Budget 2012 - key announcements for HR

The Chancellor delivered his Budget to Parliament at 12.30pm today, Wednesday 21 March. We summarise the key announcements of interest to HR practitioners. 

The UK will avoid technical recession in 2012, but with growth of just 0.8% forecast by the Office for Budget Responsibility (OBR). Growth in Gross domestic product will increase to 2% in 2013. 

Unemployment will peak in 2012 - both on the ILO measure (8.7% unemployment in 2012) and the claimant count (1.67 million unemployed). The OBR says that one million more jobs will be created over the next five years. Consumer prices index inflation is forecast to average 2.8% in 2012 but to fall to 1.9% in 2013. 

For businesses, the main rate of corporation tax reduces to 24% with immediate effect. The Government is "pressing forward" with its plans to integrate the processes for income tax and national insurance contributions, with a consultation published later this month. 

The state pension age will be automatically reviewed to ensure that it keeps pace with increased longevity, with details to be published in the summer. 

On public sector pay, the Chancellor announced that the Government will continue to see "whether we can make public sector pay more responsive to local rates". Treasury evidence (external website) to the independent pay review bodies has been published. The review bodies are due to report back from July 2012. Those civil service departments no longer covered by the public sector pay freeze for their 2012 pay award will be able to "introduce more local, market-facing pay reform from this year". 

On tax, the Chancellor announced that the 50% higher rate will reduce to 45% from April 2013. The personal income tax allowance will increase to £8,105 from April 2012, and to £9,205 from April 2013 (an increase of £1,100). 

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. 


Budget 2012 (PDF format, 706K) Download the complete Budget 2012 document from the HM Treasury website. 

Growth Implementation Update (on the HM Treasury website) Pages 21 to 26 of the Government's Growth Implementation Update set out progress on the various proposed employment law reforms. 

Income tax rates and allowances in the XpertHR statutory rates section.