Today’s Spring Statement did much to add cost and regulation to employers, and not enough to support growth and skills, according to reactions among business and employment bodies.

Ben Willmott, head of public policy at the CIPD, said announcements of additional funding for the defence and construction sectors were welcome, but “there was no recognition of the need to provide more support for employers”.

“The government has been quick to add costs and regulation to businesses through national insurance hikes and the Employment Rights Bill, which have created clear headwinds for employers in terms of additional costs and implementation challenges,” he added.

“We now need to see the government back businesses by setting out how it will work with employers to address these challenges and boost productivity, as together these measures stand to undermine business investment in workforce training and employment, as CIPD data has shown.

“It’s crucial that the government continues to consult with employers on key measures in the Employment Rights Bill still to be finalised to ensure they don’t have the effect of increasing the cost and risk of employing staff, which will also undermine efforts to Get Britain Working.

“If the government wants to see more people in work, then there must be jobs for them to go to. It’s important that new regulations don’t deter employers from hiring staff, especially younger people and those that might need more support at work.”

‘Anti-business rhetoric’

Neil Carberry, chief executive of the Recruitment and Employment Confederation, echoed these sentiments.

“Success for the Chancellor and this government comes from economic growth, and the Chancellor was right to emphasise this today. But economic growth comes from private sector success – generating the income that funds jobs, tax revenues and ultimately our public services,” he said.

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“The upcoming rise in employer’s national insurance, anti-business rhetoric from some parts of government and worries about impractical new employment regulation are all acting as anchors on business confidence to invest.”

Carberry called for more progress on reforming the apprenticeship levy to ease bureaucracy for employers and “proper partnership working” that would support the labour market and unleash growth.

Doug Rode, managing director for recruitment firm Michael Page UK&I, said employers would be carefully evaluating their hiring strategies in light of increased costs.

“Now is the time for businesses to ensure every hire is strategic – not just filling gaps as a result of immediate pressures, but securing the right talent for the future,” he said.

“As a result, holistic talent strategies will come to the fore, as business leaders look to hiring as a whole rather than by specific teams. This will unlock opportunities for cross-functional hires, where overlapping skills bring versatility and value.

“Employers should also consider creative solutions for talent needs, which may help to streamline overall costs. Temporary contracts, rather than permanent hires, may offer a cost-effective alternative for project-based roles.”

Welfare reform

On reforms to the welfare system, David Williams, head of group risk at Towergate Employee Benefits, said the government was right to focus on reforming how it deals with the 2.8 million economically inactive people out of work due to ill health.

“The welfare reforms announced last week didn’t just cut benefits but they included investment in helping people to start work, stay in work or try a return to work without losing their benefits. All crucial initiatives to kick-start an inactive population,” he said.

“So the message to businesses should be the same. If your business is sluggish, invest wisely in the welfare of your people. You may not see the immediate growth today, but you will reap the rewards in future years.”

However, Rebecca Florisson, principal analyst at the Work Foundation at Lancaster University, said the controversial reforms could inject instability into the lives of people with disabilities.

“On the one hand freezing the level and constraining access to some benefits will provide a short-term saving, but at a great human cost with the DWP estimating that an extra 250,000 people, including 50,000 children, will be in relative poverty in 2029-30 as a result of the measures,” she said.

“It’s particularly concerning that the government plans to make cuts to PIP which may actually undermine disabled peoples’ ability to sustain employment. One in six people receiving the payment were in work in 2023, and it is often crucial in helping disabled workers to remain in a job.”

“Much now hinges on the success of the government’s additional investment in employment support. It must connect disabled people who want to work with secure and well-paid employment opportunities. Failure to do so will risk eroding the living standards of already vulnerable people.”

Skills gaps

As part of today’s announcements, the government said it would launch a construction skills package that would train up to 60,000 more skilled workers.

It will also invest an additional £100 million to support 35,000 construction-focused bootcamps, and £40 million for up to 10,000 places on new construction foundation apprenticeships.

There are further ambitious investment plans for defence and artificial intelligence, which will create jobs.

However, Dominic Holmes, principal, value and strategy at software company Cornerstone, cited data from the firm showing 55% of employers don’t fully understand their existing skills gaps, which leads to a growing “workforce readiness” gap.

“Identifying the most effective strategies to bridge this gap is not straightforward and requires more than a one-size-fits-all mindset,” he said.

“Many companies invest in training through partnerships, certifications, and mentorship, but these methods often overlook industry-specific needs – and, more importantly, the individual ways that employees learn best.

“AI is not only a key driver of change in the workforce but also a solution to these challenges. It can pinpoint skills gaps, develop personalised growth programs, and provide workforce data and insights to help organisations upskill effectively.”

Tax evasion clampdown

Chancellor Rachel Reeves announced not one but two consultations into how HMRC should tackle schemes that allow workers to pay less tax than they are due. Matt Fryer, MD of Brookson Group, a compliance and services provider for the flexible workforce, said he hoped this would put an end to schemes that have plagued the market for years.

“But it would be disappointing if this results in the heavy-handed enforcement of compliant recruiters and contractors,” he added. “These businesses have been consistently and disproportionately targeted by HMRC, despite the complexities of the off-payroll tax rules that they are subject to.”

Crawford Temple, CEO of Professional Passport said HMRC needed to tap into its data to close in on tax avoiders and those who promote it.

“HMRC is sitting on a goldmine of data that could have crushed tax avoidance schemes years ago, yet they’ve chosen to twiddle their thumbs. By failing to cross-reference intermediary reports and real-time payroll data, HMRC has effectively created a playground for tax avoiders,” he said.

“Sluggish and slow enforcement mechanisms have transformed what could have been a precise surgical intervention into a widespread compliance crisis, and the economy is suffering as a result.

“For years, HMRC has watched non-compliant umbrellas flourish while launching yet more consultations. Every moment of hesitation is an invitation for tax dodgers to thrive. The time for analysis is over – the time for action is now.”

Employee experience

Mark Williams, managing director for EMEA at WorkJam, urged employers not to forget the importance of retaining valuable employees while trying to drive efficiencies.

He said: “As a result of the NICs rise, alongside increases to the National Living Wage, the UK’s largest retailers are expecting an additional £7bn increase in annual costs. It is inevitable that businesses will attempt to lower costs by halting recruitment drives and, unfortunately, making redundancies, only further damaging the economy.

“While all businesses will be attempting to do more with less, it is crucial that they are utilising tools that will protect the employee experience whilst driving productivity. Technology can play an important role in achieving this, enabling businesses to use automation and self-service tools to operate flexible scheduling.”

 

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