Spring budget 2023: six key points for employers

People Management breaks the chancellor’s ‘back to work’ budget into bite-size chunks for HR professionals

Credit: Carl Court/Getty Images

Chancellor Jeremy Hunt delivered his spring budget today (15 March) – and with a primary focus on getting Britain “back into work”, there were many points for employers and HR to consider; many of which were predicted correctly yesterday by our experts. 

Speaking in the Houses of Parliament, Hunt outlined his four pillars for growth – enterprise, employment, education and everywhere – which included a raft of reforms aimed at supporting those who are economically inactive or out of the labour market back into work. 

Referencing the current labour market, Hunt said: “We have around one million vacancies in the economy, but excluding students there are over seven million adults of working age who are not in work; that’s a potential pool of seven people for every vacancy.”  

The reforms brought forward would “remove the barriers” that stop people from working, he added.

Angela Carter, legal director for England and Wales at WorkNest, said the initiatives would “hopefully help address recruitment and retention issues” and be welcomed by employers, but time would tell “whether they are enough”.


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People Management has synthesised the budget announcement down to six key points:

  1. ‘Universal support’ scheme to help disabled into work

“With Zoom, Teams and new working models that make it easier to work from home, this [supporting those with disabilities and/or long-term sickness back into work] is possible now more than ever,” said Hunt. 

A new voluntary employment scheme for disabled people and those with health conditions, called universal support, will be funded in England and Wales. Up to £4,000 per person will be invested to support 50,000 people per year to find a “suitable role to cater to their needs”, the chancellor said.

As a further measure, and in conjunction with a DWP whitepaper on disability benefits reform, Hunt also promised that reforms to the welfare system – including abolishing the work capability assessment – would support claimants back into work “without fear” of losing their financial support. 

Alan Price, chief executive of BrightHR, said employers should review the measures they have in place to ensure the workplace was “accessible and inclusive” for all. "While reasonable adjustments should be tailored to each individual, employers can implement common adjustments that will benefit a majority, as well as utilise positive action tools to proactively appeal to these people,” said Price.

  1. More support for occupational health to keep people in work 

Also under his ‘employment’ pillar for growth, Hunt said: “We also want to help those forced to leave work because of a condition such as a back pain or a mental health issue; we should give them support before they end up leaving their job.”

He revealed a £406m plan to “tackle” health issues keeping people out of work – with a particular focus on mental health, musculoskeletal conditions and cardiovascular disease.

Hunt acknowledged that occupational health provided by employers has a “key role to play” and planned to bring forward two new consultations on how to improve “instant availability” for that support, and double the funding for SMEs. 

Jeff Middleton, head of employment, education and pensions at Hill Dickinson, said long Covid had caused many to be on long-term sick leave, and supporting them was often difficult for SMEs. “Small employers want to do the right thing by their staff and having government-backed occupational health support will be a huge help,” he said. 

Similarly, Andrew Phillips, senior researcher at Demos, said the support for SMEs and occupational health was the right decision, especially for the over 50s. “In focus groups, out-of-work over 50s told us they had left the workforce for health-related reasons, but would have liked help to continue to work,” said Phillips, adding that the chancellor still had to “follow through” with funding for this pledge. 

  1. Apprenticeships for over 50s 

In an effort to attract “older workers” back into the labour market, the government will launch a new type of apprenticeship for the over 50s: returnerships. “No country can survive if it turns its back on the wealth of talent and ability. I want to make it easier for those who wish to – to work longer,” Hunt said. 

The returnerships “refine” existing skills programmes to make them more accessible to older workers, and will be offered alongside skills bootcamps and sector-based work academies, the chancellor explained.

Hunt said these measures would focus on “flexibility and previous experience to reduce training length” to give people the support they needed to find a “recognisable path” back into work. 

Price said that employers would need to consider the details of returnerships, specifically “the type of contract, pay and benefits such workers will receive”.

"Employers should also recognise that the wants and needs of over 50s may vary from younger workers, so put measures in place to directly meet their expectations,” he said, suggesting that flexible working and certain benefits such as private health schemes may be appealing to them. 

  1. Keep the highly skilled in work by lowering pensions tax 

Hunt said: “No one should be pushed out of the workforce for tax reasons,” as he announced an increase in the pensions tax-free annual allowance from £40,000 to £60,000 to incentivise highly skilled workers to stay in work. 

Meanwhile, the lifetime allowance charge will be removed before being abolished altogether, which will encourage people to stay in work and “simplify the tax system” by removing some of the “complexity” of pensions tax, Hunt explained.

Katharine Moxham, spokesperson for Group Risk Development, said the government has “reduced the temptation to retire early” with this move, and will have a positive impact on certain employee benefits. “The decision to abolish the lifetime allowance also positively impacts on group life assurance schemes, which are employer-sponsored death benefits provided to employees,” she said. 

“Lump-sum death benefits, when combined with the value of any registered pensions, can normally be paid tax free, but only up to the lifetime allowance, so removal of this restriction will be very welcome for employers and employees alike. This will also save employers significant administration costs.” 

  1. Reducing childcare costs to support working parents 

In what Hunt proclaimed is a “revolution in childcare… today's childcare reforms will increase the availability of childcare, reduce costs and increase the number of parents able to use it”.

“But, if we really want to remove the barriers to work we need to go further,” Hunt said.

He announced that 30 hours of free childcare for every child over the age of nine months with working parents would be available by September 2025, and introduced in phases: 

  • April 2024: 15 hours of free childcare for working parents of two-year-olds 

  • September 2024: 15 hours of free childcare for working parents of children aged nine months to three years

Schools and local authorities will also be funded to increase wraparound care and therefore “tackle the barriers” caused by the current limited availability for parents of school-age children. 

Ali Hanan, founder and chief executive of Creative Equals, said this could be a “turning point” for working parents, who are key to building more diverse, equitable and inclusive workplaces. “What’s crucial now is to ensure supply increases to meet the new demand so this commitment does not fall flat,” said Hanan.

However, Nerys Ireland, legal director in employment and immigration at Eversheds Sutherland, said nurseries were already being “bitten hard” by skills shortages, and this could impact the ability to recruit staff in the childcare sector – which may have to rely on migrant workers to fill the gaps. 

“This is a positive change for the careers and work-life balance of millions of parents, but if this change goes ahead nurseries and the Home Office will have to take the additional compliance, visa and work burden into account,” said Ireland. 

  1. Raise corporation tax to incentivise investment 

Despite pressure from some Conservative MPs to drop plans to hike the rate of corporation tax from 19 per cent to 25 per cent, Hunt announced today that the rise would go ahead for companies with more than £250,000 in profits in April. He insisted that just 10 per cent of UK businesses would pay the full 25 per cent rate.

“Our corporation tax did not incentivise investment as effectively as countries with higher headline rates; the result is less capital investment and lower productivity than countries like France and Germany,” said Hunt. 

He also revealed a new “full expensing” scheme to allow every pound spent on IT equipment and machinery to be deducted in full from taxable profits.

Tania Bowers, global public policy director at APSCo, said this could have a limited impact on recruitment. “We expect hiring to be hit in the short term by the impending increase in corporation tax, which will only put greater pressures on the domestic labour market,” she said.