Spring Statement 2019 14 March 2019
As anticipated, there were no surprises for payroll, pensions or reward in today’s short Spring Statement and many of the commitments that the Chancellor did announce hang in the balance as we wait to find out if the threat of a no-deal Brexit can be removed tonight.
Minimum wage, apprenticeships and the Employment Allowance all featured in the Statement (summarised below).
“The most urgent task is to lift the current uncertainty” Philip Hammond stated in his introduction – the majority of the UK would certainly agree, if only that were mirrored in the House of Commons. The Chancellor also said “we [Government] are confident we are going to do a deal” . We shall leave speculation on that one to the masses.
What the Spring Statement is meant to be is the Government’s response to the economic forecast from the Office for Budget Responsibility (OBR). However in the words of the IFS ahead of the Statement today, “…there could be tricky fiscal arithmetic for the Chancellor as he considers how best to respond to uncertainty around Brexit and how much money to make available to departments at this year’s spending review.” If an EU exit deal is agreed, then the Government has stated that it will hold a Spending Review which will conclude alongside the Budget later this year. This will set departmental budgets, including three year budgets for resource spending. Employment… …continues to break records: • since 2010 there are over 3.5 million more people in work, and the OBR forecast that employment will increase by a further 600,000 by 2023 • the unemployment rate of 4.0% is the lowest rate since 1975. The OBR forecast that it will remain near historic lows over the next five years • wages are increasing at their fastest pace in over a decade, and are forecast to continue growing faster than inflation, which means more money in people’s pockets • since 2010 there are a million fewer workless households and every region and nation of the UK has higher employment and lower unemployment Minimum wage Listening in, the Policy team thought it unlikely that there would any announcements of relevance to the payroll profession but then we heard that a new review is to take place on the employment and productivity effects of minimum wage rates in the UK, starting with a roundtable next month to be chaired by the Chancellor himself. For anyone wondering, yes of course the CIPP is going to try and get a seat around that particular table. We will keep readers posted on that one but in the meantime what will the various reviews entail? The aspiration for the National Living Wage is for it to reach 60% of median earnings by 2020 and the government has published a new remit for the Low Pay Commission (LPC) which asks it to make recommendations for the National Living Wage rate and National Minimum Wage rates that should apply from April 2020. The LPC report is to be submitted by October 2019. To inform future National Living Wage policy after 2020, the Government has appointed Professor Arindajit Dube to undertake a review of the latest international evidence on minimum wages. The terms of reference for the review have been made available. This makes for a busy payroll profession – ensuring that people are paid accurately and on time.
The LPC’s remit post 2020 will be confirmed by Budget 2019.
Employment Allowance As announced at Budget 2018, from April 2020 the Employment Allowance will be restricted to organisations with a National Insurance contributions (NICs) bill below £100,000 in the previous tax year. Draft regulations have been published inviting technical comments on the implementation of the reform.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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