A new National Living Wage of £7.20 an hour, an apprenticeship levy for large employers and a youth obligation to ‘earn or learn’ were the HR headlines in George Osborne’s summer Budget.
Claire Bond, a Director at Bond Williams reviews the most crucial aspects for those working in HR to be aware of.
1. The introduction of a National Living Wage of £7.20 an hour from next April, rising to £9 an hour by 2020. This will be compulsory and apply only to people aged 25 and over.
Since the budget, there has been much discussion in the media that a wage increase could lead to employers cutting jobs, stating that if small businesses are forced to cut staff it will cause a domino effect on local economies — fewer jobs, higher unemployment and less disposable income.
2. Offsetting the costs for businesses of national living wage, Osborne will cut Corporation Tax to 18% by 2020. The amount of National Insurance Contributions (NICs) smaller firms pay will also be cut from next year, with the employment allowance (enabling employers to reduce NICs for their employees) increased by to £3k, from £2k.
3. Osborne also committed to an apprenticeship levy for larger firms. The money collected from this will be directly controlled by employers.
Most large employers already contribute significant time and investment to apprenticeship programmes. It is hoped that the government will simplify the complex system that currently exists and employers will also welcome investment
4. For those aged 18 to 21, Osborne introduced an obligation to either earn or learn by finding a job or remaining in education.
5. Also, though not expressly mentioned in the budget speech, a document released afterwards confirmed that the government will consult on devolving powers on Sunday trading to local authorities, including larger retailer opening times.