Pre-Budget Report 2008: Key points for HR

Chancellor Alistair Darling delivered his second Pre-Budget Report on Monday 24 November 2008, comprising what he described as a package of measures to "support businesses, families and the economy" as the UK economy deals with the ongoing impact of the downturn. 

As had been widely predicted in the media, the Chancellor announced a raft of tax cuts, representing the core of the government's economic recovery plan. 

Key measures of interest to HR practitioners include the following: 

  • From April 2011, national insurance contributions for employers and employees will increase, with the starting point for national insurance contributions to be raised in line with income tax. 
  • From April 2011, a new 45% rate of income tax will be introduced, applying to income above £150,000. This is expected to affect the top 1% of incomes. 

Darling also used the Pre-Budget Report as an opportunity to downgrade his forecasts for economic growth. Economic growth is now expected to run at 0.75% over 2008 as a whole (compared with a predicted range of 1.75% to 2.25% announced in the 2008 Budget, which was delivered on 12 March 2008). The predicted economic growth range for 2009 has been subject to a particularly sharp downgrading, from 2.25% to 2.75% in the 2008 Budget to -0.75% to -1.25% in the Pre-Budget Report. 

As might be expected, the Pre-Budget Report provoked a wide range of official reactions. At one end of the spectrum, Unite general secretary Derek Simpson hailed the report as giving "Britain a reason to be optimistic this Christmas and beyond". At the other end, PCS general secretary Mark Serwotka took issue with the report's reference to £5 billion of planned efficiency savings for the public sector, arguing that these "should not be a prelude to yet more job cuts, office closures and privatisation". 

IRS Pay and Benefits Bulletin will be publishing its detailed analysis of the Pre-Budget Report on Friday 5 December 2008. 

Key points

Also

XpertHR economic indicators XpertHR's official economic indicators service includes data on recruitment and labour market, business confidence, pay awards, average earnings, inflation, labour disputes, unemployment and working hours. 

Budget 2008: key changes from April 2008 From IRS Pay and Benefits Bulletin. 

Economic outlook: Falling inflation and slow growth IRS examines the current widespread economic uncertainty and the ongoing deterioration of credit conditions, and look at forecasts for the key economic indicators of interest to pay setters.