The UK’s long experiment with a low-rights, low-wage economy is drawing to an end, and employers need to recognise now is not the time for foot-dragging (writes TUC’s TIM SHARP).
Rupert Soames, president of business lobby group the Confederation of British Industry (CBI), was this week driven to acknowledge that improved workers’ rights is “really good for people who are employed”.
This matters because bolstering workers’ rights is central to the Labour Party’s New Deal for working people.
This pledges sweeping but necessary changes including stamping out the exploitative use of zero hours contracts, ending the ability of employers to fire and rehire workers on lower wages, and scrapping the current wait for up to two years for basic workplace protections.
Such reform is desperately needed.
Rise in insecure work
TUC analysis of official figures shows that by the end of 2022 there were around 3.9 million people in insecure employment, a rise of 23 per cent since the coalition took office – almost double the rise of 12 per cent in overall employment growth.
As Soames, having recently spent eight years as chief executive of outsourcing giant Serco, will be well aware: insecure work disproportionately affects groups of workers who are already discriminated against in the workplace, such as Black and minority ethnic (BME) workers.
Over half of those living in poverty are in working households – and this rises to three quarters of children living in poverty.
Even the current government promised 20 times to introduce an employment bill. But the pledge remains unfilled.
Faltering economy
Meanwhile, the flawed idea that weak workers’ rights means a stronger economy and higher productivity has been tested to destruction.
As the Resolution Foundation has pointed out: “Labour productivity grew by just 0.4 per cent a year in the UK in the 12 years following the financial crisis, half the rate of the 25 richest OECD countries (0.9 per cent).”
Moreover, things are getting worse not better. Economic growth is flatlining with the country teetering on the brink of recession.
The relentless undermining of wages and incomes has repercussions on spending in the economy, with household consumption failing.
This is why Richard Walker, boss of grocery chain Iceland, switched support to Labour citing concern about the impact of the rising cost of living on their customers.
Higher pay and greater security are clearly in the interests of both workers and businesses, for they mean more spending and more revenues for business.
Watering down
Soames warned that “European model” of stronger worker rights, while benefiting those in work, is “really bad for people who are unemployed because companies are terrified to take them on”.
This suggests some in business are oblivious to the events of the past decade or so.
The Marmot review, for example, recognised that insecure and poor quality employment is associated with an increased risk of physical and mental health worsening. That in turn leads to absence due to illness, and worklessness.
No wonder businesses continue to complain of staff shortages.
Indeed his language is reminiscent of the apocalyptic and entirely inaccurate warnings that a national minimum wage would lead to two million more unemployed.
The incoming Labour government in 1997 was right to disregard claims from the Right that the minimum wage would cost millions of jobs. Now there is a wealth of evidence, over 25 years of the minimum wage, that it has protected the lowest paid with no employment effects at all.
It should take unevidenced claims about the New Deal in the same spirit.
Behind the times
While some in the business lobby are dragging their heels, previous advocates of unconstrained free markets now advocate reform.
The OECD’s 2018 Jobs Strategy finally put to bed its long standing celebration of flexibility and market fundamentalism.
“Countries with policies and institutions that promote job quality, job quantity and greater inclusiveness perform better than countries where the focus of policy is predominantly on enhancing (or preserving) market flexibility,” it said.
In the UK, the Institute for Fiscal Studies warned that: “Higher earnings inequality, with low real earnings growth, and a very different labour market from 40 years ago have placed the world of work in a much more unequal and divisive place. To halt or reverse this trend requires significant attention be devoted to ways to restore and reinvigorate real earnings growth and to generate decent jobs with good career opportunities in an inclusive way”.
Conclusions
A radical and effective programme is long overdue both for workers – whether currently in employment, looking for work or will be joining the jobs market in future – and for the wider economy.
As TUC general secretary Paul Nowak told the CBI conference last year: “Decent employers will recognise the promise of Labour’s economic reset and work with unions to boost productivity, skills and security at work.”
Now is not the time for foot-dragging. The economy needs a major reboot and the opponents of change need to get out of the way.
On 7 February, the TUC wrote to Lord Cameron, Secretary of State for the Foreign, Commonwealth and Development Office (FCDO) on the escalating violence in Gaza, Israel and the Middle East.
We have long-standing policy in support of Palestinian rights and ending the occupation of Palestinian territory:
This letter follows on from the TUC’s General Council statement unequivocally condemning the shocking attacks on Israeli civilians by Hamas, calling for the immediate, unconditional release of all hostages unharmed, and calling for an immediate humanitarian ceasefire in Gaza.
In our letter to Lord Cameron, we’ve expressed disappointment that the UK government has so far failed to call for an immediate humanitarian ceasefire in Gaza, or support resolutions calling for one at the United Nations. We recognise that a ceasefire must be accompanied by a political process.
Our government has also failed to publicly condemn the siege of Gaza and called for it to end, even though it is causing immense human suffering and international humanitarian law prohibits the use of starvation, including attacking objects indispensable to the survival of the civilian population and denying or impeding access to humanitarian aid, as a method of warfare.
UNRWA is carrying out lifesaving humanitarian work in Gaza, providing shelter, food and water. We’ve called on the UK government to resume its funding to UNRWA while an investigation into allegations by the Israeli government that several UNRWA staff were involved in the 7 October attacks – is carried out. Ten countries have suspended funding to UNRWA, but the organisation’s head has said that if the funding remains suspended, it will most likely have to shut down its operations in Gaza and across the region by the end of February.
We’ve also raised our concerns that reportedly more than 27,000 Palestinians, mainly women and children, have been killed in operations launched by Israeli forces since 7 October, and that more than 66,000 have been injured. Workers are at the forefront of this violence – with at least 330 health workers, 120 journalists and 150 UN staff killed since 7 October.
We’re supporting calls by the Palestinian General Federation of Trade Unions (PGFTU) for the immediate release of at least 260 Palestinian workers who remain in Israeli detention.
The TUC has called on the UK government and international community to act to ensure that international law is upheld and applied consistently. We’re alarmed that at least 1.7 million civilians, 75 per cent of Gaza’s population, have been forcibly displaced according to the UN’s Office for the Coordination of Humanitarian Affairs (OCHA), and reportedly, that a member of Israel’s security cabinet described Gaza Strip residents evacuating south on IDF orders as, “…rolling out a Gaza Nakba”.
We’re also deeply concerned that Prime Minister Netanyahu has rejected the creation of a State of Palestine, and therefore of a two-state solution as a possible path to peace. The TUC has welcomed Lord Cameron’s recent statement that the UK government would consider the swift recognition of a Palestinian State and we’ve urged the government to make this a priority.
In calling for international law to be upheld, we’ve welcomed the decision of the International Court of Justice (ICJ) to issue binding provisional measures in the case of the application of the Convention on the Prevention and Punishment of the Crime of Genocide in the Gaza Strip (South Africa v. Israel).
Our letter stresses our concern that since 7 October, at least 360 Palestinians have reportedly been killed in attacks involving Israeli forces and/or settlers in the West Bank including East Jerusalem. OCHA has recorded nearly 500 settler attacks, and over 1,200 Palestinians have been displaced in the West Bank amid such settler violence and access restrictions.
We’re worried about the escalation of this violence to the wider Middle East and the impacts this could have, including on workers in the region. The current escalation of violence to the Red Sea, Straits of Hormuz and the eastern Mediterranean is impacting on seafarers’ safety. All parties must respect the safety and welfare of seafarers, including the need for shipping employers to respect the right of seafarers to choose not to work in and around what is now a designated war zone.
