Spring Budget: What do business leaders want and what will they get?

Tomorrow, Jeremy Hunt will present his first Spring Budget as Chancellor. So, what exactly do business leaders want to see from Hunt’s latest fiscal announcement and what will they get?

According to a survey from iResearch Services, sixty-four percent of business leaders are concerned, or very concerned about the Spring Statement.

Commenting on the findings Yogesh Shah, CEO of iResearch Services says: “It’s a turbulent time for British businesses and it’s worrying that there is so much concern surrounding what will be announced in the Spring Statement. Businesses need clarity and we urge the Chancellor to take bold and decisive action to tackle these escalating concerns.”

Help with rising costs

The survey from iResearch Services highlighted the biggest concerns of business leaders for the year ahead. The cost of living in the UK is the leading source of concern for businesses over the next few months with 48% citing this as a short-term risk.

With inflation remaining near 40-year highs, energy bill support for businesses set to end in April, and a host of other rising costs, this should not come as a surprise.

Alan Thomas, UK CEO at Simply Business, is one who wants the upcoming budget to provide help with rising costs.

He comments: “This year’s Spring Budget comes at a time when UK small business owners are particularly vulnerable. A worrying mix of challenges has backed the SME community into a corner, and many are hopeful that the Chancellor’s upcoming budget will provide some respite.

“Our research indicates that 65% of SMEs are worried about rising costs, almost a quarter are concerned by supply and material shortages, and many are finding profit margins squeezed as they struggle to pass on price increases to customers. Most notably, over a quarter (26%) believe that they, quite simply, will not be able to pay their bills in 2023. If that fear materialises then we will be in seriously dangerous waters.

“The cost of energy is front of mind for the majority of small businesses, with over half (54%) saying this is the single greatest threat to their business in 2023. Government support is due to move from the Energy Relief Scheme to the Energy Bill Discount Scheme at the end of the month. This new, less generous scheme may not scratch the surface for small hospitality businesses, who are already out of pocket to the tune of £40,000 on average due to the pandemic. Support with energy costs could prove crucial to their survival.

“With The Treasury considering an expansion of free childcare available in England, it’s essential that the Government both follow through with this promise and ensure that support goes far enough. For women business owners in particular, child care is an issue that remains front of mind – over one in five (21%) believe that access to affordable childcare is key to ensuring the success of their business.

“We’d urge Chancellor Jeremy Hunt to ensure that small businesses are at the heart of this Government’s economic plans. Accounting for over 99% of all British businesses, 48% of the British workforce, and contributing trillions of pounds a year in turnover, our economy’s recovery is directly linked to their prosperity.”

Further support for London’s finance sector

Dr Henry Balani, Global Head of Industry and Regulatory Affairs for Encompass Corporation, hopes to see the Chancellor commit to further promoting London as a world-class financial centre, and supporting businesses within it.

He continues: “It is crucial that this Budget instils optimism in the economy, and in how technology will be enabled to thrive. Regulatory technology, including the crucial solutions used to perform Know Your Customer (KYC) and Anti-Money Laundering (AML) processes, should be a key consideration, especially as the Prime Minister, Rishi Sunak, is tech-savvy, with a deep understanding of financial markets and how they can support the UK economy when combined with proven technology solutions.

“The importance of a liquid banking system and tackling financial crime are critical and ongoing battles, which require a medium to long-term approach through these ongoing policy updates.

“The UK should also continue to reaffirm its public access policy towards data, enabling financial institutions to obtain and track important customer information, such as on Ultimate Beneficial Ownership (UBO), through APIs and workflow solutions. Continuing to promote transparency with regard to data can play an important role in the fight against financial crime.

“Ultimately, this Budget should cement the UK as a leading global financial hub, promoting UK exports as part of economic recovery and growth, while facilitating openness to data to create a solid foundation for thriving markets.”

Widening employment

According to Sunil Dial, CandidateX Founder CEO, the Chancellor has urged the over-50s to get back into the workforce to drive growth and prevent inflation. However, he says this misdiagnoses the problem.

He continues: “All the available data tells us that over 50s want to be in work. It is estimated that there are now one million 50–64 year-olds who want to be in employment, but aren’t – this is almost 2% of the adult population.

“On the face of it, that seems like there should be an easy solution, but ultimately the job market does not work for older people. Age discrimination and unconscious biases are pushing the over-50s out of employment, and if we as a nation want to increase their numbers in the workforce, we need to actively tackle this overlooked form of employment discrimination.

