The Chancellor, George Osborne’s autumn statement 2013 delivered some tough news on the state of the economy and the extent of the recession, but contained the Government’s positive predictions for economic recovery over the next few years.
The Office for Budget Responsibility (OBR) now expects the economy to grow by 1.4% in 2013, and by 2.4% in 2014 (up from the March 2013 forecast of 1.8%). These are in line with the forecasts from many other commentators – see XpertHR’s latest economic outlook.
The Chancellor talked of a “job-rich recovery”. He said that businesses have created “three jobs for every one lost in the public sector”. Employment was described as being “at an all-time high”, with total jobs expected to be up by 400,000 this year. Unemployment is set to be at 7.6% this year, falling to 7% in 2015 and 5.6% in 2018. The 7% unemployment level expected in 2015 is the level that will trigger the Bank of England to consider an interest rate rise (see here for details). You can keep up to date on the latest unemployment levels on the XpertHR indicators page.
For the HR professional, a few points to note include:
- An increase in state pension age to 68 in the mid-2030s and 69 in the late-2040s “to make the basic pension affordable in the future”.
- The removal of employer national insurance contributions for workers aged under 21, to be introduced in April 2015 (and it won’t apply beyond the upper earnings limit), affecting “a million and a half” young people. This is in addition to the £2,000 Employment Allowance that comes into effect in April 2014.
- On apprenticeships – “The government will develop a model which uses HMRC systems to route apprenticeship funding direct to employers. The government will consult on the technical details of the system in early 2014, and on the option of an alternative funding route for the smallest businesses. The government also commits to: introduce a compulsory employer cash contribution for a significant proportion of the external training costs of an apprentice (excluding English and maths); provide an additional contribution to the costs of training for 16 to 17 year olds and separately consider the approach for 18 year olds; introduce a number of caps on the maximum government contribution per apprentice; and withhold a proportion of the funding for a payment by results approach.”
- On shares – “The Share Incentive Plan annual limits will increase to £3,600 per year for free shares and to £1,800 per year for partnership shares. The maximum monthly amount that an employee can contribute to Save As You Earn savings arrangements will increase from £250 to £500. These changes will take effect from April 2014.”
The Autumn Statement 2013 document revealed that from 2014 the government will pilot “paybill control” in a small number of government organisations, which will replace the 1% cap on pay awards for those organisations involved. The paybill control will involve “setting a new financial control to keep the organisation’s paybill within a pre-determined budget agreed with the Treasury”. The Treasury will also consider how “continuing reform of public-sector pay policy can best contribute to consolidation beyond 2015-16″.