We are urging the UK government to do more to bring about an end to this escalating violence and support a just peace by:
calling for an immediate and lasting ceasefire to prevent further loss of life and enable prompt and effective access to humanitarian aid
taking action alongside the international community to ensure that international law is upheld and applied consistently – this includes ending the occupation of Palestinian territory
insisting that Israel complies, in full, with the binding provisional measures issued by the ICJ
taking action to ensure that it is not complicit in any war crimes or crimes against humanity that could be found to be committed
restoring funding to UNRWA and support the ILO’s Emergency Response Programme
ending arms sales and military collaboration with Israel, and ending the UK’s trade in settlement goods
withdrawing the Economic Activities of Public Bodies Bill
recognising the State of Palestine and support genuine efforts towards a just, lasting and comprehensive peace that is consistent with international law, and is based on a two-state solution, which promotes equality, democracy and respect for human and labour rights.
Forty years ago – on 25th Jan 1984 – Margaret Thatcher’s Conservative government attacked trade union rights at GCHQ(writes TUC General Secretary PAUL NOWAK).
Trade union members were told to resign their membership or be sacked.
But after a long and heroic campaign marked by the fortitude of the workers and their families, and the solidarity of the whole movement, they were reinstated when an incoming Labour government repealed the ban.
The spirit and fight shown at GCHQ in Cheltenham has never been more badly needed.
Today, the Tories are once again hellbent on attacking the right to strike – a fundamental British liberty.
Their draconian Strikes (Minimum Service Levels) Bill is even more extreme than Thatcher’s attack in 1984.
This time over five million workers face losing their right to strike – including PCS members in border security.
It would place onerous restrictions on public sector and rail unions and make taking effective industrial action far harder.
Last month the TUC called its first Special Congress in 40 years to discuss how we resist these spiteful new laws.
The message from the trade union movement was unanimous, resounding and clear – we will defend the right to strike at all costs. And we will not rest until this pernicious legislation is repealed from the statute books.
Because let’s be clear: if the Tories get their way this is just the start. We should expect further attacks on the rights of workers and trade unions in other sectors not yet affected.
The government wants to use this heinous new bill as a Trojan horse for other anti-union measures, including an attempted clamp-down on picketing.
It is an ideological assault on workers’ and trade unions’ rights and a brazen attempt to silence workers’ voices and reduce their power.
The imposition of minimum service levels means that when workers lawfully vote to take strike action, they could be told to attend work – and sacked if they don’t comply.
Our public services are crying out for investment to address the recruitment and retention crisis they face. But, instead, the Conservatives are seeking to poison industrial relations, with the result that services deteriorate even more.
It is all driven by an unelected and out-of-touch prime minister who has lost the confidence of the British people. We won’t let this happen.
We will use every lever at our disposable to defeat these unworkable – and almost certainly illegal – new laws. We will name and shame any employer or public body that uses this legislation. We will challenge every work notice issued by employers.
And the full force of the whole union movement will stand behind any worker disciplined or sacked for exercising their right to strike.
Please join me – and trade union members from across the country – on Saturday the 27th of January 2024 as we march and rally in Cheltenham to commemorate the 40th anniversary of the GCHQ trade union ban.
Let’s channel the spirit of those brave GCHQ workers and show our collective defiance against the Tories’ attack on the right to strike.
UK is only country in G7 where household budgets have not recovered to pre-pandemic levels
Families would be £750 a year better off if real disposable income had grown in line with other leading economies
Working people are being made poorer by Conservative failure, union body says
The UK is suffering the worst decline in living standards of any G7 country – according to new TUC analysis published this week.
The analysis shows the UK is only G7 economy where real household disposable income per head hasn’t recovered to its pre-pandemic levels:
Real household disposable incomes in the UK were 1.2% lower in the second quarter of 2023 than at the end of 2019.
But over the same period they grew by 3.5%, on average, across the G7.
The TUC estimates that if real disposable income in the UK had risen in line with the G7 average UK families would be £750 a year better off.
More pain ahead
The union body warned that the contraction in UK household budgets is going to get worse – despite falling inflation.
The Office for Budget Responsibility (OBR) forecasts that real house disposable income per head in Britain will fall by an additional 3.4% by the end of the first quarter of 2024.
And according to the same forecasts household budgets won’t even recover to their pre-pandemic levels until the end of 2026.
The OBR said in November that UK households are suffering the worst period for living standards since modern records began in the 1950s.
Households in debt
The TUC says the Conservatives’ failure to grow the economy and deliver healthy wage growth has pushed many households further into debt.
Analysis published by the union body at the end of December revealed that unsecured debt (credit cards, loans, hire purchase agreements) is set to rise by £1,400 per household, in real terms, this year.
The TUC says working people have been left brutally exposed to rising costs after years of pay stagnation.
UK workers are on course for two decades of lost living standards with real wages not forecast to recover to their 2008 level until 2028.
The TUC estimates that the average worker has lost £14,800 since 2008 as a result of their pay not keeping up with pre-global financial crisis real wage trends.
TUC General Secretary Paul Nowak said: “The UK is the only G7 nation where living standards are worse than before the pandemic.
“While families in other countries have seen their incomes recover – household budgets here continue to shrink.
“This is a damning indictment on the Conservatives’ economic record.
“Their failure to deliver decent growth and living standards over the last 13 years has left millions exposed to skyrocketing bills – and is pushing many deeper into debt.
“We can’t go on like this. Britain cannot afford the Tories for a day longer.”
Growth in real disposable household income in the G7
Country
change 2019Q4 to 2023Q2
United Kingdom
-1.2
Italy
0.1
Germany
0.2
Japan *
0.5
France
2.4
Canada
3.0
G7
3.5
United States
6.0
source: OECD; * Japan to 2022Q1
– The analysis is based on OECD figures for real household disposable income per head, which extend to 2023Q2 (except for Japan, which go to 2022Q1). Looking forward, UK figures are based on Office for Budget Responsibility projections in the November 2023 Economic and Fiscal Outlook. As with the ONS outturns and OBR projections, cash figures are in 2019 prices.
– The OBR measure living standards as real household disposable income (RDHI) per person.
The energy price cap has increased to £1,928 raising the average bill by £94
Union body says UK is “feeding foreign firms’ profits” while British households struggle
Commenting on Monday’s energy price cap announcement, TUC General Secretary Paul Nowak said: “No one should struggle to get by in one of the richest countries in the world.
“But 13 years of wage stagnation and cuts to social security have left millions badly exposed to sky-high bills this winter.
“Energy bills are already 50% higher than two years ago, so today’s rise will just hammer households even harder in the coming year. “
“It doesn’t have to be this way.
“Other governments are investing in publicly owned clean power and insulating homes.”
“The UK is feeding foreign firms’ profits and subsidising cheaper bills abroad, while British households struggle to heat their homes and pay their bills.”
Next year will see 11% real-terms rise in unsecured debt with household debt hitting record levels in 2026
Britain “cannot afford the Tories” – TUC General Secretary to warn in New Year Message
Paul Nowak calls for early general election to “end years of national decline”
The TUC has warned that families are facing a “debt timebomb”. The warning comes as new analysis from the union body reveals that unsecured debt (loans credit cards, purchase hire agreements) is set to increase by £1,400 in real terms next year, on average, per household.
The analysis of official statistics shows that in 2024 household unsecured debt is forecast to rise by 11%.
And over the course of the next parliament unsecured debt is set to rocket by £6,000 (+43%), on average, per family.
The union body warned that unsecured debt per UK household is on course to reach a record level of £17,200 by 2026 – exceeding the previous high of £16,800 set in 2007.
By 2028 unsecured debt per household is set to top £19,000.
Unsecured debt includes credit cards, loans and purchase hire agreements, and excludes mortgages. The TUC excluded student loans from the analysis.
