A budget that rewards work, but not a budget for growth and jobs.

The Chartered Institute of Personnel and Development (CIPD) responds as follows to the Chancellor’s Budget statement.

John Philpott, Chief Economic Adviser at the CIPD, comments:

“The Chancellor has redrawn the boundaries of taxation but, judging by the central forecast of the Office for Budget Responsibility (OBR), his budget has done nothing to change the big picture outlook for growth and jobs overall, while ironically shifting the balance of the economic recovery away from business investment and toward household consumption and public spending.

“The OBR is slightly more optimistic about economic growth in 2012 than it was last November but slightly more pessimistic about 2013. The OBR’s forecast for employment growth and headline unemployment is unchanged, with a lower forecast for claimant unemployment due in large part to a methodological change to the forecast rather than anything to do with the effects of policy. Most worryingly of all the OBR has significantly downgraded its forecast for growth in business investment between now and 2016 while raising its forecast for growth in household consumption and government spending and investment. If the OBR is proved right the economy doesn’t appear to be rebalancing in the way we were supposed to expect, which casts an element of doubt on the Chancellor’s claim that the budget will enable Britain to ‘earn its way’ to recovery.

“Although this is a budget that rewards work, it doesn’t on the face of things look like a budget for growth and jobs. And if once the fine print has been scoured over it proves to be a ‘Robin Hood’ budget, it’s surely ‘Robin Hood lite’ with less for those not in work and the promise of perhaps an extra £10 billion of welfare cuts to come. “

Commenting on plans to water down employment regulation, Mike Emmott, Employee Relations Policy Advisor at CIPD, says: “If the Government is serious about increasing economic growth, it will look to support employers’ efforts to build an engaged workforce.  Taking away employment rights is not the answer and there is no evidence to support such a claim.  If the government wants high performing workplaces so as to increase productivity and support economic growth, it needs to accept that they cannot be built on the back of unfair treatment of employees. Fairness, trust and respect are the basis for successful employment relationships, not dumbing down management practice to the level of the least competent.

“Some commentators have claimed that employment regulation is unfairly loaded against the employer, but the OECD has shown that the UK has one of the most flexible labour markets in the developed world.  In fact, it is the dispute resolution system that creates unnecessary problems for employers and that is why CIPD strongly supports the government’s proposals for alternative dispute resolution, including early conciliation by Acas and building mediation networks.”

On proposals to introduce regional public sector pay deals, Charles Cotton, CIPD Reward and Performance Adviser, comments: “We welcome the opportunity for employers to determine pay and benefits that meet the needs both of their local labour market and their budget. The frequent reliance on uniform, union-negotiated pay deals and length of service as a determinant of individual pay progression has ensured that there is a disconnect in the minds of many public-sector workers between their performance and the pay they receive. We need to move beyond this to an approach in which individual and collective performance and achievement of results becomes a significant determinant of public sector pay.”