REC responds to Spring Budget 2023

Responding to today’s Budget, Neil Carberry, REC Chief Executive, said:

“The Chancellor has shown a keen awareness of the challenges our economy faces, and today he has started to address them. We particularly welcome his focus on employment and labour shortages, and the adoption of many of the recommendations of the REC’s Overcoming Shortages campaign. It is also good to see government appreciate the need for an overall strategy to boost growth, given forecasts that – even at the more optimistic level set out by the OBR – are far below what we need.

“The Chancellor mentioned an industrial strategy which is long-awaited music to business ears, but we only saw glimpses into what it could be. Moves on full expensing for investment, childcare, immigration and investment zones are starting down the right path. In other areas, such as skills, he headed in the wrong direction.

“The childcare changes will be helpful for the jobs market, and pay for themselves over time as parents stay in higher paying jobs. But we also need to make sure the provision is in place for parents to get what they have been promised. The implementation of the childcare changes won't come quickly enough to help businesses and industry overcome entrenched labour shortages in the current economic slowdown. This is concerning when labour and skills shortages could cost the UK economy up to £39 billion per year from 2024 - the equivalent of two Elizabeth Lines.

“The big gap in today's Budget is on skills. While more devolution to local areas is the right choice, government is inventing new qualifications and retiring ones that business values, rather than focusing on what will get employers investing more - reforming the failed Apprenticeship Levy. A missed opportunity yet again.

“We are ready to work with the government to ensure that better employment support makes a difference to labour shortages. As experts in workforce issues, engaging the recruitment sector in reform brings practical and effective help. But we also need government to be a guardian of standards - we really need progress on regulating umbrella companies, to protect good businesses and workers alike. That should be a big focus for HMRC when thinking of tax avoidance.”

Ends

Notes to editors:

Overcoming shortages - How to create a sustainable labour market – July 2022. In this report, we show exactly how much damage could be done if we don’t step up. With a 10% surge in demand for staff across the economy, and the labour market restricted by shortages, we could see a 1.2% fall in expected GDP and productivity by 2027 – costing the economy anywhere between £30 billion and £39 billion every year. This figure is just short of the entire current defence budget, or two whole Elizabeth Lines.

Labour Market Tracker: New job ads hit a 14-month high as businesses still need to hire – February 2023.

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The REC is the voice of the recruitment industry, speaking up for great recruiters. We drive standards and empower recruitment businesses to build better futures for great candidates and themselves. We are champions of an industry which is fundamental to the strength of the UK economy.

Find out more about the Recruitment & Employment Confederation at www.rec.uk.com.