On March 6th, The Chancellor of the Exchequer Jeremy Hunt delivered his 2024 Spring Budget. The budget aims to build on measures taken in the previous Spring Budget, prioritising long-term economic growth, and includes several initiatives aimed at helping individuals disproportionately affected by various factors re-enter or join the workforce.
Ongoing issues with the labour market
The UK labour market suffered a growth snag in the last few years, the first in decades. This slowdown stems from a combination of factors, including lingering effects of the COVID-19 pandemic, the Russia-Ukraine war, and ongoing adjustments to the post-Brexit landscape. The rising number of individuals suffering with long-term health conditions or disabilities continues to present a long-term workforce challenge.
Fuel duty
In a move echoing the Autumn Budget, the government announced continued freezes on alcohol and fuel duty, emphasising the “temporary” 5p cut to fuel duty in place, meaning there will be no immediate changes to either tax in this announcement. This will continue to save the average car driver £50 a year – a welcome boost for commuters.
National Insurance cuts
Good news for workers! From April 6th, National Insurance contributions for employees and the self-employed will be cut by 2p in the pound, dropping from 10% to 8% and 8% to 6% respectively. This reduction impacts roughly 27 million workers across the UK and is estimated to save workers a combined £10 billion annually.
This cut builds upon identical reductions announced in the Autumn Statement, making it the largest ever decrease to National Insurance for both employees and the self-employed. The average worker can expect to see an additional £450 in their pocket each year, while self-employed individuals will benefit from an average increase of £350.
Child benefit overhaul
The budget plan aims to tackle unfairness in the Child Benefit system by addressing the High Income Child Benefit Charge (HICBC). Currently, the Child Benefit system “phases out” for families where one partner earns over £50,000. This means the benefit gradually decreases as their income rises, ultimately disappearing entirely if they earn above £60,000.
While this doesn’t impact two-income families where each partner earns £50,000 (they receive the full benefit), single-earner families or those with one high-income earner face a cut or complete loss of Child Benefit. From April, the threshold for receiving the full Child Benefit will increase to £60,000 per year. This means more families will be eligible for full benefits. Additionally, the benefit will only be completely withdrawn for those earning above £80,000, providing greater support for families with moderate incomes.
Living wage increase
As previously announced in the Autumn statement, the National Minimum Wage (NMW) and National Living Wage (NLW) is set to rise significantly from April 2024. The largest increase ever, NLW for workers aged 21 and over will be jumping to £11.44 per hour, which translates to over £1,800 extra annually for full-time workers. Additionally, the age threshold for NLW will be lowered from 23 to 21 years of age. The changes also include increases for younger workers, bringing the new rates to:
21 and over: £11.44
18 to 20: £8.60
Under 18: £6.40
Apprentice: £6.40
This boost to wages is expected to benefit millions of workers across the UK and contribute to improved living standards for many families.
It’s hopeful that these new plans, combined with previous measures, will make a significant difference in supporting workers and recognising their contributions to the economy.
Whether you’re looking to re-join the workforce or looking for your next role, we’re here to help. We have offices in Chippenham, Bristol, and Salisbury, covering the Southwest. Get in touch!