“Businesses must actively tackle their own recruitment practices to address this. They should make sure that CVs and applications are anonymised before they reach hiring managers, and that job advertisements use inclusive language, are advertised widely, and via accessible job platforms. They can also make sure that their internal talent teams and hiring managers are fully trained in preventing unconscious bias, and understand the value of underrepresented talent.

“Employers can also take the bold step to publish data on how they are hiring now. AI-powered application systems and access to big data analytics are already streamlining inclusivity measures, and allowing companies to see where they can advance their DE&I.”

However, Ben Ashton, Co-founder of GoodOaks Home Care, would like to see more support to help young mothers get back into the workforce.

He comments: “The current underfunding and underinvestment in early years childcare makes it uneconomical for both parents to work. This has a big impact on the elderly care sector too, as 80%+ of the workforce is female, and informal arrangements often struggle to provide the certainty and reliability needed for safe provision of care.

“Although expensive, this would bring more people back into economic activity, and ultimately reduce the strain on the NHS by improving staffing capacity both for direct employment by the NHS as well as the related services such as homecare and care homes.

“Changing the tax status of homecare providers from VAT exempt to Zero rated. Currently, homecare companies cannot charge VAT, but cannot claim back VAT paid on products and services, effectively making everything 20% more expensive.

“With Zero Rated VAT, we still wouldn’t charge our clients VAT on the services we provide but we’d be able to claim back the VAT we’ve paid on goods and services. This would be a far fairer VAT regime for the social care sector and would allow us to reinvest that money back into the business to further support our staff and clients.

“We could spend this on building staffing capacity in the care sector, improving working conditions for home care professionals, and developing training and employee skills.

“Scrapping the planned fuel duty increase. I actually think in principle, fossil fuels should be taxed more heavily to speed up the change to renewables and electric vehicles. It does however hit the homecare sector and the less well-off the hardest, and in the current economic situation, it could be quite damaging. If the fuel duty increase does go ahead, the money should be ring-fenced for investments in green transport infrastructure to enable companies such as ours to move to clean transport in a shorter timeframe.”

Planning reform

Alex Franklin, Director of architecture at Basha-Franklin, wants to see planning reform in the upcoming budget.

He comments: “The UK planning system has been under scrutiny for some time for its slow application process. Political discussions have centered around finding a solution, such as simplifying or shortening the process, or providing more resources. However, many professionals in the field feel frustrated with being assigned planning officers who lack the required design or planning experience, indicating a gap in technical competence.

“To address this, I propose that instead of dispersing skills among local planning authorities, we centralise these skills to create a talent pool, to build and maintain state-of-the-art sector-specific expertise for engagement on major projects. This will lead to better-quality buildings in the long term, despite the lack of additional funding and the skills gap.

“The system also appears to effectively handle environmental considerations, and rightly so. However, the same cannot be said for building design technicalities. The lack of proper consideration of technical design issues can lead to consent being granted for designs that have oversights or flaws.

“To mitigate this, the reintroduction of Outline Consent, followed by a Full Plans or Detailed Consent, once the design is technically resolved could be considered. This solution may pose a challenge for Local Planning Authority (LPA) staff, as it would require the expertise of surveyors or architects to evaluate proposals, and to be blunt, there probably aren’t enough architects involved in planning. That needs to change moving forward.”

Will the Spring Budget deliver for SMEs?

In a survey of 500 UK SMEs from Bibby Financial Services, 80% of respondents said they don’t think the government is providing enough support for SMEs.

Meanwhile, 67% are not confident that the Chancellor’s Spring Budget will deliver the support their business needs. This figure shows a decline in businesses’ confidence in the Government since Autumn 2022 when 62% of SMEs reported that they were not confident that the Autumn Budget would deliver the support they needed.

Notably, 85% of female respondents don’t think the government is providing enough support for SMEs, compared to 77% of male respondents, whilst 72% of female respondents are not confident that the Chancellor’s Spring Budget will deliver the support their business needs, compared to 62% of male respondents.

Jonathan Andrew, CEO of Bibby Financial Services, comments on the findings: “The UK’s small to medium-sized businesses have demonstrated incredible resilience over the past few months and years. Hit with crisis after crisis, SMEs have tenaciously adapted and evolved in any way they can to survive. But the difficult economic conditions have played havoc with their ability and desire to invest in innovation and growth.