Families left exposed
The TUC says working people have been left brutally exposed to rising costs after years of pay stagnation.
UK workers are on course for two decades of lost living standards with real wages not forecast to recover to their 2008 level until 2028.
The TUC estimates that the average worker would now be £14,800 better off if their pay had kept up with pre-crisis real wage growth trends since 2008.
The union body says the sharp spike in debt, along with stagnant living standards, will “more than wipe out” any gains from the Chancellor’s cut to national insurance tax and leave many families “under the cosh”.
The Office for Budget Responsibility says the period between 2021 and 2024 will be the worst for living standards (real household disposable income per person) since records began in 1955.
New Year’s Message
TUC General Secretary Paul Nowak warns that Britain “cannot afford the Tories” in his annual New Year Message. Calling for an early general election, he said: “Every month the Tories stay in office the more families will be pushed into debt.
“This party of out-of-touch millionaires is more focussed on clinging to power than on growing our economy and getting living standards rising again. If something doesn’t change, real wages won’t recover to their 2008 levels until 2028.
“These 13 years of economic stagnation have left working people brutally exposed to the cost of living crisis. We cannot afford a Tory government for one day longer.”
Highlighting the choice on offer at the next election, Nowak said: “After years of national decline, Labour’s New Deal for Working People would be a gamechanger. It would be the biggest expansion of workplace rights in a generation.
“No more zero-hours contracts and no more fire and rehire. Employment rights from day one. Union rights to access the workplace. New fair pay agreements. Repealing the attacks on the right to strike.
“And more than that, the prospect of a new era of a grown-up, constructive approach to industrial relations, where disputes are solved through negotiation.
“And a clear commitment to put unions and employers at the heart of a modern-day industrial strategy.”
Highlighting the TUC’s ongoing campaign against the government’s new anti-strike laws, Paul Nowak said: “Nobody withdraws their labour lightly. It is the last resort when employers refuse to talk and refuse to compromise.
“The action taken by union members [in 2023] forced bosses across the country back to the negotiating table and secured better deals. Unions will do everything in our power to defend that right to strike. It is a cornerstone of our democracy.
“We won’t be intimidated by this government, and we won’t be bullied. The Tories’ Strikes Act is toxic, unworkable, undemocratic and likely illegal. And it’s a brazen attempt to try stop working people winning better pay and conditions.
“The entire trade union movement will rally behind any worker who is sacked for exercising their right to strike.”
Andy Burnham, Sadiq Khan, Steve Rotherham and Tracy Brabin – as well as 10 other mayors and council leaders – join forces to slam minimum service levels
Metro mayors and council leaders say they will “explore every possible option” to avoid issuing work notices
“Once in a generation” special Congress kicks off on Saturday – as unions debate how to step up campaigning against new laws
Metro mayors and council leaders from across the UK yesterday warned that Conservative anti-strike laws will “make disputes harder to solve” and “lead to more frequent and longer strikes”.
The mayors of London, Greater Manchester, Liverpool, West Yorkshire, South Yorkshire, Bristol and North of Tyne, and council leaders of Birmingham, Cardiff, Glasgow, Leeds, Liverpool, Newcastle and Nottingham and Sheffield, have joined forces to issue a scathing statement on minimum service levels.
The leaders of towns and cities pledge to “work with trades unions and employers to explore every possible option to avert any prospect of work notices being issued in our areas”.
The TUC has hailed the announcement as “hugely welcome”, particularly as the mayors and council leaders run services – such as transport – which could be subject to the legislation.
The mayors and council leaders also slam the new laws as “placing severe and unacceptable restrictions on the fundamental right of a worker to take industrial action to defend their pay and conditions”.
The statement comes after Mark Drakeford, First Minister of Wales, and Humza Yousaf, First Minister of Scotland, have both said they will do everything in their power to avoid issuing work notices.
New laws restricting the right to strike and introducing minimum service levels in rail, border security and ambulance services are now on the statute book – after passing in parliament this week.
Ministers are also consulting on rules affecting workers in hospital settings, schools, universities and fire services.
The intervention comes as unions discussed how they take on the new anti-strike laws at a “once in a generation” special Congress yesterday.
Widespread criticism
The legislation gives ministers sweeping powers to impose strike restrictions in any service within health, education, fire, transport, border security and nuclear decommissioning – and has faced widespread criticism.
NHS Providers recently warned that the legislation could worsen industrial relations, harm patient care and lead to more disruption.
The Joint Committee on Human Rights (JCHR) wrote to the government to express “serious concerns” about its anti-strike legislation breaching international law.
The Equality and Human Rights Commission (EHRC) also warned that the legislation could see all striking workers in affected sectors lose their unfair dismissal protection, as whole strikes could be deemed illegal.
TUC General Secretary Paul Nowak said: “I welcome today’s pledge from elected leaders across the UK to do all they can not to impose minimum service levels on striking workers.
“This statement from mayors and council leaders across Britain is the latest in a long list of scathing criticism for minimum service levels.
“Employers, politicians and civil society organisations have all condemned this legislation.
“And it’s little wonder so many are opposed these new laws. They are a deliberate attempt to restrict the right to strike – a fundamental British liberty.
“Make no mistake – they are undemocratic, unworkable and likely illegal.
“And crucially – as the leaders of our towns and cities say – they will poison industrial relations and drag out disputes.
“That’s why we are calling today’s once in a generation special Congress. Unions won’t stop fighting this spiteful legislation until it’s repealed.”
On the commitment of mayors and council leaders to do everything in their power to avoid issuing work notices, Paul added: “It’s hugely important and welcome that council leaders and mayors have joined the First Minister of Wales and the First Minister of Scotland in saying they will do everything they can to avoid issuing work notices.
“These politicians all run services which could be affected by the legislation.”
Mayor of Greater Manchester Andy Burnham said: “The way for the government to resolve industrial disputes isn’t through draconian legislation, but to negotiate.
“Workers in our public services don’t take the decision to withdraw their labour and lose a day’s pay lightly, and strike action is always the last resort.
“Ministers threatening to sack workers for going on strike during a dispute is both wrong and likely to be counter-productive. This is why we have opposed minimum service levels every step of the way – and will do everything in our power not to issue work notices.
“It also undermines devolution, as services in Greater Manchester such as transport are devolved, with no role for government in decisions such as service levels.”
Marvin Rees, Mayor of Bristol, said: “Minimum service levels are a desperate attempt by a government that has run out of ideas to stop workers taking action to defend their pay and conditions.
“Disputes at work are only solved effectively when people sit down and negotiate.
“Strike action is a human right and provides a basis for workers and employers to find solutions together. Legislating away worker dis-satisfaction does nothing to promote good working conditions or positive relations”.
JOINT STATEMENT:
The government’s proposals for minimum service levels in the event of strike action would place severe and unacceptable restrictions on the fundamental right of a worker to take industrial action to defend their pay and conditions.
They are unfair, undemocratic, and likely to put the UK in breach of our international legal commitments.
Crucially, they would make disputes harder to solve and lead to more frequent and longer strikes.
The recent publication of a draft code of practice that would put impossible hurdles in the way of unions complying with this draconian legislation shows that it is intended to stoke conflict not resolve it.
As leaders in our towns and cities, we urge the government to abandon plans to minimum service levels in any service.
We will work with trades unions and employers to explore every possible option to avert any prospect of work notices being issued in our areas.
