Emergency Budget comment: A budget for jobs

The Recruitment and Employers Confederation has welcomed Chancellor George Osborne’s proposals in his Emergency Budget to help the UK's jobs market through reducing tax liabilities on private sector businesses and creating a stable tax environment for them to plan.

Commenting on the Emergency Budget as a whole, Kevin Green, Chief Executive of the REC said:

"We are delighted that the Government has put tackling business taxation at the heart of this budget. It is clear that the private sector will need to grow jobs as the public sector sheds them, and this Budget sets the framework for this to happen."

More specifically on the proposals, Kevin Green has made the following comments:

On the rise in the NI thresholds

"We are delighted that the Government has got rid of the planned tax on jobs. The planned rise in National Insurance Contributions would have simply added cost onto hiring temporary staff for every hour they work. We need measures which encourage employers to take on more staff to tackle unemployment. The rise in the threshold will assist this."

On corporation tax

"The reduction in the rates of corporation tax and small business tax will certainly make Britain a more attractive place to do business. This will bring new jobs to our economy. In addition the plan to reform corporate taxation over the next five years to make it simpler, clearer and more stable, is very welcome. It will offer businesses the basis on which to plan for the future."

On public sector resourcing

"The Chancellor is right to freeze public sector pay for two years, a measure which many in the private sector have already experienced and we are encouraged to see that public sector pension costs are being reviewed. But the biggest impact on the public sector will still be the slashing of expenditure, in some departments, of up to 25 per cent. The public sector needs to use this tight spending environment to fully review how it runs and operates. Simply salami-slicing the spend will not bring about the structural change the sector needs to serve in the 21st century. The public sector needs to become more efficient and know how to attract the talent it requires. In the longer term, the jobs market in the public sector should be as flexible and adaptable as our successful private sector model."

On reducing red tape

"We are delighted to see the commitment to review all regulations scheduled for introduction. The forthcoming Agency Worker Regulations are of particular concern to recruitment agencies. Whilst the regulations broadly struck the right balance, there are some areas where they could be improved before introduction. This is vital if we are to keep temporary work opportunities viable. We will also be looking for a review as to how the forthcoming automatic enrolment pensions provisions interact with the agency work market. The REC supports pensions savings for temporary workers, but in their current form the regulations are unsuited to the fast-paced dynamic temporary jobs market."

On the rise in VAT to 20 per cent

"This will hit some jobs hard, especially the supply of agency staff into the charitable and financial sectors. The REC recognises the need to raise revenue, however greater allowances should be made for those businesses and organisations who cannot recoup the VAT they are charged, especially when that charge is applied to jobs."

On the income tax threshold

The REC also noted that many temporary workers would be winners with the rise in the income tax threshold. Kevin Green continued: "Any temporary workers use agency work to dip in and out of work on a part time basis. The rise in the income tax threshold means that they will leave the agency at the end of the week with more money in their back pocket."

On welfare reform

"We welcome the focus on reducing the growth in benefit costs and moving people into work. However the REC believes that a complete review of how the benefits systems interacts with today's world of work is needed. Many people use temporary work as a stepping stone into a career and more permanent work. However at the moment the risks are too high, with it taking too long to move on and off benefits. We need a benefits system which will allow people to work the hours that they find, without having to wait weeks to move back onto benefits if the work dries up."

On small businesses and procurement

"We welcome the move to open up public procurement to smaller businesses, not least through publishing tenders free of charge so that all can access them. This move will be welcomed by niche recruiters who can help fill specialist roles and will make it easier for local firms to win business close to home."

Source the REC