Autumn Budget 2021: Chancellor charts out post-pandemic economic recovery plan

On 27 October 2021, Chancellor Rishi Sunak announced the 2021 Autumn Budget, setting out the government’s tax and spending plans for the year ahead. This year’s Autumn Budget is unusual in being the second of the year – there was a budget in March too.

Despite expectations of a bleak economic outlook, the Chancellor announced that UK economic growth for 2021 has been revised upwards from 4% to 6.5%. The UK economy is forecasted to return to pre-Covid levels by 2022.

Total departmental spending will increase by £150bn over this Parliament, which means a real term rise in overall spending. Inflation in September was 3.1% and is likely to rise further – to an estimated average of 4% over next year.

The budget announced seems set to try and address some of the key issues facing the UK right now, such as recovering from the economic impact of the COVID-19 pandemic and the ‘levelling up’ agenda.

There wasn’t a huge amount that directly impacts employers, but our HR experts have collated those points that do below.

National Minimum Wage

The Chancellor confirmed that the government have accepted the recommendations of the Low Pay Commission to increase the National Living Wage next year by 6.6%, to £9.50 an hour. The full list of increases which will apply from 1 April 2022 are as follows:

• increasing the rate for individuals aged 23 and over by 6.6%, from £8.91 to £9.50 per hour
• increasing the rate for 21- to 22-year-olds by 9.8%, from £8.36 to £9.18 per hour
• increasing the rate for 18- to 20-year-olds by 4.1%, from £6.56 to £6.83 per hour
• increasing the rate for 16- to 17-year-olds by 4.1%, from £4.62 to £4.81 per hour
• increasing the rate for apprentices by 11.9%, from £4.30 to £4.81 per hour
• increasing the accommodation offset rate by 4.1%, from £8.36 to £8.70 per hour

Apprenticeships

The Chancellor confirmed the government’s commitment to developing skills through apprenticeship programmes by committing to increasing apprenticeship funding to £2.7 billion by 2024-25.

As part of this, the government will continue to meet 95% of the apprenticeship training cost for employers who do not pay the Apprenticeship Levy. They will also deliver improvements to the apprenticeship system, including:

• Developing an enhanced recruitment service by May 2022 to help SMEs hire new apprentices.
• Supporting flexible apprenticeship training models to make sure that apprenticeships meet the needs of employers:
  • By April 2022, the government will consider making some changes to the provider payment profiles, to try and provide employers with more choice over how the apprenticeship training is delivered. They will also consider streamlining existing additional employer support payments so that they go directly to employers.

• Introducing a return-on-investment tool to show employers the benefits apprentices create in their business (to be in place by October 2022).

The Spending Review also reconfirmed the government is extending the £3,000 incentive for taking on apprentices until 31 January 2022.

Immigration

In spring next year, the government will be launching a new Scale-Up Visa. This will be open to applicants who pass the language proficiency requirement and have a high-skilled job offer from an eligible business with a salary of at least £33,000. Eligible companies will be those that have experienced 20%+ annual growth in turnover or employee numbers over the past three years.

This will differ from the Skilled Worker Visa in that this new visa will be open to all sectors as long as the growth, role and individual criteria are met, whereas the Skilled Worker Visa is restricted to roles on the eligible occupations list.

Business rates

The Chancellor announced a new 50% business rates discount (up to a maximum of £110,000) for businesses in the retail, hospitality, and leisure sectors (including pubs, music venues, cinemas, restaurants, hotels, theatres, and gyms).

Nursery sector

The early years sector was promised an extra £170m by 2024-25. After the budget, the Children’s Minister Will Quince announced further details and explained the additional funding would be worth £160m in 2022-23, £180m in 2023-24 and £170m in 2024-25. This will be used by local authorities to increase hourly rates paid to childcare providers for the government’s free childcare entitlement.

The Chancellor also reaffirmed £150m for training of the early years workforce to support children’s learning and development (this is part of the £1.4 billion announced in June 2021 to help children catch up on lost learning).

Questions? Get in touch

As always, if you have any questions or concerns about the HR or employment law implications  these changes may have for your business, please just contact our team by calling 0345 844 4848.

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