Andy Burnham, Mayor of Greater Manchester
Oliver Coppard, Mayor of South Yorkshire
Sadiq Khan, Mayor of London
Steve Rotheram, Mayor of the Liverpool City Region
Tracy Brabin, Mayor of West Yorkshire
Jamie Driscoll, Mayor of North of Tyne
Marvin Rees, Mayor of Bristol
Cllr John Cotton, Leader of Birmingham City Council
Cllr Huw Thomas, Leader of Cardiff Council
Cllr Susan Aitken, Leader of Glasgow City Council
Cllr James Lewis. Leader of Leeds City Council
Cllr Liam Robinson, Leader of Liverpool City Council
Cllr Nick Kemp, Leader of Newcastle City Council
Cllr David Mellen, Leader of Nottingham City Council
NEW report finds most employees aged 16-24 miss out on key employment rights – and young people are also much more likely to be employed on zero-hours contracts
TUC says Labour’s New Deal for Working People would be “life changing” for young people by giving all workers day one rights in a job, banning zero-hours contracts and removing age bands from the minimum wage
A new TUC report has revealed that nearly three-quarters (72%) of young employees aged 16 to 24 miss out on key employment rights at work.
While some workplace rights for employees begin from day one of employment, others only kick in after two years of continuous service – including protection from unfair dismissal and the right to statutory redundancy pay.
The new report – published at the end of TUC’s Young Workers’ Month – shows that employees aged 16 to 24 are far less likely to have built up two years of continuous service in the same job, so are much more likely to miss out on key protections.
That means nearly three in four young employees (72%) don’t qualify for vital employment rights, compared to around one in four (27%) of working people aged 25 and over.
Zero-hours contracts
Young people are also much more likely to be on zero-hours contracts – which means they are ‘workers’ (without employee status) who miss out on essential rights – like the right to request flexible working or the right to return to the same job after maternity, adoption, paternity or shared parental leave.
Zero-hours contracts are characterised by low pay and variable hours. As a result, many zero-hours contract workers also miss out on key social security rights such as full maternity pay and paternity pay.
One in seven (13%) 16 to 24-year-olds in employment are employed on a zero-hours contract – meaning they are around 5.5 times more likely to be on these contracts than workers aged 25 and over (2.4%).
Women are hit harder – one in six (16%) young women in the jobs market are employed on a zero-hours contract.
And young Black, minority and ethnic workers (BME) are 12 times more likely to be on a zero-hours contract than white workers aged 35 to 49 (15.9% compared to 1.4%).
The report highlights that just under half a million young workers (474,000) are employed on a zero-hours contract.
This means that despite only being around one in nine (11%) of the total workforce, 16 to 24-year-olds make up two in five (40%) of the 1.18 million workers employed on zero-hours contracts.
Unemployment
Workers aged 16 to 24 also face a higher unemployment rate than older workers. This is because people aged 16-24 are twice as likely to have been unemployed for six months to a year (22%) compared to those over 25 (11%).
Overall, the unemployment rate for under 25s (12.3%) is nearly three times as high as that for all workers (4.2%). One in eight young people (12.3%) are without a job despite actively seeking work and being available to start work.
Low pay
And young workers are also paid less. Median hourly pay for 16 to 17-year-olds is £8 per hour and £10.90 for 18 to 21-year-olds, compared to £15.83 for all employees.
This is partly because the National Living Wage (currently £10.42 per hour) does not kick in until an employee is 23.
The government has accepted the Low Pay Commission’s recommendations to increase the National Living Wage to £11.44 from April 2024, expand it to 21 and 22-year-olds, lift the rate to £8.60 for 18 to 20-year-olds, and to £6.40 for 16 to 17-year-olds and apprentices.
These changes follow pressure from unions and low-pay campaigners. The TUC says that this is a positive step – but that the top rate must be made available to all working people, regardless of age.
Even with these current announcements a 20-year-old doing the same minimum wage job as a 23-year-old will still be earning £2.93 per hour (28%) less.
Labour’s New Deal for Working People
Labour has pledged to deliver new rights for working people in an employment bill in its first 100 days.
The TUC says that Labour’s New Deal would be “life changing” for young people. It would:
Ban zero-hours contracts to help end the scourge of insecure work.
Give all workers day one rights on the job. Labour will scrap qualifying time for basic rights, such as unfair dismissal, sick pay, and parental leave for all workers.
Remove the discriminatory age bands from the minimum wage to ensure every adult worker benefits from fair pay.
Ensure all workers get reasonable notice of any change in shifts or working time, with compensation that is proportionate to the notice given for any shifts cancelled or curtailed.
Strengthen flexible working rights by introducing a day one right to work flexibly. Strengthen collective bargaining by introducing fair pay agreements to boost pay and conditions – starting in social care.
Beef up enforcement by making sure the labour market enforcement bodies have the powers they need to undertake targeted and proactive enforcement work.
Introduce disability and ethnicity pay gap reporting.
Ban unpaid internships.
TUC General Secretary Paul Nowak said: “Every worker should be protected from being sacked for no reason – but three in four young workers can be fired at will by bad bosses. Just imagine working hard in a job for nearly two years – only to be let go with no recourse.
“Too many young workers are trapped in insecure work, on lower pay and without the workplace rights most of us take for granted.
“That’s not right.
“Labour’s New Deal for working people would be life changing for younger workers.
“It would give them a secure contract – so they knew how many hours they’d work each week. It would stop fire at will – making sure every worker is protected from unfair sacking from day one in the job. It would make sure they were entitled to maternity and paternity pay when they have kids.
“And it would give them a chance to work for a decent future.”
• The real pay crisis is intensified and now expected to last 20 years. • The politically charged National Insurance cut makes the smallest dent in the worse squeeze on household incomes since the 1950s. • While the Chancellor has enjoyed higher revenues, he has chosen to play austerity politics rather than back public services on the brink – £20 billion has been taken from public services to fund the meagre tax cut. • An ‘Autumn Budget for growth’ has meant the reduced growth in almost every year of the forecast. • ‘Full expensing’ of capital expenditure is a seriously inefficient way to boost the economy. • In spite of all the claims to the contrary, the Tories are still presiding over worst deterioration in public finances for more than 100 years.
Real wage and household disposable income crisis unended
The forecasts published alongside the statement by the Office for Budget Responsibility (OBR) contained alarming news on real wages. According to the OBR forecasts, real wages are now not set to return to 2008 levels until 2028. The current pay squeeze will hit two decades.
This is a significant downgrade on the March forecast, when wages were returning to 2008 levels by 2026 – two years sooner than it now expects.
The forecast for broader living standards (as measured by real household disposable income per person) remains dire. After already declining in both the 2020/21 and 2022/23 financial years, further falls are expected over the next two.
While in fact a less bad forecast than March, the OBR stress that living standards “are forecast to be 3½ per cent lower in 2024-25 than their pre-pandemic level … this … represents the largest reduction in real living standards since ONS [Office for National Statistics] records began in the 1950s”.
The OBR also put into perspective the 2 per cent cut in National Insurance, reckoning it will boost living standards by around 0.5 per cent at the end of the forecast. This is a minor dent in an immense collapse, and of course as everybody has pointed out only reverses in a small way tax increases at past statements – even on their own terms the government are failing.
Minimum wage
Specifically for those on the minimum wage, the Chancellor has accepted the recommendations of the Low Pay Commission (LPC). This takes the wage floor to £11.44 an hour and extends coverage to everyone aged 21+. This is badly needed and follows pressure from unions and low-pay campaigners. But with prices sky high, and the OBR increasing its inflation forecasts, the minimum wage must be raised to £15 as soon as possible, and extended to all adult workers.
The Low Pay Commission’s recommendations take the minimum wage to 66% of median wages. This is an internationally recognised measure of relative low pay. However, the Chancellor’s claims that he has eliminated low pay should be taken with a pinch of salt. This is a measure of pay distribution which looks at how close low-paid workers are to the median worker. The floor has risen since 2010 but the middle has had no real pay rise over 13 years. The bottom has been catching up, in part, because wages are stagnant for everyone else. The government should set the LPC’s next minimum wage target at 75% of median wages, and this should be delivered alongside a plan for real wage growth for all workers.
