How the Autumn Budget will impact jobs and hiring in the months ahead

One of the biggest budgets of a generation was announced by Chancellor Reeves this week, but did it go far enough?

In my view, no. While it was the first to be delivered by a woman, and had a lot of positives for health and housing, there were some notable aspects missing. Our hope is that there are more plans for investment coming, encouraging private money to be spent and as such, encouraging more money to begin to flow.

What was announced?

We know that for many business leaders, the key announcements on National Minimum Wage and National Insurance will be the two which have the biggest impact. Yes, we may see a short-term slow down on vacancies, and there will be an impact on the profitability of businesses & the high street may be impacted more than we would like as retailers & hospitality employ a large number of people on minimum wage.

However, when it comes to the National Insurance change, yes it will raise revenue for HMRC, but the brunt of that cost will ultimately fall to employees.

Most businesses make pay related decisions based on profitability, and research shows that roughly 80% of the National Insurance increase will come from employees, in the form of lower pay rises over time. The key items which may impact the jobs market directly are:

• National Minimum Wage to rise by 6.7% for people aged 21 or older from £11.44 an hour to £12.21 from next April and will rise for people aged between 18 and 20-years old from £8.60 to £10. Apprentices will get the biggest pay bump, with hourly pay increasing from £6.40 to £7.55.
• National Insurance Contributions for employers will rise from 13.8% to 15% with the threshold lowering from £9,1000 to £5,000. However, the allowance will increase from £5K to £10.5K, meaning 865,000 employers won’t pay National Insurance next year.
• The current 75% discount to business rates - due to expire in April 2025 - will be replaced by a discount of 40% - up to a maximum discount of £110k.

What does the future of work look like?

Disappointingly, this budget didn’t really feel like a budget for growth, especially for businesses.
There were few plans outlined on how the government can encourage (crowd-in, is the economist term) private investment to help stimulate growth in the economy. After all, it’s growth we need to create more jobs; and to help generate greater profits to facilitate pay increases for workers.

Yes, there will be short term investment in the NHS and schools etc. but there were no innovative plans to drive investment in sectors that will help set us apart from other countries.

It would have been brilliant to see plans to encourage private investment to drive better use of our energy, and in turn drive down energy costs, or as an island plans to encourage private investment in marine/sea that might help us explore the untapped potential that exists all around us.

While the chancellor did announce some investments into a number of areas like housing, Aerospace, Automotive etc., it’s really critical that as the plans for this investment develop they encourage more private investment. Fundamentally, it’s investment that will drive economic growth and it’s growth that will provide everyone with better standards of living through new job creation and wage growth.
All in all, only time will tell.

We can hope this budget will be the first signs of economic recovery and begin to build public confidence so money will begin to flow once again. And with that, we hope that investment into innovation will follow.