Budget 2021: What do the new policies mean for employers?

People Management explains what HR professionals need to know about key areas of the announcement, including furlough, visas and apprenticeships

In yesterday’s budget, chancellor Rishi Sunak unveiled a raft of measures designed to “protect jobs and livelihoods” costing in excess of £500m.

Top of the billing was the much-hoped for extension to the furlough scheme, as well as business rates relief, apprenticeship hiring incentives and a new ‘Help to Grow’ scheme offering up to 130,000 SMEs across the UK a digital and management boost.

In his speech, the chancellor said: “The choice I’ve made is, as much as I can, to protect working people, small businesses and public services. This budget is helping people develop new skills, start an apprenticeship, and get better paid jobs [and] helping small business owners get the training, skills and technology they need to compete with bigger firms and become the high growth companies of the future.”

The budget was “as helpful as it could have been”, says Martin Tiplady, CEO of Chameleon People Solutions, but cautions that the devil will be in the detail. “I am relieved that the chance was not taken to increase tax at this juncture – though that will follow without doubt – and the increase in corporation tax is a worry. But all in all, the budget, in my view, was as sensitive to the circumstances as we might have reasonably expected.”

Following the announcement of the new policies, People Management asked HR and employment experts for their analyses of the proposals, the impact they could have and the questions that remain to be answered.

Furlough extension and reskilling

The coronavirus job retention scheme (CJRS) has been extended until the end of September. Under the scheme, the government covers 80 per cent of workers’ salaries for the hours they are not working, up to a maximum of £2,500 a month.

However, as part of the plans, from July businesses will be expected to contribute 10 per cent of employees’ wages for the hours not worked, increasing to 20 per cent in August and September.

For the most part, the move has been welcomed, however some have suggested that focusing on training furloughed workers should have been prioritised. Helen Jamieson, founder of Jaluch HR, warns that while well intentioned, the furlough scheme risked “holding everyone down”. 

“Furloughing workers where their industry is changing dramatically for the long term [and] they will not be returning to jobs they left is not helpful,” she says. “It is damaging self-esteem, damaging social interactions and damaging career prospects.”

Kirsty Donnelly, CEO at City & Guilds Group, agrees: “What we’re not seeing, and what is needed now more than ever, is a comprehensive long-term strategy that connects all the dots of employment, welfare, skills and education, to connect people to jobs, for longer term growth and productivity.

“While furlough may have been extended again, we need funding to be made available right now to help unemployed and furloughed people retrain and reskill so they can transition from one job to another and quickly get back into meaningful work. Otherwise, once furlough ends we may be leaving millions with no route back to the labour market.”

CIPD chief executive Peter Cheese also says the announcements on skill investment and policy “lack ambition and don’t meet the needs of businesses or workers” and that it “must be addressed if the government’s further education reforms are to meaningfully tackle the skills gaps and shortages that hold back the economy”.

He adds: ”There is still a huge challenge to address the reskilling needs of the new economy and to help jobseekers back into work.”

More incentives to take on apprentices

The apprenticeship hiring incentive in England has been extended to September 2021, and the payment has been doubled to £3,000. A new £7m ‘flexi-job’ apprenticeship programme in England was also announced, enabling apprentices to work with a number of employers in one sector, while an additional £126m will go towards 40,000 more traineeships for 16-24 year olds.

Steve Rockey, people director at Lime Wood Group, says that overall the government’s approach to skills has been beneficial – particularly to the hospitality sector. “[They have created] some great routes for young people to learn more about the hospitality industry at a super interesting entrepreneurial time, with lots of new business ideas that now people can put into practice,” he says.

Rockey added the increased incentive payments was a “boost for all businesses” to get behind their apprenticeship programmes, and while the Kickstart scheme had been slow to get off the ground, he is confident it will become “beneficial to everyone once we get back up and running”.

However, Neil Carberry, chief executive of the REC, expresses disappointment that there was no wider reformation of what he describes as the “failed” apprenticeship levy. “A flexible skills levy would deliver better apprenticeships for young people and allow older workers to do the qualifications they need, rather than the ones government is willing to fund,” he says.

New ‘Help to grow’ scheme for SMEs

The new ‘help to grow’ scheme is set to offer free MBA-style management training for up to 130,000 leaders of SMEs, with £520m to be put into online courses from top business schools and a 50 per cent discount for new software.

Paul Struthers, managing director of Sage, hailes the scheme as a “major first step towards a much-needed longer-term approach to supporting smaller businesses scaling up digital adoption”.  

Citing Sage research, he adds that realising the current appetite for technology investment in full could benefit economic output to the tune of £145bn, supporting 2.7 million jobs nationwide.

“As consistent and long-time supporters of technology incentives, we welcome the recognition that technology will play a key role in an SME-led recovery,” he says.

New visa routes

Sunak announced a new visa route similar to the Global Talent route that replaced the old Tier 1 visa.

It is aimed at making it easier for firms to bring in highly skilled migrants from abroad, who will no longer need to obtain a third-party endorsement or be backed by a sponsor organisation. It will, Sunak says, help grow the UK’s FinTech sector, and prize winners and people who hold scholarships will automatically qualify for this route.

Jonathan Beech, managing director of Migrate UK, says he is cautiously optimistic about the move, but employers would have to wait to see how it worked in practice. He said: “Developing the UK’s expertise as a science superpower will need many more scientific superstars across science, research and tech to add to our existing talent pool. But we need to learn when the scheme will begin, the number of points required, plus any other qualifying criteria for this new highly skilled migrant visa.

“On simplifying the visa process for entrepreneurs, start-ups and scale-ups, this too could be welcomed, but again more needs to be learnt on how it will really work in practice.”