When the Chancellor stands up at 12.30pm today to deliver his Budget speech, it will be something of a "holding operation" in the words of Deloitte's economic adviser Roger Bootle (see Deloitte's Budget briefing on their website), with some major decisions deferred until after the general election.
Even so, there are some key employment issues to look out for. During the speech, I'll be joining Personnel Today's live blogging team to digest what the Budget means for the HR community and employers in the UK. Please join me by bookmarking this page on the Personnel Today website and hear what employment experts have to say about the Chancellor's proposals.
Here are my top ten HR issues to watch out for:
- National insurance hike. Perhaps the proposal of biggest concern to HR in December's Pre-Budget Report was the announcement that National Insurance employee and employer rates would rise by one whole percentage point from April 2011. While employers' bodies want the Chancellor to scrap his proposal, this remains an unlikely outcome in view of his pledge to halve the fiscal deficit over the next four years.
- Cuts to hit public sector HR. Of particular relevance to HR professionals in the public sector are details of where the public spending axe will fall. The FT website reports that the Chancellor may give a more detailed outline of the scale of potential cuts to departmental spending budgets (registration required). The Guardian reports that the Treasury will ask each department to lift the efficiency of its HR operations to the upper quartile of public sector performance (on its website).
- Public sector pay. The Chancellor is likely to reiterate the policy outlined in the 2009 Pre-Budget Report of pay freezes or caps for public sector workers. We are also expecting a report on pay for senior public servants to be published today, due to outline further measures to clamp down on pay and bonuses and increase transparency.
- National minimum wage. The government has now sat on the Low Pay Commission's recommendations for the 2010 rate of the national minimum wage since the end of February - remarkably without any leaks (but a strong hint from Ed Milliband). Whether the Chancellor will mention the minimum wage today or leave this one for nearer the launch of Labour's general election manifesto remains to be seen - my bet would be on the latter.
- Income tax. The Chancellor will no doubt recap on the tax changes announced in 2009 and due to come into force on 6 April 2010, such as the new 50% income tax rate on earnings over £150k and the phasing out of the personal allowance once earnings breach the £100k pa mark. The Telegraph reports that the Chancellor will freeze all income tax bands today.
- Tackling youth and long term unemployment are likely to be centre-stage. The Guardian expects some money to be set aside for some of the government's key employment schemes, such as the Future for Jobs fund.
- "Green jobs". A theme of last year's Budget and Pre-Budget Reports, it has been widely predicted that the Budget will launch a fund to kick start investment in green transport and energy projects, supporting job creation in these industries (on the Guardian website).
- Pensions. Many are calling for the Chancellor to scrap the rules announced last year restricting higher-rate tax relief on pensions for those earning over £130,000pa from April 2011 (on the Professional Pensions website). Even if the Chancellor sticks to his plans, the Conservatives have backed business protests (on the FT website - registration required).
- Capital gains tax. There has been speculation that this could rise because of the increasing discrepancy between the 18% rate and income tax rates (see the Telegraph website).
- Workplace benefits. A Budget rarely goes by without a tax break being removed from one or other benefit. As always, we will be scouring the small print for changes affecting company cars, salary sacrifice benefits or other issues that are often announced on Budget day without a fanfare.