Autumn Budget 2024: HR Implications and Industry Insights
- 3 Min Read
The UK Chancellor of the Exchequer, Rachel Reeves, unveiled the Autumn Budget 2024 today, introducing several measures that will significantly impact HR and People professionals. Key changes include an increase in employers’ National Insurance contributions, a 6.7% rise in the National Living Wage, and new productivity targets for government departments. The budget also addresses fiscal […]
- Author: HRD Connect
- Date published: Oct 30, 2024
- Categories
The UK Chancellor of the Exchequer, Rachel Reeves, unveiled the Autumn Budget 2024 today, introducing several measures that will significantly impact HR and People professionals. Key changes include an increase in employers’ National Insurance contributions, a 6.7% rise in the National Living Wage, and new productivity targets for government departments. The budget also addresses fiscal drag by ending the freeze on income tax thresholds in 2028/29, a move that could affect employee take-home pay.
Industry leaders have shared their insights on these changes:
Economic stability and business impact
Andrew Harding, Chief Executive – Management Accounting at AICPA & CIMA, welcomed measures aimed at providing stability for UK businesses:
“In today’s Budget, the Chancellor announced measures such as the corporate tax roadmap, the continuation of R&D tax reliefs, and the maintenance of full capital expensing allowance, which will help provide UK businesses with much-needed stability and certainty.”
However, Harding expressed concerns about the increase in employers’ National Insurance:
“We are concerned about the increase in employers’ National Insurance and how this will affect businesses’ ability to grow and expand. This announcement is particularly worrying for SMEs across the country, and while we understand some measures will be put in place to mitigate its impact on SMEs, we are eager to see how these will be implemented in practice to ensure they don’t hinder growth.”
Impact on pay and employee benefits
Sheila Attwood, Senior Content Manager, Data and HR Insights at Brightmine, highlighted the potential effects on pay awards:
“Given the economic pressures businesses are already facing, the increase in employer National Insurance Contributions (NI) will likely prompt leaders to reassess their pay award budgets for the coming year. Funding has to come from somewhere, and as our recent Pay Trends research shows, affordability and business performance are going to be two of the biggest factors in deciding what pay awards employees receive next year.”
Attwood emphasised the importance of a comprehensive employee value proposition:
“While retaining top talent remains crucial, employers may need to leverage more than just salary to keep employees engaged – meaning it’s more important than ever to have a well-crafted and competitive Employee Value Proposition (EVP).”
Long-term talent management
Ronni Zehavi, CEO and Co-Founder of HiBob, cautioned against hasty decisions:
“Employers need to be careful not to make rash budget decisions following the rise in National Insurance tax announced today. While many may have to look to reduce wages or cut back on staff investment to even out costs, it’s important for business owners to remember the value of talent in the long run.”
Zehavi also stressed the need for balance:
“The cost of employing people remains the most significant burden on businesses. As new measures are rolled out to support working individuals, it is crucial that we don’t overlook the vital need for assistance to those who employ them. Balancing this will be key in ensuring both workers and businesses thrive in the challenging times ahead.”
As HR leaders navigate these changes, they will need to carefully balance financial constraints with the need to attract and retain talent, while also considering the long-term implications of their decisions on organisational growth and employee wellbeing.