. Cutting the taper rate for Universal Credit may also help, although this is likely to have a knock-on effect on the awarding of other government benefits.

Investment in skills

Investing in young people and investing in the upskilling of the existing workforce has been seen as a priority in this Budget, with the Chancellor announcing a £3 billion funding package. This includes £1.6bn to support technical qualifications (T Levels), and £170 million for apprenticeships. It also includes £550 million for adult skills boot camps which may help to address the shortage in cybersecurity, artificial intelligence and nuclear. Forward-thinking haulage firms may apply for this to fund training for HGV drivers as logistics is covered under this scheme, but whilst investing in skills helps businesses build for the future, companies trying to attract skilled staff right now are likely to continue to struggle.

Federation of Small Businesses (FSB) National Chair Mike Cherry responded: “….against a backdrop of spiralling costs, supply chain disruption and labour shortages, is there enough here to deliver the Government’s vision for a low-tax, high-productivity economy? Unfortunately, not. Where inflation and forthcoming tax hikes are concerned, the clouds are gathering…

….much more will be needed to support small employers in the months ahead. Our call for an increase in the Employment Allowance to £5,000 would have made a real difference to efforts to increase wages, retain staff and create jobs...”

The Budget was the only topic under discussion and debate at the weekly HR Forum we host and, no doubt, will be under scrutiny over the upcoming weeks and months as its full implications and effects take hold. So if you’d like to join the debate, ask questions and share views with peers, please join us. The ASL HR Forum is free to join and occurs weekly on a Wednesday at 2 pm. Please email me at [email protected] for your link to join us.

ASL Recruitment was established in 1999 and has been serving Hastings and the surrounding area ever since, placing temporary and permanent roles across a variety of sectors, including Industrial and Manufacturing, Legal, Finance, Marketing, Technology and Office Support, from junior up to board level. Our co-founder and Managing Director, Jason Perry, is an HR specialist and a Chartered Fellow of the Chartered Institute of Personnel and Development. For further information on our recruitment or consultancy services, email  [email protected] or call us on 01424 452999.

Companies interested in finding a Skills Boot Camp can find the list here