The Chancellor's Budget on 21 March 2012 needs to deliver growth to the UK economy. He starts by saying that it "rewards work" and backs business.
The key announcements of interest to HR are:
Growth
Office for Budget Responsibility (OBR) forecast for UK GDP growth in 2012 is 0.8% (and the UK will avoid technical recession in 2012). This is up from 0.7% forecast in the autumn statement in November 2011. Following this GDP growth is forecast at 2% in 2013 (down from 2.1% forecast in the autumn statement); 2.7% in 2014; and 3% in 2015 and 2016.
Unemployment
Unemployment (on the ILO measure) is expected to peak at 8.7% in 2012, falling to 6.3% by the end of the forecast period (2015/16). Claimant count unemployment is expected to peak at 1.67 million in 2012.
Inflation
CPI inflation is expected to fall from an average 2.8% in 2012 to 1.9% in 2013. The Chancellor confirmed the 2% target for CPI inflation.
Pension age
There will be an automatic review of the state pension age - details to be published this summer.
Sunday trading
The Government will relax the Sunday trading laws for eight Sundays only starting 22 July 2012.
Regional pay in the public sector
The Chancellor says that we "will see whether we can make public sector pay more responsive to local rates. London weighting already exists". He has asked the independent pay review bodies to look at it, and will publish the Treasury evidence to these today.
Tax
Will simplify the tax regimes for small firms - will consult on plans for firms with a turnover of up to £77,000 a year.
Pressing forward with operation to integrate processes for income tax and NI - a consultation on this will be published next month.
From 2014, around 20 million taxpayers (those contacted by the HMRC) will receive a Personal Tax Statement detailing what taxes and National Insurance they have paid and how these are being spent - "a tax system that is simple and transparent" says the Chancellor.
Headline rate of corporation tax - currently at 26% and due to fall to 25% from April 2012 - will be a further cut of 1% - to 24% - to take effect immediately. By 2014 will have a 22% rate of corporation tax. "Biggest sustained cut in business tax rates for a generation," says the Chancellor.
Personal tax
Chancellor: My goal is that the lowest paid are lifted out of tax altogether, while the tax paid by the richest increases.
The higher tax rate - 50p per £1 for income over £150,000 - "can only be justified if it raises significant sums of money". Publishing figures from the HMRC today - £16bn of income deliberately shifted into the previous tax year; self assessment receipts are below forecast; and it raised just a third of the £3billion "we were told it would raise". From April 2013 the top rate of tax will therefore be reduced by 5p to 45p.
As previously announced, the personal income tax allowance will increase by £635 to £8,105 from April 2012. From April 2013 this will increase by £1,100 to £9,205.
Employment law
The Government announced that it will relax Sunday trading laws from 22 July 2012 to 9 September 2012 inclusive for the Olympics and Paralympics. It also set out progress regarding its various proposed reforms to employment law, confirming that "protected conversations" are on the way, subject to consultation that will take place in 2012. It is also considering responses to its calls for evidence regarding the current TUPE provisions and the rules regarding collective redundancies, with a view to consulting on any proposed changes in autumn 2012.
The Government plans to respond before the summer recess on the consultation regarding fees for tribunal claims, and confirmed that Mr Justice Underhill's report on the employment tribunal rules of procedure will be delivered in spring 2012.
The Government will also "scrap or improve" 84% of health and safety legislation, which includes the removal in 2012 of "strict liability" provisions for employers where they have done everything that is reasonable practicable and foreseeable to protect their employees. It will also, by October 2013, amend the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 (SI 1995/3163) and its associated guidance to provide clarity for businesses on how to comply with it.
The full Budget report is available on the HM Treasury website.
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