TUC General Secretary Frances O’Grady
This was a pre-election Budget, with its give-aways aimed at the better off rather than lifting the living standards of the many.
It will be paid for by further years of austerity, public services brought to near collapse, public sector pay cuts and a welfare cap that bites into the safety net that any of us might need. There was nothing for the young who continue to face the worst job market in decades and unaffordable housing. Nor was there any relief for low and middle earners who, after years of falling living standards, have no spare cash to take advantage of the help for savers, and who now face year on year cuts in benefits for working families as the welfare cap bites.
The best news for the long-term health of the economy is the genuine help for manufacturing, but it was the exception in this highly political short-term Budget that continued the Chancellor’s project to shrink the state and help the rich.
Andrew Hunter, co-founder of Adzuna
On the surface, the labour market is forging forwards. The number of people claiming Jobseekers Allowance has experienced its fastest drop since 1997, and the unemployment rate has fallen. In addition, the OBR predicts real wages will catch up with inflation this year. But beneath the statistics, there remain some underlying problems. Youth unemployment may have fallen to a four-year low, but 16-24 year olds are still three times more likely to be unemployed than the rest of the workforce. And our data shows that advertised salaries fell to a 17-month low in January. The creation of 100,000 new apprenticeships for younger workers is a nod in the right direction, but we still need to do far more, both to support our youth and increase salaries overall.
Osborne may be pleased that income inequality is falling, but the ongoing North-South divide is still crippling the labour market. Competition for jobs in the North remains intense, with more than more than 27 people competing for each vacancy in areas such as Wirral and Salford. Osborne paid lip-service to this problem, but jobseekers in these areas may well be disappointed.
Ronan Dunne, O2 CEO
It’s positive to see the value of a young workforce recognised by the Chancellor today, as the fact remains that there are still over 900,000 young people out of work. Young people possess the digital skills that are the fuel of the growing economy and a greater number of businesses need to give them a chance. That’s why this week we’re launching a new space in the heart of London with the commitment to help young people capitalise on their digital skills and get practical career advice and support.
Sean Drury, head of employment solutions at PwC
It’s good news that HMRC has made clear that multiple employment arrangements or “Dual Contracts” have their place as part of the commercial arrangements used by organisations and are not inherently artificial in nature. Dual contracts are common for international workers with different roles inside and outside the UK. HMRC is looking to raise £55m-£75m a year from blocking artificial arrangements, but has listened to the various responses to the consultations and made some changes to the detail which will reduce the impact on commercial arrangements. These clarifications are helpful in attracting businesses with senior executives with responsibilities across multiple jurisdictions to base themselves in the UK.
Tony Wilmot, Co-founder, staffbay.com
This was an encouraging Budget for low earners who want to get out there and work. The rise in the personal tax allowance to £10,500 is a welcome step towards ending the Welfare dependency culture that holds the economy back.
The news that the government is to back more than 100,000 more apprentices is, on the face of it, good news – but we have to be sure that these jobs are real, and not just cheap labour for 18 months. Apprenticeships must lead to sustainable jobs, else they will end up costing more than they save.
Mark Wood, CEO at JLT Employee Benefits
The Budget marked the single biggest leap forward for pensions for nearly a hundred years. This is the Government’s silver bullet for the silver generation. Flexibility for pensioners is an essential ingredient in encouraging a savings culture. Doom-mongering for annuities and the life assurance sector is hugely premature and the extreme reaction of these companies’ share prices, such as Legal & General and Just Retirement, should surely begin to correct once the shock factor has been overcome.
The reality is that just because you will not be required to take an annuity, it doesn’t mean you shouldn’t take one. Annuities offer individuals protection against rapidly increasing life expectancy and the vagaries of the financial markets and therefore they will remain extremely valuable as part of a person’s retirement planning. Critically, insurance companies can withstand investment risk in a way in which individuals may not be able to.
Joanne Segars, Chief Executive, NAPF
Today’s announcement is perplexing. Automatic Enrolment, one of the largest and most successful reforms of workplace pensions ever seen, was introduced to encourage people to make good financial decisions about their retirement, because experience tells us that people are often ill-informed and make poor decisions about financial planning for old age.
On the one hand the idea that savers can take their pension as a lump sum, albeit subject to tax, may be an incentive to save. However, this choice brings with it a significant burden of responsibility for individuals to understand the choices they are making. We know this is not always the case as people often underestimate how long they will live and overestimate how long their pot will last1. There is a recognised problem with the lack of financial literacy in the UK and there is a distinct lack of detail in today’s announcement on how the Government will ensure people have access to good impartial advice so they make the right decisions about their income for retirement.
There are many unanswered questions today’s announcement – not least how a free impartial guidance service will be established within twelve months. Additionally, the effect on defined benefit schemes will need to be tested as the cost and funding implications for these schemes could be significant.
It is concerning that there appears to be little robust modelling to reassure us the Government has understood the risk that a number of people will run through their pension pots far too quickly. We fear these reforms, without careful scrutiny, will leave a large swathe of people vulnerable to poverty in old age.