Unemployment rise
The OBR has also predicted that unemployment will steadily rise from now until midway through 2025, estimating there will be 275,000 more people in unemployment than at the start of this year. At no point in the OBR forecasts do they predict unemployment will fall below the level at the start of the year.
It is unfair to put it mildly to penalise individuals for an economic climate which is out of their control. The Chancellor decided to support compulsory work placements, but analysis show this punitive policy does not result in an improved employment outcome.
Skills
The Government plans focus largely on reforms coming in for 16-18 year olds, overlooking the skills gap faced by those already in the labour market. On apprenticeships £50m for a 2-year pilot widely misses the mark. In 2021/22, there were approximately 349,200 apprenticeship starts in England – a 31% decline from the pre-Apprenticeship Levy figures of 509,400 starts in 2015/16 (Source: CIPD). The funds are largely directed at male-dominated sectors, according to the Women’s Budget Group. Other measures are recycled and/or small – though the increase to the pitifully low apprenticeship minimum wage is be welcomed.
Little has been done to reverse cuts to adult and further education budgets since 2010, with spending still significantly below where it was when the government took office. Celebrating an uptick in Level 4 apprenticeships just repeats the ‘virtuous cycle’ where those with the highest levels of qualification receive the most investment in their training. Graduates get most of the training as working adults, and almost half of adults from the lowest socio-economic group receive no training at all after leaving school.
Social security
It is a low bar for this Government when they boast that benefits are being uprated in line with September’s rate of inflation, which is standard practice. Though they have severed the link between inflation and the uprating of benefits numerous times since 2010 – which has slashed vital financial support for families.
And while the Local Housing Allowance has been restored to the 30th percentile after it was last frozen in 2020, it will be frozen again and support reduced for ever-increasing rental prices.
There were also significant cuts to benefit entitlements for some people with long term health conditions. They are expected to lose £400 a month compared to current system, and face the threat of sanctions to enter employment.
The rate at which prices are increasing may have slowed, but families are still struggling with the essentials. Over the last two years the cost of energy has increased by 49 percent while food prices have increased by 28 percent.
Energy prices
And energy bills are a glaring omission from this Autumn Statement.
Household energy bills remain 50% higher than they were in the winter of 2021-2022 (approximately £600 higher for an average household). This means that an estimated 6.3 million households are in fuel poverty (spending more than 10% of their income on energy), and more than 1 million households are in extreme fuel poverty (spending 20% or more of their income on energy). (Estimate by Friends of the Earth and National Energy Action as government data are not yet available.)
Energy prices are expected to remain high or increase. Ofgem today raised the domestic energy price cap by 5%, based on wholesale price volatility.
Many employers will also struggle with rising and volatile energy bills. The UK consistently has some of the highest electricity prices for business in Europe, affecting the ability of UK manufacturers to compete internationally. Unions representing manufacturing workers have consistently campaigned alongside employer bodies for measures to rein in excessive and volatile wholesale energy prices – but these issues seem to be far from the list of priorities of the current Government.
Public services and public finances crises continue
As the OBR gently warn, “it is worth dwelling for a moment on something the Chancellor didn’t announce in his Autumn Statement – which is any major change to departmental spending plans despite significantly higher inflation”.
The government has added “just” £5 billion a year in cash terms to departmental budgets, and this means that “the real spending power of these budgets is eroded by around £19 billion” relative to the previous forecast (as on their chart below).
In 2023-24 the increased budget is allocated for public sector pay increases (£3.9 billion for the NHS in 2023-24, and £0.4 and £1.4 billion for other departments in 2023-24 and 2024-25, respectively). Overall, the OBR have departmental spending growing by 0.9 per cent a year in real terms, down from 1.1 per cent at the March Budget.
Given the government’s political priorities on spending, the OBR stress that unprotected departmental spending is projected to fall by between 2.3 and 4.1 per cent a year in real terms from 2025-26. They wryly observe this (austerity) would “present challenges” and cite the Institute for Government’s recent report finding that “performance in eight out of nine major public services has declined since 2010”. Plainly there is no intention to resolve the crisis in public services and public service recruitment. And ultimately
The public finances overall
For the public finances as a whole, the government has enjoyed a momentary windfall – with less bad than expected growth outturn and higher inflation meaning tax gains (especially with tax thresholds not being uprated) outweighing higher interest and other costs. This has been spent on the NI cut and expensing.
But the Chancellor has made hollow boasts about the improved condition of the public finances. The overall management of the economy for 13 years has meant a disastrous failure for them. Immediately less bad GDP outcomes (next section) have meant marginally improved ratios for this statement. But overall the Conservatives have presided over a huge increase in debt from 65 per cent of GDP in 2009-10 to 98 per cent of GDP in the current financial year. This is an unprecedented deterioration relative to all economic cycles for more than a century.
Growth crisis unended
At the end of his speech the chancellor proclaimed an “Autumn Statement for Growth”. But nothing announced yesterday changed the bottom line. While the forecasts reflected ONS revisions to GDP data and a less bad than expected 2022, growth over the next two years is revised steeply down. And on a medium term view the OBR warn:
“we have revised DOWN our estimate of the medium-term potential GROWTH rate of the economy to 1.6 per cent, from 1.8 per cent in March” (our emphasis)
Of the onslaught in policy measures, the most prominent was making permanent the full expensing of business capital investment. The Chancellor chose to disregard OBR analysis showing both precursor measures (the super-deduction and temporary full expensing in the March 2021 and March 2023 Budgets) had a lower impact on investment levels than predicted (see OBR, Economic and Fiscal Outlook, November 2023, pp 33 – 34).
Introducing full expensing is forecast by the OBR to lead to an increase in business investment of £14 billion between now and 2028-29 and to cost £29.5 bn over the same period. This would appear then to be an extremely inefficient means of increasing business investment, reflecting huge ‘deadweight’ effects, whereby businesses gain generous tax relief on investment that would (likely) have taken place anyway.
The OBR estimates that the measure will raise the capital stock by 0.2 per cent by 2028-29 – a positive, but small, and very costly impact.
Pension saving
The chancellor also had high hopes for the role workers’ £2.5tn of pension savings could play in boosting our flagging economy. But while there were some welcome steps such as setting up a new growth fund through the British Business Bank the plans rely mostly on merging pension schemes in ways that are unlikely to be in the interests of their members, and leaning on funds to put more money into global private equity. These measures were also over shadowed by a poorly thought through proposal to upend the workplace pension system. See our fuller commentary here.
Industrial strategy?
As the Chancellor noted, the lack of long-term certainty over policy decisions (including industrial strategy, taxes, and climate commitments) is a drawback to business decisions to invest. But there was no reassurance in the Autumn Statement that the Government would provide that certainty. While reannouncements of investment commitments to support the automotive, advanced manufacturing, and energy sectors – amounting to £4.5 billion are welcome, this represents only a small proportion of the investment requirements of the Biden-style industrial strategy that the UK needs.
Ending the failure
The failure – as Labour have repeatedly identified – is still a failure of growth. The government need to invest in a stronger economy where growth and fairness go hand in hand, where decent pay means workers spend and businesses produce to meet that spending. A virtuous cycle comes when businesses invest in the face of expansion and optimism, and stronger public services re-enforce the upward dynamic. Fairer and sustainable growth will then support the public finances.
Yet the government continues to take us in the wrong direction. Yesterday’s Autumn Statement showed more strongly than ever why it is time for a change.
