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Budget 2015: Government urged to focus on skills and productivity


The first all-Conservative budget since 1996 contained several surprises, such as a cut in corporation tax and a proposed change to Sunday trading laws. Businesses are now exploring exactly what these changes will mean for their organisations.

Proposals to introduce an apprenticeship levy on businesses were welcomed, but some are warning that this must be introduced with care.

CIPD chief economist Mark Beatson commented: “The Government’s introduction of an apprenticeship levy does highlight the importance of investing in training, but there is a concern that this could reduce broader workforce development if it is introduced in isolation without consideration of the UK’s broader skills challenges, for example inadequate leadership and management capability.

“We need to see more detail from the Government on how they intend to encourage a culture of lifelong learning, training and development and this must include opportunities for those aged over 25 right through to mature workers.”

“With the annual productivity gains from training an apprentice at £10,280 per year, the investment is well worth it. However, if this new levy is implemented, it must be done in a way that does not impose additional bureaucracy on businesses, and does not discourage employers from supporting on-the-job training in their companies,” agreed Chris Jones, chief executive of the City & Guilds Group.

A possible change in Sunday trading laws was also met with a mixed reaction. Speaking before the budget, Laith Khalaf, senior analyst for Hargreaves Lansdown said that extending Sunday trading might be construed as a good thing for the Big Four supermarkets, but it’s far from an open and shut case. “Customers are simply going to spread the same purchases over the additional hours of shopping, and the supermarkets will bear the additional cost of keeping those big stores staffed for longer,” he said.

The Chancellor also addressed Britain’s ‘productivity puzzle’. Measures rolled out to tackle this included investment transport infrastructure and devolving powers outside of the capital, with Osborne announcing that a full productivity plan will be released on Friday.

The CIPD responded by calling for a Government-led campaign to boost the productivity of Britain’s workforce to be announced on Friday. This should cover boosting leadership and management capabilities, extending skills development opportunities beyond apprenticeships to workers of all ages, and a concerted push to boost workplace productivity through sector-based industrial partnerships.

Some criticism has been aimed at the cuts to welfare and benefits. Iain McMath, CEO of Sodexo benefits and rewards services, said he was concerned that removing access to Tax Credits for families with more than two children will leave parents with a significant gap in their childcare provisions.

He said: “The change is due to be implemented in April 2017 and coincides with the launch of Tax-Free Childcare (TFC) which will see 57% of families with three children  worse off than under the current Childcare Voucher system.”

He added: “Sadly, it is those parents in the lowest income tax-bracket that so heavily rely upon these Tax Credits who are also facing severe uncertainty with the implementation of TFC. Many parents now face a significant dilemma over their work/home balance and how they will be able to provide for the future.”