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What Does The Spring Statement 2019 Mean For HR?

What Does The Spring Statement 2019 Mean For HR?

Wednesday 13th March 2019
Aphrodite Papadatou

Philip Hammond used his Spring Statement to plead with MPs to back a Brexit deal and lift the "cloud of uncertainty" hanging over the economy. But what does it mean for employers and HR?

It came as the Office for Budget Responsibility (OBR) forecast growth of 1.2 per cent this year: a downgrade from the 1.6 per cent forecast at the Budget in 2018.

Delivering his statement in the Commons on Wednesday after MPs rejected Theresa May's Brexit deal for a second time on Tuesday night, the Chancellor said the issue was damaging the UK's standing and reputation in the world.

Paul Holcroft, Associate Director of Croner comments from an employment law point of view:

In a Spring Statement marred by a "cloud of Brexit uncertainty", Chancellor Phillip Hammond revealed that UK employers could stand to benefit from an increase in financial support providing the UK reaches a deal with the EU over Brexit.

This includes a £37bn National Productivity Investment fund to help businesses address the UK's lagging productivity rate, whilst it was also confirmed that the £700m previously suggested to help small firms take on more apprentices will become available from as early as April 2019.

Changes have also been confirmed for the UK's visa scheme as foreign nationals applying for PHD level roles will become exempt from the UK's visa cap from this Autumn, making it easier for employers to recruit highly skilled individuals in the face of an ongoing talent shortage.

In news which may be less welcome by employers and payroll departments, Hammond also announced a review of low pay in Britain which mirrors the government's recent efforts to improve protections under the Good Work Plan. This could see minimum wage rates increase in the future which is likely to come at a considerable cost to a large number of employers.

Jonathan Richards, CEO of Breathe, comments from an SME point of view:

The Chancellor has stated that the UK economy has been growing for last nine consecutive years and is expecting an additional 600,000 new jobs by 2023. He also reveals there is a £37 billion productivity fund, this investment into skills and talent is a step in the right direction, however there is still a long way to go. Businesses need certainty, especially SMEs accounting for 99.9% of all private sector businesses in 2018. It is therefore crucial for a more robust plan to support small business with the correct tools to stay afloat and continue to grow.

Gautam Sahgal, Chief Operating Officer at Perkbox, comments from an employee experience point of view:

Much of the UK's success to date has been achieved from its ability to become a beacon for talented and ambitious individuals from Europe and beyond. But putting Brexit aside, the biggest challenge for UK prosperity right now is absolute and relative productivity which has been stagnating for the past decade and today was confirmed will be far slower than was forecast two years ago.

It's great to see investment in areas of public spending such as genetic research and laser technology, to support some of Britain's fastest-growing industries. However, this is not going to help the average British employee struggling with low wages and increasing uncertainty over Brexit. Unemployment might be at its lowest rate right now, but with stagnant productivity, labour shortages could soon add to our numerous growth challenges.

Neil Carberry, Recruitment & Employment Confederation chief executive, comments from a recruiter point of view:

Businesses will welcome the pragmatic tone that the Chancellor brought to the Spring Statement - especially his strong support for a well-regulated market economy as the primary driver of national prosperity. His case against a no-deal Brexit enjoys the support of a strong majority of recruiters, who are the UK's jobs experts.

Good regulation is at the heart of government action on jobs, so firms will also welcome the commitment to consulting on the future of the National Living Wage. Recruiters also want the Chancellor to listen to firms on upcoming tax changes for contractors to deliver a level-playing field. Without clients taking responsibility for contractors paying the right tax, law-abiding firms may be undercut. REC will make this point forcefully in the run-up to the Budget.

The Chancellor's recognition of the resilience of the UK labour market was hugely welcome. With 600,000 new jobs to fill by 2023, addressing skills policies will be vital. We will be interested to see what the National Retraining Scheme looks like in practice as REC members will have a big role to play. And while it is good news that the limited package of reforms to apprenticeships announced in the last Budget are to be brought forward, we still need to have the debate about changing the failing apprenticeship levy policy into a flexible skills levy that really works for business and workers.

Even if we get skills changes right, UK competitiveness needs to be backed up with flexible immigration policies that meet our economy's needs. There were some welcome steps today - but the real test is an open approach to attracting people to work in the UK after Brexit. REC data shows that candidate availability has been falling month-on-month in the last year.