Autumn Statement ‘ushers in new era of welfare reform’
A ‘bold new vision for welfare’ backed by nearly £30 billion has been set out by Work and Pensions Secretary Mel Stride
Millions of people will benefit from next generation of welfare reforms and extra support for those most in need, announced at Autumn Statement
Benefits increased by 6.7% and pensions by 8.5%, maintaining commitment to seeing the country through cost of living pressures
DWP Secretary Mel Stride heralds new era offering a “brighter future for millions”
The plans offer unprecedented employment and health support to help over a million people, while protecting those in most need from cost of living pressures – including raising pensions and benefits and increasing help with housing costs.
Long term decisions to provide unprecedented help for people to move off welfare and into work were at the heart of the Government’s plan for growth set out at the Autumn Statement.
While unemployment has been almost halved since 2010, the £2.5bn Back to Work plan will help thousands of people with disabilities, long-term health conditions and the long-term unemployed, to move into jobs. This comes alongside new guarantees for those on the highest tier of health benefits around keeping benefit support to cushion those who try work.
The transformative employment programme comes as the Government continues to protect the most vulnerable, delivering a Triple Lock-protected boost for pensioners and raising benefits in line with inflation next year, worth £20bn taken together.
The changes mean the full rate of the new State Pension will go up by £17.35 per week, while families on Universal Credit will be on average £470 better off next year.
Around 1.6 million households will also benefit from an increase to the Local Housing Allowance – and will be around £800 a year better off on average. Worth more than £7bn over five years, this commitment will support low-income families in the private rented sector with rent costs and help prevent homelessness.
Secretary of State for Work and Pensions, Mel Stride MP said: “Work changes lives. With the next generation of welfare reforms, we will help thousands of people to realise their aspirations and move off benefits into work, while continuing to support the most in need.
“We are taking long term decisions that will build a brighter future for millions, offering unprecedented support to open up opportunity and grow the economy, building on our record that has seen almost four million more people in work since 2010.
“Our reforms will remove the barriers to work that we know some people still face, while we’re boosting benefits and pensions to help with cost of living pressures.”
Welfare reforms announced at the Autumn Statement include:
Uprating working age benefits in line with September’s CPI index figure of 6.7%.
Uprating state pensions in line with September’s earnings figure of 8.5%.
Increasing the Local Housing Allowance to cover the 30TH percentile – worth an average of £830 per year.
Expanded jobcentre support including intensive help for those on Universal Credit
Introducing the Chance to Work Guarantee, which will tear down barriers to work for millions of claimants to try work with no fear of reassessment or losing their health benefit top-ups.
Increasing mental health support for jobseekers by expanding NHS Talking Therapies treatment and the Individual Placement and Support programme, supporting almost 500,000 over five years.
Matching 100,000 people per year with existing vacancies and supporting them in that role through Universal Support.
Rolling out WorkWell to support people at risk of falling into long-term unemployment due to sickness or disability.
Reforming the Work Capability Assessment for new health benefit claimants to better reflect the opportunities available in the modern world of work.
Stricter sanctions for people who should be looking for work but aren’t engaging with jobcentre support.
Building on the Mansion House reforms with further steps to improve private pension returns and grow the economy.
Introducing new Government powers to request data from organisations such as banks when accounts are showing signals of fraud and error.
The Government’s ‘radical new plan’ will stem the flow people falling out of work and onto inactivity benefits due to physical or mental health problems, as it takes the long-term decisions to help people realise their dreams to find a job and build a better life.
With this unprecedented level of employment support comes tougher enforcement of sanctions for fit and able people who should be looking for work but aren’t.
Work coaches will use tools to track people’s attendance at jobs fairs and interviews, and close benefit claims of those able to work who have been sanctioned and no longer receiving money after six months.
Taken together, the package will make sure those who are vulnerable or on the lowest incomes are protected, with intensive support to get them back into work, while ensuring fairness to the taxpayer.
Plan for stronger economy will reward hard work, putting £450 back into the pocket of the average worker earning £35,400 a year thanks to National Insurance tax cut from 12% to 10% for 27 million working people from January.
Tax to be cut and simplified for 2 million of the self-employed, abolishing an entire class of NICs and cutting the rate of the NICs top rate from 9% to 8% – with an average total saving of around £350 for someone earning £28,000 a year.
Biggest permanent tax cut in modern British history for businesses will help them invest for less and boost investment by £20 billion per year over the next decade.
Triple lock maintained for pensioners, benefits to rise in line with inflation and Local Housing Allowance increased to continue supporting families with the cost-of-living. Government is making work pay.
National Living Wage rise represents boost of £1,800 to the average annual earnings of a full-time worker, and the Back to Work Plan will help over a million people start, stay, and succeed in work while ensuring tougher consequences for those choosing not to.
Great British pubs, breweries and distillers backed by freezing alcohol duty for six months to August 2024.
Public finances in a better position than in March thanks to government action, with borrowing and debt as a share of the economy down on average across the next five years.
Autumn Statement gets the economy growing, debt falling and helps return inflation to its 2% target – long-term decisions to build a brighter future.
Tax cuts for working people and British business headlined Chancellor Jeremy Hunt’s ‘Autumn Statement for Growth’ yesterday.
Aimed at building a stronger and more resilient economy, the Chancellor set out a plan to unlock growth and productivity by boosting business investment by £20 billion a year, getting more people into work, and cutting tax for 29 million workers – the biggest tax cut on work since the 1980s.
With higher revenues resulting from stronger growth than previously projected and the pledge to halve inflation having been met, the government has stabilised the economy through taking sound decisions. As set out by the Prime Minister this week, the stronger outlook means taxes can now be cut in a serious, responsible way.
To that end, Mr Hunt announced that a 2 percentage point cut to Employee National Insurance from 12% to 10% will come into effect from January 2024.
For the average worker earning £35,400 a year, that amounts to an over £450 annual tax cut – almost immediately improving living standards for millions of people and rewarding hard-work as the government builds an economy for the future.
Taxes for the self-employed will also be cut and reformed. From April 2024, Class 4 NICs for the self-employed will be reduced from 9% to 8% and no self-employed person will have to pay Class 2 NICs, saving the average self-employed person on £28,200 a year £350 in 2024/25.
Taken together, this is a tax cut of over £9 billion per year and represents the largest ever cut to employee and self-employed National Insurance. The independent Office for Budget Responsibility (OBR) says these reductions will lead to an additional 28,000 people entering work.
Cutting National Insurance will not lead to any change in NHS funding or pension payments. Services will remain unchanged and continue to be funded as they are now.
Businesses will also benefit from the biggest business tax cut in modern British history. As signalled at Spring Budget, the Chancellor announced permanent Full Expensing: Invest for Less for those investing in IT equipment, plant, and machinery.
Full Expensing: Invest for Less is an effective permanent tax cut of £11 billion a year, boosting business investment by £14 billion across the forecast period and helping to grow the economy.
With the tax cut now permanent, the UK will continue to have both the lowest headline corporation tax rate in the G7 and the most generous capital allowances in the OECD group of major advanced economies, such as the United States, Japan, South Korea and Germany.
Since the introduction of the super deduction – the predecessor to full expensing – in 2021, investment in the UK has grown the fastest in the G7.
To further ensure that work pays, Mr Hunt confirmed that the National Living Wage will increase by nearly 10% to £11.44 an hour from April 2024, the largest ever cash increase.
The Chancellor also reinforced the new £2.5 billion Back to Work Plan for those with long-term health conditions, disabilities and difficulties finding employment, which includes tough new sanctions for those who can work but choose not to.
