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October Budget: Does it address the issues facing businesses today?

October Budget: Does it address the issues facing businesses today?

As Rishi Sunak took to the dispatch box for the October budget earlier today, his ‘rabbit-out-of-the-hat’ announcement was the rise of the minimum wage to £9.50.

This rise of 6.6% was announced alongside a reform of the Universal Credit taper, cutting the rate by 8% to 55% – set to come into effect “within weeks”.

Alongside this, Sunak announced that the new Scale Up Visa is set to “make it quicker and easier for the fast growing businesses to bring in highly skilled individuals”.

He wants to make the UK talent market “the most competitive in the world” and a “science and technology superstar”.

But, does this address the issues businesses are facing today?

Deputy CEO of the Recruitment & Employment Confederation Kate Shoesmith said: “The Chancellor said today was about preparing for a new economy.

“To really deliver on that, what we need to see from the government is a long-term, strategic vision for the whole UK workforce.

“Businesses up and down the country are battling labour and skills shortages. They need the right levers to enable the right type of investment in workforce development and growth – only that growth can make wage rises sustainable and improve the public finances long-term.

“Today’s pledge for more spending on skills is a step in the right direction – but what is long overdue is a revolution in how we deliver training and skills.”

Organisations should now prepare their payroll teams to manage the changes to take-home pay and update any associated policies, so staff are aware of the new pay rates as the new minimum wage comes into play.

Kate Palmer, HR advice and consultancy director at Peninsula, said: “These changes represent an increase of 6.6% the third-highest annual rise since the financial crash in 2008.

”It’s expected that a similar increase will be applied across payments associated with family-friendly leave, for example, maternity, paternity, adoption, shared parental, and parental bereavement pay.

“The increase will likely also be in place for statutory sick pay entitlements; however, this may mean a subsequent rise to the lower earnings limit, which employees must meet to be eligible for most statutory payments.

“This increase in demand on payroll and HR teams may mean that organisations will have to recruit additional people, so it could also be beneficial to review recruitment strategies now, to ensure there are sufficient staffing resources in place.”

The challenge for many, especially in talent acquisition, is one of talent supply rather than lack of investment.

Paul Newnes, head of innovation at Talent Works, said: “These initiatives are likely to be good news in the medium term and will help to build a better pipeline of talent – but businesses aren’t looking that far ahead at the moment.

“Schemes like these will take at least five years to have a tangible effect.

“Today’s budget is too reactive and slow moving – businesses across the country are being strangled by a lack of talent.

“The problem is not investment, it’s resourcing, and the budget doesn’t address that.

“Any new talent visa schemes need to avoid the usual Kafkaesque processes if they are to be at all effective in attracting overseas talent into the UK.”

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