“SMEs feel underrated, undervalued, under-supported. So, in this budget, we want to see better support and policy that matches SMEs’ resilience and ambition.

“First, education is key. Government should help to guide businesses to existing resources and initiatives that are currently underutilised, such as the Bank Referral Scheme. Second, the Government could take more effective steps to alleviate the burden for hardworking small businesses by pulling the levers of central and local taxation, such as business rates, and by extending the pay-back period on covid loans.

“As the Government ‘goes for growth’, those SMEs that are sufficiently equipped to build resilience and invest in their futures will play a vital role in driving the UK’s economic recovery.”

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Disabled employees surges to record high thanks to remote working

Employment among disabled people in the US rose to 21.3% in 2022.

The embrace of remote work spurred by the pandemic helped the US employment rate for people with disabilities to reach an all-time high last year.

The percentage of disabled people who were employed rose to 21.3 per cent in 2022, according to data released Thursday by the US Bureau of Labour Statistics. That’s more than a two percentage point increase from 2021 and the most since 2008, when comparable data was first published.

The unemployment rate for disabled people dropped last year along with the national average. And while the labour force participation rate did tick up for those without disabilities, it went up by three times as much for people with disabilities.

Daily tasks such as commuting and navigating an office space can be difficult for people depending on their disabilities. As companies adopted remote and hybrid work arrangements, more disabled people applied for and landed jobs — sometimes for the first time in years.

The recent push by companies urging workers to return to the office may threaten the gains made by disabled people, who comprise about 12 per cent of the population, according to the bureau. A report by the consulting firm McKinsey and Company published last June estimated that 35 per cent of companies offered a fully remote option.

Overall, disabled people are still less likely to be employed than their counterparts who don’t have disabilities, and they are twice as likely to be employed part-time, the BLS report said. They’re also more likely to be self-employed.

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Mothers, older workers and disabled people hold the key to getting Britain back to work

Government efforts to boost Britain’s workforce should focus on supporting more mothers into work, and helping older workers and those with a disability stay in work, rather than persuading the large Covid cohort of older workers to ‘unretire’, according to new Resolution Foundation research published.

The issue of workforce participation has come to a head following a sharp rise in economic inactivity over the course of the pandemic – up by 830,000 between 2019 and 2022, with three quarters of the rise concentrated among those aged 50 and over.

This has prompted calls to action, with the Government’s response likely to form a major part of the upcoming Budget. The authors say that attention on this issue is welcome but warn that a policy focus on trying to persuade this recent ‘Covid cohort’ of lost workers back into the labour market is unlikely to work.

The report finds that increased labour market exits during the pandemic were disproportionately from higher-than-normal retirements among higher-paid professionals, with flows from employment into retirement from many low-paying occupations actually falling. It will be hard to persuade these people, two-thirds of whom own their own home outright and therefore have low living costs, to ‘unretire’ says the authors.

The Foundation adds that someone who took early retirement during the summer of 2020 has now been economically inactive for two-and-a-half years. Historically, just 1-in-50 people in this situation return to work every three months.

Using the benefit system – to target more support, or increase the pressure to work – is unlikely to work either, as just one-in-ten of the economically inactive 55-59 year olds who have left employment since the start of the pandemic are relying on benefit support in the first place.

Policy makers should instead look ahead and focus on three groups – older workers, mothers and those with ill-health or a disability – where the UK’s past experience tells us progress can be made.

In the decade running up to the pandemic, the UK saw employment rates rise by 13 percentage points for women aged 55-64 (and four percentage points for men) and by five percentage points for coupled mothers, while the employment gap between those with or without a disability fell by five percentage points between 2013 and 2022.

First, demographic changes mean that there will be many more older age workers in Britain in the 2020s – the number of people aged 65 and over will rise by 2.5 million between 2020 and 2030.

The Foundation warns against a narrow focus on simply raising the State Pension Age, which disproportionately impacts those on lower incomes and poor places with lower life expectancies. If the Government wants to discourage early retirement – having previously encouraged it for richer people with ‘pension freedoms’ – it could accelerate the rise in the minimum age at which people can draw their private pension, which is currently due to rise from 55 to 57 but to remain 10 years lower than the state pension age.

Second, the UK must address its maternal employment gap, where participation rates among low-income women aged 25-54 were just 50 per cent in 2017-2019, compared to 94 per cent among high-income women of the same age.

