Pensions minister pledges workplace reform amid government u-turn

The secretary of state for work and pensions Chloe Smith has outlined the government's plan to help stimulate the UK workforce.

During a speech delivered at the Policy Exchange on 13 October, Smith set out how the government will attempt to get more people into work, doubling down on some initiatives discussed in Kwasi Kwarteng's mini-budget.

This included introducing stricter criteria for people trying to claim Universal Credit, and expanding the number of people getting work search support by 100,000.

Smith said government would invest £1.3 billion over three years in employment help for disabled people and people with health conditions as well as stepping up support for over-50s looking for work. Plans to reform the occupational health market were also discussed, making it so companies could purchase higher quality occupational health services. 

Demographics earmarked for government support:

Government commits to supporting older workers

Low-income workers relying on Universal Credit rise to 1.3 million

Disabled employees fear conditions hold them back from promotion

Zofia Bajorek, senior research fellow at the Institute for Employment Studies, said employers have an important part to play in making these policies work.

She told HR magazine: "These government measures are a step in the right direction to help stimulate the labour market, but change won’t happen in isolation. Employers have a key role in this as well, including broadening and simplifying their recruitment offers to make them more inclusive, making work more flexible and secure, as well as improving access to workplace training, support and development.

"Organisations can also be making greater use of support services such as occupational health and vocational rehabilitation to help people out of work get into work, and those in work remain and thrive in work."

Since Smith's announcement, prime minister Liz Truss has removed Kwasi Kwarteng as chancellor and replaced him with Jeremy Hunt, and it is now expected there will be a u-turn on the previously announced budget

Truss is expected to raise corporation tax to 25% rather than cutting it, in addition to scrapping the planned abolition of the 45p top rate income tax. 

Seb Maley, CEO of insurance firm Qdos, warned against the government going back on its decision to repeal IR35 reforms.

He said: “The government doesn’t seem to know which way to turn. Having rowed back on its pledge to scrap the corporation tax rise, the government would be unwise to do the same regarding IR35 reform.

“One of the few things Liz Truss and the now ex-chancellor, Kwasi Kwarteng, have got right is the decision to repeal IR35 reform. Backtracking on a promise to scrap these changes would ultimately cause more financial problems than it would solve.”

Dave Chaplin, CEO of tax compliance firm IR35 Shield, added: “Amidst the turmoil of ousting Kwasi Kwarteng as chancellor and u-turning on corporation tax, we have heard nothing about the government’s intention to repeal the off-payroll working rules from April 2023.

"Jeremy Hunt should be fully aware of how damaging the legislation has been for contractors and hirers in both the public and private sectors because the united contracting market told him in June 2019 as part of the Stop The Off-Payroll Tax Campaign.

“Meanwhile, it’s good to hear the prime minister committing to the growth plan; in times of economic hardship and uncertainty, the country relies on the UK’s flexible talent as the engine of growth, and they should be valued. I would urge the new chancellor to see the repeal through and allow the self-employed workforce to thrive and help the UK economy to flourish.”