A Budget aimed at boosting UK business and encouraging employment

Forecasts:

Today’s Budget forecast some positive figures for the future of UK industry and business, which will hopefully go some way to getting business confidence back on track.

The Independent Office for Budget Responsibility (OBR) has revised the UK growth forecast for 2012 to 0.8%. Unemployment is expected to peak at 1.67m in 2012 before slowly starting to fall again, with the promise of one million more jobs to be created over the next five years.

For business:

Not only did the Chancellor announce a cut in corporation tax, allowing businesses to invest further in their workforce, and continued investigation into the rolling up of income tax and National Insurance, he also focused on transport and infrastructure investment and sector specific funding.

The construction sector is likely to see a strong recovery with further investment in the housing sector. With the industry being such a heavy user of temporary agency labour this will be welcome news to temps and their supplying agencies.

Railways in the North will be improved, bringing jobs to the area and boosting business and there are plans to improve air travel in the South East of England.

The Chancellor is keen to encourage global businesses to move to the UK with plans for enhanced capital allowances for businesses setting up in new Scottish enterprise zones in Dundee, Irvine and Nigg and Welsh enterprise zone to be created in Deeside.

The Science, Engineering, Aerospace and Energy sectors also benefited from announcements and extra funding.

“Changes to corporation tax will encourage businesses to invest in their workforce. Plus, in continuing and speeding up year-on-year reductions the Chancellor creates certainty for businesses, which is so important in encouraging growth.” Kevin Green, REC Chief Executive

What was left out?

Many had speculated that the Government would go some way to easing EU red tape for businesses, relaxing laws around the use of agency labour and simplifying the new auto-enrolment pension scheme – due to come into effect later this year – in order to encourage job creation.

Liam Fox’s Budget challenge could end the era of the temporary worker

Both the CBI and the former defence secretary have suggested George Osbourne should ease the tax burden employers in next months Budget.

The Confederation of British Industry (CBI) and ex MP Liam Fox have called on the Chancellor to cut the tax onus on businesses and make the hiring and firing process simpler.

Writing for the Independent newspaper, Mr Fox said “It is too difficult to hire and fire, and too expensive to take on new employees.”

For some time now this has been the general feeling for many large employers; resulting in a constant increase in the use of temporary agency workers. Obviously, making the process simpler and cheaper would likely lead to a change in this pattern.

There are advantages to a temporary workforce beyond the cost and ease of hiring/firing which employers should consider…

1. Skills gaps – temporary workers are a great way to fill skills gaps within your company. Often it can be difficult to find a permanent employee with the right attributes but much easier to source a temporary solution. This means your business can continue running smoothly whilst you search.
2. Experience – many temps now make a choice to work in such a way – they like the experience it gives them. They will have a broad understanding of their industry and may well have worked with many similar companies, so the knowledge they bring is often second-to-none.
3. Legal mitigation – using an agency or a neutral vendor to source temporary workers passes a lot of the initial legal challenges on. Agencies will ensure the worker has the correct qualifications and right to work documents, taking away much of the administrative burden.
4. Coping with demand – many businesses experience peaks and troughs in demand. A flexible or temporary workforce is the simplest way to react to the market instantly, ensuring you can keep up with demand.
5. Hourly rates – Although some temporary agency workers are very skilled, others may be temping for experience. This means they are likely to accept positions with lower than average hourly rates.
6. Flexibility – Temporary agency workers are often much more flexible than their permanent equivalents. They are used to working at different times, in different places so have the resources in place to cope with this (such as childcare). Because of this they are also more likely to settle into a position much quicker than most.

The Chancellor will deliver his Budget on Wednesday 21 March 2012.