On 8th July 2015, it was just 62 days since the Tories swept to sole rule in the UK. This was the day that a wholly Conservative Chancellor of the Exchequer stood at the despatch box to deliver their first Budget in 19 years. This was a chance for George Osborne to really make this a Budget true to the Conservative pledges they outlined pre-election – to reduce reliance on benefits, encourage business and realise personal ambition.
Did it work? The easy way to define that is “yes and no”.
Getting benefit claimants able to work back into work has been at the heart of Tory drive for increased economic efficiency. Therefore reducing the DWP benefits bill by £12bn over the next three years has been on everyone’s lips. It’s lingered longer than the in-laws do at Christmas. The build up to which an EastEnders “whodunit” would be proud. So, surely they’ll be something in the budget to encourage substantial investment for small, medium and large businesses? After all, businesses will need the conditions to be absolutely right to take on more people, including “return to workers”. Every recruiter will tell you clients are in no hurry to make an appointment, they need to get it absolutely spot on. What this tells me and my colleagues is that the candidate position is even stronger. Here’s an overview of the business and employment related highlights in our esteemed opinion:
- A new National Living Wage will be implemented, starting with a wage of £7.20 an hour for the over-25s in April 2016 before rising to over £9 an hour by 2020.
- The tax-free Personal Allowance will be increased from £10,600 in 2015/16 to £11,000 in April 2016, with it rising to £12,500 by 2020. The higher rate threshold will also be increased, with the point at which people start paying income tax at 40p set to rise from £42,385 to £43,000 next year.
- Public sector pay will increase by 1% a year for the next four years.
- Corporation Tax will be cut to 19% in 2017 and 18% in 2020, which could benefit “over a million businesses”, said the Chancellor.
- The annual investment allowance will be set permanently at £200,000 from January 2016 to help businesses plan their spending on longer-term investments.
- The dividend tax credit, which reduces the amount of tax paid on income from shares, will be replaced by a new £5,000 tax-free dividend allowance from April 2016, while tax rates on dividend income above that level will be increased.
- Reforms to the way banks are taxed, including a new 8% tax on banking profits from January 2016.
Was the handbrake on Mr Osborne?
From a recruiting for business point of view, there isn’t a huge amount here that will mean my phone won’t stop ringing. Whilst small and medium sized enterprises have benefitted, it’s a token gesture in real terms. Whilst one million businesses will benefit from the Corporation Tax cut, this is set a backdrop to the UK currently hosting over 5 million private sector businesses.
Releasing dividends from small businesses will be welcomed by their owners and directors. The prudence from the Chancellor can also be seen in the provision of the annual investment allowance being set at £200,000 per annum. It’s good, but not good enough for businesses to really plan so more heads are employed. And that’s where many businesses may struggle. Whilst the onus isn’t on businesses to take on the people who are being freed from a life on benefits, where really is the encouragement for businesses up and down the UK to employ one, let alone teams on them?
This Budget was delivered whilst the uncertainty in Greece continued to unfold. There is nervousness over what will happen, and whilst the UK are not part of the Eurozone it would be churlish to think it won’t have some sort of knock-on to our shores. Is a “Grexit” on the cards? Or is it fanciful to think an 11th hour deal could be done. Sounds a bit like Icarus to me.
The Greek situation is a serious one, and I get the impression the Chancellor held back learning mistakes of others before over committal to finance led projects.
- And here is the rabbit? No, but cheer to end of nuisance calls. There’ll be a clampdown on nuisance calls from claims management companies.
After all this which George took his seat and began to ponder…..