Announced on 27 October 2021, Rishi Sunak’s autumn budget is as interesting for what it includes as for what is omitted. Given the proximity of the announcement to COP26, the budget has been criticised for a lack of emphasis on green initiatives and the government’s net-zero plan. The cost of long-haul flights is set to rise, with climate change cited as the reason. Yet, duty on domestic flights has been cut.
Overall, the 2021 autumn budget is a mixed bag. It offers some causes for celebration, and others for commiseration.
Here, we explore the aspects of Sunak’s 2021 autumn budget that will impact employment and employability services.
Supporting more people in-work
Following the controversial decision to cut the £20 uplift introduced to support people on Universal Credit, Sunak’s budget announcement included a reduction to the percentage cut from support given to working people.
Put simply, the Universal Credit Taper withdraws support as people work more hours. For every £1 over £515 per month earned by someone currently claiming Universal Credit, 63p is claimed back by the government. This means that anyone attempting to move from benefits into employment is effectively being taxed to work.
Sunak, citing the advice of organisations including the Resolution Foundation, the Centre for Social Justice and the Centre for Policy Studies, has cut this “tax on working people” by 8%. This takes it down to 53p per £1. What this means in real terms, he claims, is that: “Nearly two million families will keep, on average, an extra £1,000 a year.” He also claims that a “single mother of two, renting, and working full-time on the National Living Wage will be better off by around £1,200.” What’s more, this change is set to come into force no later than 1 December.
For employment service providers this means a greater number of people will be in a position to work. And it will reduce the level of stress faced by people on Universal Credit who want to work. They’ll now be more able to pay their bills at the end of each month.
However, as Jonquil Lowe, Senior Lecturer in Economics and Personal Finance at The Open University, told The Conversation: “the work allowance applies only to those who have children or limited capability for work. What’s more, these changes do not help the 60% of Universal Credit claimants who are not in work.” And, as The Resolution Foundation points out, “Around 75 per cent of the 4.4 million households on Universal Credit will be worse off as a result of decisions to take away the £20 per week uplift despite the Chancellor’s new Universal Credit measures in the Budget.”
So, while this is a welcome change for the employability sector, it’s just a start. More reform and support will be required to enable the currently unemployed who do not have children to move into work.
Raising the minimum wage
From April 2022, the minimum wage is set to rise across all age groups. For anyone over the age of 23, the minimum wage will increase from £8.91 to £9.50 per hour. This change brings the minimum wage in line with the real Living Wage, an amount calculated by taking into account the cost of living. Sunak has also unfrozen pay for public-sector workers. Although, with no specifics included in the 2021 autumn budget (such as the percentage rise that can be expected or where the money will come from), this has been criticised as a very loose and insufficient promise.
While raising wages can only be seen as a good thing, the Office for Budget Responsibility (OBR) has predicted that inflation will rise to 4% thanks to supply-chain issues and increasing energy costs. This means the cost of living is going to rise significantly. This will make the real impact of increased wages negligible. This puts pressure on employability services to support more people seeking work to improve skills and move from minimum wage employment into work that offers better pay, benefits and stability.
Funding for skills and education
Reporting on the 2021 autumn budget, the Institute for Fiscal Studies (IFS) highlights the “striking contrast” between Sunak’s approach to funding for healthcare and education. They note that since 2010, “health spending will have increased by over 40%, education spending by less than 3%.”
In his speech, Sunak proudly claimed that spending per child would return to 2010 levels by 2024. The IFS derided this as “a statement of a remarkable lack of priority afforded to the education system since 2010. A decade and a half with no growth in spending despite economic growth, albeit insipid, is unprecedented. Spending per student in FE and sixth-form colleges will remain well below 2010 levels. This is not a set of priorities which looks consistent with a long-term growth strategy, or indeed levelling up.”
The Institute’s analysis lies in direct contrast with Sunak’s statement that the “Plan for Jobs is working”, and has been described by the OBR as “remarkably successful”. The IFS analysis calls for a greater focus on education and employability from the government.
However, Sunak has announced what the government called “the most ambitious funding package for adult education since 2015.” He has also promised a £3.8 billion investment in skills by 2025 – a spending increase of 42%. This money will apparently be spent on T-Levels, apprenticeships, the Lifetime Skills Guarantee, new technology institutes, skills bootcamps and Further Education colleges.
However, there was no mention of either Kickstart or Restart. The experts are not convinced. Stephen Evans, Chief Executive of the Learning and Work Institute (a think tank dedicated to learning, employment and inclusion), told FE News: “It’s good to see investment in skills rising again after a lost decade of cuts. However, it looks like this only restores some of the previous cuts and so won’t be enough to transform Britain into a skills superpower. We need more detail on both levels of investment and how money will be spent.”
The government’s proudly announced £5 billion increase in spending on education – set aside to help school pupils catch up with lost learning – has also been criticised for falling well below the recommended level. Kevan Collins resigned when the government refused to follow his advice, calling their “half-hearted” investment a “false economy”. What’s more, according to The Guardian, public spending on services for young people in England has been cut by two-thirds in real terms over the past 10 years.
While current investment in skills is promising, the minimal spending on education and reduced funds for youth activities is a real concern. Employment services will undoubtedly come under pressure. Young people who have had their education and development impacted by Covid-19 will soon try to enter the workforce. Youth unemployment is already an issue and can have lifelong scarring effects. This is a particularly pressing challenge that does not seem to be being given enough attention.
Overall, the 2021 autumn budget announcement does little to boost employability services. Instead, Sunak claims the Plan For Jobs is working and implies he has already largely solved the unemployment challenges the country faces. Yet, as the cost of living rises and financial support for childless unemployed people does not, the pressure on employability services to quickly re-skill and move people into work will increase.