Yesterday, Jeremy Hunt presented the Autumn Statement to Parliament, setting out billions of tax rises and spending cuts.
Is it a HR success? And, what does it mean for employers?
HRreview has gathered expert comments on the HR implications of the Autumn Statement.
Ronni Zehavi, Co-Founder and CEO at HiBob, says:
“Today’s budget officially acknowledged that the UK has entered a recession, while offering little support to employers to help us navigate this economic crisis. With the unprecedented combination of the recession, low unemployment, and a serious skills shortage in the international talent market, 2023 now promises another year of uncharted territory.
“This amount of change brings complexities for businesses that go beyond the financial. Naturally, people will be affected by the uncertainty change brings and may start to lose confidence in their job security. This could lead them to lose focus or become demotivated in their roles opting to look for other jobs. Conversely, they might also begin to suffer from stress and this will inevitably impact their mental health, satisfaction levels and productivity. Employers need to be mindful and think holistically. They need to be transparent about company plans and focus on finding ways to keep employees engaged and happy. In the face of inflation, nothing speaks louder than a salary hike. But for companies on a strict budget, HR leaders must think strategically about how they can offer creative benefits packages to retain talent and continue to attract the people they need – all while keeping the business lean.
“When it comes down to it, there’s nothing anyone can do to slow down changes following the budget. However, supporting versatile strategies and agile workforces is the only way to resolve some of these complexities and power through the constant change headwinds.”
From Ben Chaplin, Managing Director at Croner-i, says:
“This Autumn Statement marked a return to normal after the headline-grabbing surprises of Kwasi Kwarteng’s mini-Budget. The emphasis here was on stability, growth, and public services to ensure that the markets were not flustered. But there were some major announcements.
“The Chancellor announced net tax rises of £25 billion by 2027-28. There were also significant changes on Government expenditure with significant increases for health (and social care) and education. The pension triple lock has been honoured, those on universal credit are to be given support to increase their working hours and the National Living Wage will increase to £10.42 an hour from April 2023.
“Finally, the Chancellor announced a range of policies under the headings Energy, Infrastructure, and Innovation (including a change of approach on Investment Zones) designed to generate growth.
“This was a Budget about weathering the financial storm whilst reinforcing the economy’s foundations so it can return to significant growth. Continued capital expenditure on infrastructure being a good example. The Office for Budget Responsibility seems generally supportive. The tax increases were substantial but widely spread and the introduction of a new windfall tax will steal some of the Opposition’s thunder. The preservation of COP26 targets will also be a reassurance for many. The tone was surprisingly upbeat – possibly because the bad news had been communicated in the run up to the speech.”
Daniel Zona, Associate at Collyer Bristow comments:
“Today the Chancellor Jeremy Hunt announced a raft of spending cuts and tax rises in his autumn budget. Many of the measures were aimed at supporting the lowest earners, those on benefits and pensioners. However the Chancellor also warned of spending squeezes for most government departments and said his focus was to reduce public debt.
“The Chancellor acknowledged the UK economy is in recession and unemployment is expected to rise to 4.9 percent in the next two years before falling back. the Chancellor said he would work with the DWP to implement measures aimed at getting people back into work. He also stated he was committed to helping those already in-work to raise their incomes and become financial independent.
“The Chancellor announced an increase in the National Living Wage from £9.50 to £10.42 per hour from April 2023 meaning those on the lowest incomes could see a pay rise worth £1,600 for a full time worker. In conjunction with increases in benefits and pensions by the rate of inflation (and protection of the pensions triple lock), the lowest earners in the UK are being promised some moderate increases in their take-home pay from next year. But with inflation rising, real wages continue to be squeezed.
“The Chancellor has also announced an extension of the freeze on the personal income tax allowance and other tax thresholds until 2028 (previously frozen until 2026). So as wages increase, individuals will find their tax burden increasing also.
“The government is also promising more support with energy bills for the poorest households next year. Although the support would be ‘less generous’ than the financial support already provided which will no doubt be of concern to many.
“Meanwhile, the highest earners will start paying the top rate of tax much sooner, with the threshold being brought down to £125,140 from £150,000. The government also extended its windfall tax on energy firm profits, after his predecessors refused to do so.”
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.