The Chancellor also announced that the government will honour its commitment to the triple lock in full, with the state pension to increase by 8.5% in April in what is the second biggest ever cash increase. Universal Credit and other working age benefits will also be boosted by 6.7% in April, in line with September’s inflation figure as is convention.
Further action to help families includes increasing the Local Housing Allowance rate to cover the lowest 30% of rents from April – benefiting 1.6 million households with an average gain of £800 in 2024/25 – and an alcohol duty freeze to 1st August 2024, following common-sense changes of the duty system made possible by Brexit.
Measures today take the government’s total support for the cost-of-living between 2022-25 beyond the £100 billion mark, to an average of £3,700 per household.
Accompanying forecasts by the OBR confirm that today’s measures will make the economy permanently bigger, with growth every year of the forecast period. Borrowing and debt as a share of the economy are lower than in Spring this year and next year, with borrowing also lower on average across the forecast by comparison. They also confirm that inflation is expected to return to target in line with the Prime Minister’s economic priorities.
Tax
With inflation halved and debt forecast to fall, Mr Hunt delivered on the government’s commitment to cut taxes – rewarding and incentivising work as part of its long-term plan to grow the economy.
The main rate of Employee National Insurance will be cut by 2 percentage points from 12% to 10%, coming into effect from January 2024 – delivering the benefit of a tax cut quickly for 27 million workers.
The combined rate of income tax and National Insurance for employees paying the basic rate of tax will therefore fall from 32% to 30% – the lowest combined basic rate since the 1980s.
The rate of Class 4 NICs on all earnings between £12,570 and £50,270 will be cut by 1p, from 9% to 8% from April 2024.
The weekly Class 2 NICs – the flat rate compulsory charge which is currently £3.45 paid by self-employed people earning more than £12,570 – will effectively be abolished, with no-one required to pay from April 2024. Access to contributory benefits will be maintained and those currently paying voluntarily will still be able to do so at the same rate. The cuts to Class 4 and Class 2 together amount to a tax cut of £350 a year for the average self-employed person on £28,200, with around 2 million individuals to benefit.
Business
Measures to back British businesses big and small will remove barriers to investment and help to bridge the productivity gap between the UK and its G7 peers – unlocking £20 billion extra business investment per year over the next decade.
Permanent Full Expensing will create the certainty that businesses need to confidently invest for less. A company can now permanently claim 100% capital allowances on qualifying main rate plant and machinery investments, meaning that for every pound invested its taxes are cut by up to 25p.
A business rates support package worth £4.3 billion over the next 5 years will help high streets and protect those small businesses that are the backbones of communities. This includes a rollover of 75% Retail, Hospitality and Leisure relief for 230,000 properties and a freeze to the small business multiplier, which will protect around 90% of ratepayers for a fourth consecutive year.
Pension reforms, including through establishing a new Growth Fund within the British Business Bank, will help unlock an extra £75 billion of financing for high-growth companies by 2030 while providing an extra £1,000 a year in retirement for the average earner saving from 18.
SMEs will be supported with tougher regulation on late payers to improve prompt payments, the expansion of Made Smarter in Great Britain and continued funding for Help to Grow.
The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024, simplifying the system and boosting innovation in the UK.
The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%, and the threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%, benefiting a further 5,000 SMEs.
The Climate Change Agreement Scheme will be extended, giving energy intensive businesses like steel, ceramics and breweries around £300 million of tax relief every year until 2033 to encourage investment in energy efficiency and support the Net Zero transition.
Work and welfare reform
Mr Hunt set out steps to reward work, help make work pay, and reform welfare in recognition of the need to expand the workforce and get those out of work back into work to deliver growth.
The OBR expect that the measures announced at Autumn Statement will support a further 78,000 people into work by 2028-29, on top of the 110,000 resulting from action taken at Spring Budget.
From 1 April 2024, the National Living Wage will increase by 9.8% to £11.44 an hour for eligible workers. For the first time this will include 21- and 22-year-olds. This represents an increase of over £1,800 to the annual earnings of a full-time worker on the NLW and is expected to benefit over 2.7 million low paid workers.
The government will also substantially increase the National Minimum Wage rates for young people and apprentices: for people aged 18-20 by 14.8% to £8.60 an hour, for 16-17 year olds and apprentices by 21.2% to £6.40 an hour.
The government is reforming the Work Capability Assessment to ensure that people who can work are supported to do so via the welfare system. Changes to the activities and descriptors will better reflect the greater flexibility and reasonable adjustments now available in the world of work, preventing some individuals from being deemed not fit for work and ensuring they will be better supported into employment.
The boosting of four key programmes – NHS Talking Therapies, Individual Placement and Support, Restart and Universal Support – will benefit up to 1.1 million people over the next five years.
The government is exploring reforms of the fit note process to provide individuals whose health affects their ability to work with easy and rapid access to specialised work and health support.
Mandatory work placements will boost skills and employability for those who have not found a job after 18 months of intensive support. Those who choose not to engage with the work search process for six months will have their claims closed and benefits stopped.
Infrastructure and levelling up
The Chancellor unveiled a raft of supply-side measures and funding packages to benefit businesses and local communities.
£4.5 billion of funding for British manufacturers in the high-growth industries of the future, including £960 million earmarked for the Green Industries Growth Accelerator to support clean energy.
The government has published its full response to the Winser review and Connections Action Plan, which will cut grid access times for larger projects by half, halve the time to build major grid upgrades and offer up to £10,000 off electricity bills over 10 years for those living closest to new transmission infrastructure.
Three advanced manufacturing Investment Zones will be established in Greater Manchester, East Midlands, and West Midlands – together generating £3.4 billion of private investment and creating 65,000 high-quality jobs within the next decade.
The Investment Zones programme and freeport tax reliefs will be extended from 5 years to 10 years, and a new £150 million Investment Opportunity Fund will support Investment Zones and Freeports to secure specific business investment opportunities.
Four new devolution deals across England have been agreed. Mayoral deals with Greater Lincolnshire and Hull and East Yorkshire, and non-mayoral deals with Lancashire and Cornwall, will boost investment right across the country and deliver on the Prime Minister’s commitment to levelling-up.
£500 million of funding over the next two years will help establish two more Compute innovation centres, supporting the development of artificial intelligence as a growth opportunity for Britain.
The life sciences will also be supported as one of the Chancellor’s key-growth sectors, with £20 million to speed up the development of new dementia treatments coming as part of the government’s full response to the O’Shaughnessy Review of commercial clinical trials in the UK.
To prioritise those who want to invest in the UK’s future, the government has accepted in principle the headline recommendations of Lord Harrington’s review into increasing foreign direct investment. This includes additional resource for the Office for Investment, allowing it to deepen its world-class concierge offer to strategically important investors.
Scottish Secretary Alister Jack said: ““This is an Autumn Statement to support hard working families and grow our country’s economy. It is great news for Scotland.
“The National Insurance cut and increase in the National Living Wage will mean a pay boost for millions of workers right across Scotland. We have honoured the pensions triple lock, meaning pensioners will get a £900 a year increase.
“Vital new support for Scottish businesses will ensure we get growth back into our economy.
“The Chancellor confirmed more than £200 million of new, direct UK Government investment in exciting projects across Scotland, which will create jobs, boost growth and transform communities.
“Plus, there will be an additional £545 million in Barnett Consequentials for the Scottish Government, on top of their record block grant.
“There is a lot to cheer about, not least the duty freeze on spirits to support Scotland’s biggest export industry.”
Rain Newton-Smith, Chief Executive, Confederation of British Industry said:“With tough decisions to be made, the Chancellor was right to prioritise ‘game-changing’ interventions that will fire the economy.
“While the move on National Insurance will give hard-pressed households some much needed breathing room, making full capital expensing a permanent feature of the tax system can be transformational for accelerating growth and improving living standards in the long-term.
