With a focus on ‘long-term growth’ and with frequent mentions of growing GDP, has the 2024 Spring Budget pathed a way to boost the UK’s workforce?
In short, the answer is no. Whilst some funding has been allocated to AI skills and security, and some money was granted to regions that may or may not support local jobs through a trickle-down system, there was an absence of a clear strategy for enduring growth.
Chancellor Jeremy Hunt emphasised that this budget was designed for sustained economic expansion, but it’s certainly fallen flat.
In a response to the statement, the Recruitment and Employment Confederation (REC) said, “given the rhetoric on boosting the UK’s workforce, there was a distinct lack of a comprehensive plan to do so.”
Ben Willmott, head of public policy for the Chartered Institute of Professional Development (CIPD), stated: ” This Budget sorely lacked a broad economic strategy to improve living standards and boost productivity across the economy.”
It’s not a surprise that in a bid to give his party a boost in the polls, this pre-election statement offered individual taxpayers something sweet in the means of a National Insurance reduction, but will this be the final major fiscal event prior to a general election?
When it comes to business decision makers, the NIC reduction won’t benefit employers, and in fact, with the previously announced increase in National Minimum and Living Wage rates from 1 April 2024, employers will be facing an increase in employment costs. So, this benefits the voters, but how does it support workforce growth?
There were several initiatives announced that will benefit businesses, however they have widely been labelled as not quite good enough. The initiatives include:
- For SMEs, the VAT registration threshold has increased from £85,000 to £90,000 from 1 April 2024.
- Also for SMEs, the Recovery Loan Scheme has been granted an extension, but has been rebranded as the “Growth Guarantee Scheme”.
- SMEs will also be able to access an AI Upskilling Fund.
- A review of the high-income child benefit allowance was announced, which could see 170,000 families taken out of scope of the tax.
The REC’s official response stated, “even if taken together – they didn’t add up to the industrial and workforce strategy we really need.”
How will the current state of the market impact your firm’s recruitment?
To better understand the impact of the Spring Budget, and any changes to the economic landscape for that matter, it’s important to review the current state of the market your firm is navigating.
Let’s look at the stats:
- Payrolled employees in the UK rose by 15,000 between December 2023 and January 2024, and rose by 386,000 between January 2023 and January 2024. While the number of payrolled employees continues to increase, the rate of annual growth is decreasing.
- The UK unemployment rate (for those aged 16 years and over) was estimated at 3.9% in November 2023 to January 2024. The unemployment rate is above estimates of a year ago (November 2022 to January 2023) and is now projected to be 4.7% until the end of 2024. It is expected to rise around 5.1% in Q4 2026.
- GDP is projected to continue to fall throughout 2024 and could go down to 0.4% in 2025. GDP growth is forecasted to pick up to around 1.1% by Q4 2026.
- In February 2024, 1.58 million people claimed unemployment related benefits, 16,000 more than in January 2024, and 85,000 more than in February 2023.
- There were 873,169 new job postings in January 2024, which is a 27.9% increase from the month before (December 2023).
- The number of people placed into permanent jobs across the UK continued to decline markedly midway through the first quarter of 2024, as uncertainty over the economic outlook led employers to often delay or freeze hiring decisions.
So, despite the Chancellor’s emphasis on sustained economic expansion, recognising the lack of a tangible strategy to bolster the workforce effectively is significant in understanding the broader implications of the budget and forecasting its real-world effects on your firm.
While the 2024 Spring Budget includes several proposals that could benefit the business environment and offer politically-motivated relief to individual taxpayers, it falls short of providing a robust blueprint for workforce expansion and long-term economic growth.
As your firm navigates these changes, you must remain agile, proactive, and responsive to both the opportunities and challenges presented by the budget, ensuring your recruitment strategy is not only reactive but also strategically aligned with future economic landscapes.
As the UK’s largest agency recruiting exclusively into public practice, and with a 20-year track record of successfully doing so, Public Practice Recruitment Ltd has an established presence with high-level oversight of the market. We understand the challenges impacting both firms and candidates and this perfectly positions us to provide guidance on the best ways to recruit top talent.
Whether you have live vacancies to fill or if you’d benefit from expert guidance on the current state of the market, the team here is always happy to help. Contact us today.
Statistics sourced from REC, March 2024
