In his autumn statement, Jeremy Hunt outlined significant adjustments to personal tax and welfare policies, leaving a notable imprint on the HR landscape. Here are the key takeaways for HR professionals:
Personal Tax
Hunt has announced a substantial cut to the main 12 percent rate of employee national insurance contributions, reducing it by two percentage points to 10 percent. This tax reduction, effective from January 6, 2024, is expected to benefit a staggering 28 million people, with individuals on the average salary poised to save £450 annually.
Neil Carberry, REC Chief Executive, commended the steps taken to reduce employees’ National Insurance, extending the Restart program, and reforming fit notes, but cautioned about the downgraded growth forecasts.
He said: “Reducing employees’ NI is a great way to make work pay – and we also welcome the extension of the Restart programme and reform of fit notes as these steps will help ensure that we make the most of the UK’s labor force. Extending Restart was a key REC aim – it is a programme that effectively harnesses joint working between public and private sectors to get people into work.”
However, Jeff Fox, principal consultant at Aon, warned of the unintended consequences of the National Insurance reduction, pointing out its potential impact on Salary Sacrifice schemes for lower-paid staff. “The increase in the national minimum wage and significant NI reduction will simultaneously make it harder for organisations to offer salary sacrifice to many people, while also reducing the savings achieved for those still able to participate,” says Fox.
Wages and Benefits
Hunt’s ambitious welfare reforms aim to bring 200,000 more people into the workforce. Notably, individuals claiming benefits will now face mandatory work experience if they are unable to secure employment within 18 months.
As part of the pre-announced measures, the “national living wage” will see a substantial increase of more than a pound per hour, reaching £11.44 from April. This wage hike will also extend to 21-year-olds. Additionally, benefits will experience a notable uptick of 6.7 percent, accompanied by more stringent requirements for claimants to actively seek employment.
The state pension is set to receive an 8.5 percent increase, addressing concerns about financial well-being in retirement. Furthermore, the long-frozen local housing allowance will see a noteworthy boost, injecting £800 into some households next year.
Despite these changes, Westfield Health CEO Dave Capper has expressed disappointment in the government’s approach. In a statement, Capper criticised the disproportionate focus on cutting benefits rather than fostering employee health and well-being in the workplace.
An investment into upskilling
Hunt also declared a £50 million pilot initiative aimed at “boosting” apprenticeship training in engineering and other sectors experiencing growth.
The chancellor outlined a two-year ‘apprenticeship growth sector pilot.’ However, specific policy details have not been disclosed at this time.
During the announcement in the House of Commons, Hunt stated, “We aim to increase the number of apprenticeships. Building on discussions with Make UK and other stakeholders, I am allocating an additional £50 million in funding over the next two years to experiment with methods to augment the apprenticeship count in engineering and other critical growth sectors facing shortages.”
Despite the speech, Treasury documents released afterward provided no further insight into the operational aspects of the pilot or its official launch date.
According to the documents, “The government remains actively engaged with businesses to enhance the apprenticeship system in alignment with the needs of learners, employers, and training providers.”
“The government is committed to supporting initiatives that drive growth in specific sectors, earmarking £50 million for a two-year apprenticeship pilot. This initiative aims to explore strategies to encourage training in these sectors and overcome barriers to entry in high-value standards.”
Nevertheless, the Treasury documents disclosed a £30 million spending commitment for the fiscal year 2024-25, with no provision for subsequent years.
Alexia Pedersen, VP EMEA at O’Reilly, stressed the importance of upskilling and support for individuals rejoining the workforce, highlighting the need for government intervention in ongoing education and upskilling programs.
HR Advice and Consultancy Director at Peninsula, Kate Palmer, highlighted three updates impacting HR: increases in the National Living Wage and National Minimum Wage, an injection of £50 million for apprenticeships, and the potential indirect benefit to companies from the National Insurance cut for employees.
As the HR landscape navigates these changes, businesses and professionals are urged to stay vigilant, ensuring compliance and proactively addressing the evolving needs of the workforce. The coming months will likely see further discussions and adaptations as the implications of the Autumn Statement unfold.
The ‘back to work plan’
As part of his Autumn Statement, Hunt has also introduced a new initiative called the Back to Work Plan, designed to assist individuals with disabilities, those with long-term health conditions, or those facing “long-term unemployment” in finding and retaining employment. The plan aims to support nearly 60,000 individuals with long-term illnesses or disabilities in “initiating, sustaining, and thriving in work” and is set to be implemented in approximately 15 areas across England.
In the upcoming weeks, a prospectus will be launched to provide information for all Integrated Care Systems throughout England, enabling them to formulate localised strategies for work and health.
Additionally, ministers are contemplating trial reforms to the fit note process with the objective of “streamlining and expediting the process for individuals to access specialised work and health support.”
In response, Bertrand Stern-Gillet, CEO at Health Assured, voiced skepticism about the announced ‘back to work’ plan, emphasising the need for tailored support for individuals returning from long-term sickness, especially in small organisations. Stern-Gillet warned against viewing working from home as a panacea and emphasised the potential negative impact on mental health.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
