While much of the media focus has been on the Chancellor’s ‘end of austerity’ rhetoric, yesterday’s budget included a number of specific areas of direct interest to recruiters. The overall tone was generally pro-business and there was positive movement on key issues such IR35 and the apprenticeship levy which have been priority campaigning issues for the REC over the last year.

Here are the 5 key take-aways from the 2018 budget:


1.       IR35 extension is delayed until 2020

IR35 rules won’t be extended to the private sector until April 2020 and only for medium and large firms. This is a big win and comes after intensive lobbying from the REC and other stakeholders. Having to implement these changes in 2019 – at the same time as dealing with Brexit transition – would have been hugely challenging. This is only a delay but we will use this space to encourage the government to pause for thought and really learn the lessons from public sector implementation and ensure that the small business exemption works in practice. We have managed to influence when the IR35 changes come into force – we will now seek to influence how they are implemented.


2. The Apprenticeship Levy will be reformed

The Chancellor confirmed that large businesses will be able to transfer up to 25 per cent of their apprenticeship levy in their supply chain, and have reduced the contribution required for apprenticeship training for small businesses from 10% to 5%. These reforms are welcome but they do not go far enough. Our aim is to ensure that they open the door for further changes – including a broadening of the levy into a wider training levy that can benefit workers on temporary contracts. This is something Matthew Taylor recommended in his review last year and REC have been calling for it since the levy was introduced. We will be working with REC members to make a real impact on the Treasury’s anticipated consultation on the levy.


3. National Living Wage will increase to £8.21 in April

The Treasury have accepted the recommendation of the Low Pay Commission (LPC) to increase the National Living Wage from £7.82 to £8.21 from next April. The LPC’s recommendation remains on the path to meet 60% of median earnings by 2020. The LPC also recommended above inflation increases to the National Minimum Wage for 21-24 year olds (£7.70), 18-20 year olds (£6.15) and 16-17 year olds (£4.35) as well as a new apprentice rate of £3.90. We welcome that government have accepted the recommendations of the LPC and have made new rates based on evidence and not politics. We will continue to use our monthly data to feed into the work of the LPC and to ensure that REC members are aware of the changes.


4. Specific sectors will benefit

As part of the government ‘Plan for the High Street’ they have committed to cutting business rate bills by 90% for retail properties with a rateable value below £51,000 for 2 years from April 2019. We will monitor how this impacts on jobs in the retail sector. Other announcements by the Chancellor may have implications for specialist recruiters in sectors as diverse as construction, healthcare, life sciences and education. We will working with the REC’s dedicated sector groups to take stock and review potential opportunities.


5. Jobs remain front and centre

The Chancellor confirmed that the ‘jobs miracle’ is set to continue with the Office for Budget Responsibility (OBR) predicting that there will be 800,000 more jobs by 2022 – so plenty of vacancies for recruiters to help employers to fill over the coming years! As the UK jobs market continues to be held up as a real success story, we will continue to promote the role of the recruitment sector in fuelling a dynamic and agile labour market. Government needs to facilitate this contribution by working with us to creating the right regulatory, taxation and skills landscape.