The Foundation warns that policy makers need to be clear what their objectives are when it comes to new childcare policies. Popular proposals to extend the number of ‘free’ childcare hours will largely boost the incomes of already-working parents in middle-and-high income households, rather than boost employment among lower income households. To achieve the latter, the government should reform childcare support and work incentives for second earners in Universal Credit.

Third, the report notes that a growing share of the population lives with a disability or ill-health. As well as a wider policy agenda to tackle the underlying causes of this trend, including rising mental ill-health, policy makers can do far more to help those affected stay in employment.

The Government should build on the success of statutory maternity leave in boosting maternal employment, and create a new ‘right-to-return’ so that workers who need take some time off work for ill-health remain attached to their employer and job. The Foundation also warns that proposals from both main parties to reform disability benefits to ease the path back into work are well intentioned, but either relatively minor or fraught with implementation challenges.

Without further progress on these three areas, the authors warn that the economic inactivity rate for 15-75 year olds is set to rise from 29.5 per cent up to 30.8 per cent by 2030, the highest rate since the turn of the century (2001).

Louise Murphy, Economist at the Resolution Foundation, said:

“Britain did a great job of getting more people into work in the 2010s. But some of that progress has been undone by the pandemic, with economic inactivity rising by 830,000 over the past three years.

“We need to reboot progress on getting people into work, but we’re not going to achieve it by persuading the recent Covid cohort of older workers to ‘unretire’.

“Instead, we need to do more to encourage mothers in low-income families into work, and help people who need to take periods of time-off for ill-health stay attached to their jobs.

“Taking the right approach to workforce participation would boost individuals’ living standards, and improve the wider health of our economy.”

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McKinsey calls for better socioeconomic representation to boost economy

McKinsey is calling on other firms to kickstart their social mobility agendas — by highlighting links to how better socioeconomic diversity benefits businesses and the wider economy.

The management consultancy’s renewed social mobility focus includes sharing best practices and follows increased media and government attention on the topic.

This includes headlines on how Santander and PwC will change their recruitment to be more socioeconomically inclusive and target-setting by the City of London’s socioeconomic diversity task force.

The task force now has a target for 50% of financial and professional services leaders to come from lower socioeconomic backgrounds by 2030. Currently, 36% of leaders in these sectors do.

Encouraging other firms to kickstart their social mobility agendas, McKinsey has highlighted links to how better socioeconomic diversity benefits businesses and the wider economy.

Colin Shaw, leader of operations practice at McKinsey shared his first-hand experience of how little socioeconomic diversity the sector used to have.

He said focusing on social mobility makes sense on a landscape where new pathways into work and new business aims are apparent.

Speaking exclusively to HR Magazine, he said: “We’ve just come out of the pandemic, there’s a cost of living crisis and the gap between socio-economic differences is right to be challenged.

“Furthermore, a lot of organisations are focusing on the environmental, social, governance (ESG) agenda but the part that isn’t front and centre is the S… and companies can do a lot to challenge that these days.”

According to Sutton Trust research cited by McKinsey, better widespread social mobility could boost UK GDP by 9%.

McKinsey’s own research Diversity Wins links organisational performance and diversity.

While Shaw explained that improving socioeconomic diversity can be a difficult agenda to get started on — not least because it is a complex, dynamic and highly contextual category — he said clear purpose and data have an important role in kicking off initiatives.

He added: “Socioeconomic diversity might be the hardest one to tackle. Firstly, you’ve got to get data; without data, you can’t see how good or bad you are.

“But it’s also about just getting started. To do this you’ve got to be purposeful. Just saying we’re going to start this and asking how do we start measuring and monitoring, and the rest will come.”

McKinsey tips on where to get started to boost socioeconomic diversity, published in Fixing the ladder: How UK businesses benefit from better social mobility, include using a hybrid working model, contextualised recruitment assessments and paid internships.

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White House pushing to get more veterans into the trucking industry

The White House’s latest idea to fix the US's supply chain issues is to put more veterans in trucks.

Half a million veterans re-entered the US workforce in January, and comes as businesses nationwide have struggled with a host of supply chain issues. Getting products from warehouses to store shelves has been complicated by the ongoing pandemic and a lack of workers in key posts at ports and other transition stations.

White House officials have promoted increasing the number of truck drivers in America as a long-term solution to the problem, and offered a host of recent training initiatives to direct job seekers to the industry.

In the administration’s “Trucking Action Plan to Strengthen America’s Workforce” released in December, officials said that veterans skills and experience make them “excellent candidates to help address these challenges and build the next generation’s trucking workforce.”

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