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Spring Budget 2021 offers HR breathing space but lacks skills investments

Chancellor Rishi Sunak has extended the three-point Plan for Jobs, increased minimum wage and introduced new schemes to help businesses recover after coronavirus, yet measures to plug skills gaps in employment have come under fire.

While the measures announced in yesterday's budget (2 March) creates a breathing space for HR teams and businesses, critics have shared fears these allowances won’t be enough to solve current problems in the job market.

Notable absences from the budget were strategies to tackle unemployment and any reforms to the apprenticeship levy


Apprenticeship incentives

Before the budget announcement, the CIPD called on the government to reform the apprenticeship levy, arguing under current rules the levy will undermine the investment in skills and economic recovery needed following the pandemic.  

Though there were no direct reforms to the levy, the cash incentive for businesses hiring new apprentices of any age has increased from £1,000 to £3,000 and funding for traineeships has tripled to a pot of £126 million.

Jennifer Locklear, chief people officer at ConnectWise, said that the increase in apprenticeship and trainee incentives will benefit smaller businesses in particular.

Speaking to HR magazine, she said: “In spite of the unpredictable employment market, there still exists a skills gap in certain roles, technology and cybersecurity, to name a couple.

“The tripling of money for traineeships and the doubling of incentives for new apprentice hires opens up the candidate pool to allow companies, especially smaller companies, to take advantage of talent that may have previously been overlooked due to a lack of experience.”

Sunak also announced the introduction of two Help to Grow schemes as part of the programme which has set up to help small and medium sized businesses across the UK learn new skills and reach new customers. 

A new management training scheme for SMEs has been launched, of which 90% of the cost will be covered by the government and a digital scheme that will give small businesses access to free expert training.

However Neil Carberry, chief executive of the Recruitment & Employment Confederation, said that the chancellor had no clear strategy for tackling unemployment and resourcing growth and the skills transition this would require.

He said: "A flexible skills levy would deliver better apprenticeships for young people and allow older workers to do the qualifications they need, rather than the ones government is willing to fund." 

Peter Cheese, chief executive of the CIPD, agreed that the investment in skills lacks ambition.

He said: “Spending on lifelong learning is still less than it was a decade ago at a time when investment in this area has never been more important.

“There needs to be much more sector-specific funded training and mentoring support to help job seekers develop the technical and employability skills they need to find work in parts of the economy that are set to grow.”

Speaking to HR magazine Mark Hendy, founder of HR consultancy Hendy HR, said this rising void in desired skills will inevitably cause issues for HR.

“While unemployment is rising and is predicted to continue to do so, the failure to invest adequately in skills development will likely create talent pipeline shortages in the future", he said. 


What business support can HR access?

Since March 2020, over 700,000 people have lost their jobs and the economy has shrunk by 10%.  

To support businesses as they re-open in line with the lifting of lockdown restrictions, a new Re-Start grant for April was announced. This will allow non-essential retail businesses access to grants of up to £6,000 and hospitality and leisure businesses grants of up to £18,000.

Jonathan Richards, CEO and founder of Breathe, said that the loans will be a welcome relief for SMEs and benefit smaller businesses in particular.

Speaking to HR magazine, he said: "The coronavirus pandemic has challenged so many businesses over the past year to say the least, so it’s great to see support announced today to help them get back up and running.

"It remains to be seen whether this will be enough for businesses to weather the storm, but in the meantime, it provides space for HR teams to focus on their people and culture as lockdown restrictions ease.”


Furlough, SEISS and the minimum wage

Prior to the Budget announcement, government confirmed that it would be extending the furlough scheme until the end of September this year. Though still a welcome helping-hand, lobbyists have asked government to provide more decisive action ahead of changes with some calling for the scheme to be extended to the end of the year.

Support for self-employed workers will also be widening allowing those who started self-employment work in 2019-2020 access to cash grants.

The £20 uplift of Universal Credit will also be extended for another six months, and the national minimum wage will be increased to £8.91 from April.