The HR community has welcomed the absence of significant announcements in the Autumn Budget speech on pensions or IR35.
It was predicted that Hammond might replace the current system of providing pensions tax relief at an individual’s marginal rate with a flat rate for all, or that he might cut the tax relief available to older savers. But while some had predicted that he might cut the lifetime pension allowance, instead this will increase in line with the consumer price index, rising to £1.03 million for 2018-19. This represents the first rise in the annual allowance for seven years.
The only other mention of pensions were plans to unlock over £20 billion of new investment in UK scale-up businesses by facilitating pension fund access to long term investments.
Tom McPhail, head of retirement policy for Hargreaves Lansdown, said that while there may be change in the future this hiatus is welcome.
“The stability of no change is a relief after years of political interference and the salami-slicing of reliefs and allowances,” he said. “There may have to be further changes at some point in the future; higher rate relief in particular is still likely to be scrapped as soon as a government feels it is strong enough to do it. In the meantime investors can make hay while the sun shines.”
There were rumours that IR35, the legislation that applies when workers supplying their services to clients via an intermediary would be an employee if they were not using the intermediary, would be rolled out to private sector workers. However, Hammond remained quieter than expected on that front, announcing only further consultation on the matter in the 'red book' of the Budget where he promised to "carefully consult on how to tackle non-compliance in the private sector".
“Instead of extending the changes now, Mr Hammond paid heed to IPSE’s warnings and pledged to consult on extending the changes to the public sector and ‘draw on the experience of the public sector reforms, including through external research’,” said Chris Bryce, CEO at IPSE (the Association of Independent Professionals and the Self-Employed).
“It was widely rumoured for some time that the chancellor would use the Autumn Budget to extend the disastrous changes to IR35 laws from the public sector to the private sector. IPSE, however, warned again and again that the changes have caused chaos in the public sector; driving out thousands of contractors and stalling numerous government projects.”
When it came to HR topics making it into the Budget, a headline skills announcement was the new national retraining scheme, launched by the government in partnership with the CBI and TUC.
Ian Brinkley, acting chief economist at the CIPD, warned that this announcement does not go far enough. “We welcome the commitment to a national retraining partnership and the investments to support Unionlearn, but overall the investments announced don't come close to reversing the historic decline in public funding for adult skills and lifelong learning,” he said. “If the government wants to build an economy that is 'fit for the future' then we need a much greater investment in the skills agenda, including how skills are used in the workplace.”
The Chartered Management Institute (CMI) was disappointed that some skills appear to have been neglected. “The new £30 million national retraining scheme announced today neglects management skills, which is deeply disappointing,” said Ann Francke, chief executive of the CMI. “While it is great that the chancellor is to extend the National Productivity Investment Fund to £31 billion, with significant spend on R&D, tech and AI, we need to remember that this investment will be wasted unless we also invest in the managers who lead the organisations to benefit from this extra spending.”