“Helping firms to unleash pent-up investment is critical to getting momentum into the economy. Making full expensing permanent will give firms the stability they need to press on with decisions on investment whilst keeping the UK at the top table internationally for investment incentives.
“Moves to speed up planning and grid connectivity should also bolster business confidence to invest in high growth areas like green technologies, renewable energy and advanced manufacturing.”
Eve Williams, General Manager, eBay UK said: “The hundreds of thousands of UK small businesses who use eBay and other online marketplaces will warmly welcome the Chancellor’s cuts in national insurance, more support for the self-employed, as well as the decision to make permanent full expensing.
“There are enormous productivity gains to be had from encouraging the long tail of Britain’s SMEs to invest in existing digital technologies. And given that around half of our online businesses also trade offline, they will benefit hugely from the measures on business rates for retail as well as freezing the business rate multiplier.”
Kate Nicholls, Chief Executive, UKHospitality said:“The Chancellor has brought forward a significant package of business rates measures that will help hospitality businesses across the country. UKHospitality led the calls for Government to extend relief and take action on the multiplier and I’m delighted the Chancellor has acted on our asks.
“Reforms to the planning system to drive quicker approvals will remove a significant barrier to business investment. This type of reform to reward the best performing local planning authorities is exactly the type of change we have been suggesting to drive growth in hospitality.
“We’re also pleased that the Chancellor has acted on our proposal and frozen alcohol duty until August next year to support our supply chain.
“The reduction in National Insurance for employees will put more money in people’s pockets and provide a boost to hospitality in the New Year, often a challenging time for the sector.”
Responding to the freeze in alcohol duty until 1 August 2024
Nuno Teles, Managing Director, Diageo GB said:“Today we raise a glass to the Chancellor and the Prime Minister, who have listened to the industry’s plea for support and decided to back our homegrown sector, that employs so many people across the UK.
“Drinkers and pub-goers across the country now have even more reason to celebrate this festive season. Cheers, Chancellor!”
Responding to the announcement of £7million of funding to tackle antisemitism
Mark Gardiner, Chief Executive, Community Security Trust (CST) said:“The commitment to fund education to tackle antisemitism in universities and schools, alongside the promise to continue the increase in funding for security guarding in the Jewish community, is not just a welcome, concrete contribution to the fight against antisemitism: it sends an important and powerful message to the Jewish community that we have the sympathy and support of government in this struggle.
“We are grateful for the Chancellor for this commitment and we will work with government and communal partners to ensure it is put to effective use.”
Responding to the protection of the Triple lock
Caroline Abrahams, Influencing Director, Age UK said:“We’re pleased and relieved the Government kept its promise to older people to honour the Triple Lock.
“For the 4.2 million older people who recently cut back on food and groceries to make ends meet, having a State Pension that delivers the basics in life is essential.
“Today’s decision also crucially makes is more likely that older people will keep their homes adequately warm this winter, with less fear of facing an energy bill they simply cannot afford to pay come the spring.”
Responding to the support for Veterans
Anna Wright, Chief Executive, the Armed Forces Covenant Fund Trust said: “We are delighted by Chancellor of the Exchequer’s announcement of an additional £10 million to support the Veterans’ Places, People and Pathways programme.
“These projects have delivered significant work already to support our veterans, growing collaborative cross sector working and giving a more seamless interface between statutory and charity or not for profit support.
“They have great potential to help even more veterans, and further develop better, more inclusive local support and better coordination and communication that sustains into the future”
Autumn Statement offers ‘worst case scenario’ for Scotland
Deputy First Minister responds to announcements from Chancellor
The Autumn Statement delivered the ‘worst case scenario’ for Scotland’s finances and failed to live up to the challenges posed by the cost of living and climate crises, Deputy First Minister Shona Robison has said.
The statement failed to deliver the investment needed in services and infrastructure, Ms Robison said. While welcoming the increase in the statutory minimum wage, she said this did not go far enough and fell well short of the Real Living Wage of £12 an hour for 2024-25.
The Deputy First Minister said: ““Today’s Autumn Statement from the UK Government has delivered what is the worst case scenario for Scotland’s finances. Scotland needed a fair deal on investment for infrastructure, public services and pay deals – the UK Government has let Scotland down on every count.
“We needed investment in the services that people rely on and in infrastructure vital to the economy, but the Chancellor’s actions failed to live up to the challenges we are facing as a nation, while not doing enough to help those on the lowest incomes.
“The cut to National Insurance shows the UK Government has the wrong priorities at the wrong time, depriving public services of vital funding. Shockingly, the health funding announced today represents an increase of less than 0.06% to Scotland’s health budget in 2023-24 of £19.138 billion.
“The increases to the state pension and Local Housing Allowance are welcome, but the increase to the minimum wage falls well short of the Real Living Wage. Some of the measures for businesses are also positive, but they come in the face of UK growth having been projected downwards as a result of Brexit and the UK Government’s mismanagement of the economy.
“As global temperatures push ever higher, the Autumn Statement was a chance to fund efforts to cut the UK’s carbon emissions – but it did not. It’s not enough to say they support measures to encourage more renewable energy developments and expand the UK’s electricity grid need. It needs to be matched with funding to actually deliver and help us meet our net zero targets.
“We will now assess the full implications of today’s statement as we develop a Budget that meets the needs of the people of Scotland, in line with our missions of equality, community and opportunity.”
The Scottish Budget will be announced on 19 December.
TUC: Hunt’s Autumn Statement “is a plan for levelling the country down”
Chancellor has confirmed “another round of punishing spending cuts to public services and investment”
Cutting NI won’t make up for “13 continued “years of economic failure on living standards and growth”
Growth forecasts revised down with real wages set to remain below 2008 level until 2028
“The Conservatives have broken Britain. They cannot be trusted to fix it,” says TUC
Commenting on the Autumn Statement, TUC General Secretary Paul Nowak said: “This is not a plan for rebuilding Britain. It’s a plan for levelling the country down.
“At a time when our schools and hospitals are crumbling – the Chancellor has confirmed another round of punishing and undeliverable spending cuts to public services and investment.
“Be in no doubt – if the Tories win the next election, even more austerity is on the way.
“Cutting national insurance won’t make up for 13 continued years of economic failure on wages and living standards.
“Jeremy Hunt has nothing to smile about when working people are on course for a 20-year real wage freeze.
“The Conservatives have broken Britain. They cannot be trusted to fix it.”
Responding to the 2023/24 Autumn Statement, SCVO Chief Executive Anna Fowlie, said: “I share the disappointment of other voluntary sector bodies that this week’s budget Autumn Statement did not recognise the essential services and support of voluntary organisations both in Scotland and across the UK.
“Our sector is a major employer, a partner in delivering public services, and a vital contributor to society and the economy.
“The last few years have been a period of significant change and upheaval for Scottish voluntary organisations, their staff and volunteers, and the people and communities they work with. Rising inflation and the resulting cost-of-living crisis and running costs crisis has strained sector finances and increased demand for the support and services many organisations provide, as demonstrated in our Third Sector Tracker.
“This crisis is not over. We welcome the increase in the National Living Wage which will offer some support to the lowest paid, but to meet the rising cost-of-living this needed to go further, lifting both the National Living Wage and the National Minimum Wage to at least Real Living Wage.
“Our sector is central to building a stronger economy and offers specialist support to those furthest from the labour market and should be included in these plans.
“To protect our sector’s essential contributions for the future, underfunding and a lack of inflation-based uplifts in grants and contracts needed to be addressed in this statement. As people and communities struggle through the largest reduction in household incomes since records began in the 1950s, our support will be needed more than ever.”
