Responses to the Spring Budget 2017 from the Institute for Employment Studies

Press Releases

8 Mar 2017

Nigel Meager, Director:

‘The Budget contains a broadly sensible approach to reduce the differential tax/NI treatment of the self-employed and employees, and to reduce tax incentives for the self-employed to incorporate in service companies.

‘Despite the likely negative response from parts of the small business lobby, tax incentives have been increasingly difficult to justify, and it’s worth remembering that much of the impact of the change will be on relatively high earners, and that most of the self-employed who are low earners will be less affected. Indeed, many of the latter will actually be better off due to the scrapping of Class 2 contributions announced in last year’s budget.

‘However, the quid quo pro for more equal treatment on taxation ought to be more equal treatment for the self-employed when it comes to access to the benefits of the welfare state.  

‘If, as it seems, a larger share of the UK workforce is going to be spending part or all of their working life as self-employed, it would be good to see a more level playing field between employees and the self-employed when it comes to pensions, maternity/paternity rights, sickness benefits, and vocational training provision, as well as access to welfare benefits under the new Universal Credit regime. The Chancellor had less to say about this side of the equation, perhaps because the government is waiting for the results of the current Taylor review of modern employment practices, although the Budget contained a welcome announcement of a review of the case for parity in parental benefits between the self-employed and employees.’

Annette Cox, Associate Director:

‘The budget contains a couple of welcome proposals to support continuous learning among working-age people, which will help counteract the reduction in spending on adult skills over the past few years. Lifelong learning pilots, especially if trialled in community settings, may be helpful in tempting and supporting people from disadvantaged groups back into work. Returnships have extended the concept of internships to an underused talent pool and have considerable potential to help people back into work after a career break.

‘However, both of these policies need to be backed up by careers information, advice and guidance, especially for people who are unable to return to a former occupation or those lacking the skills and confidence to embark on a new career. It will be interesting to see whether the forthcoming careers strategy from the Department for Education addresses the needs of adults making choices about retraining in the context of longer working lives, as well as targeting support to young people making initial choices about entry to the labour market.’

ENDS

About the Institute for Employment Studies

The Institute for Employment Studies is the UK’s leading independent centre for research and evidence-based consultancy in employment, labour market and human resource policy and practice. It is apolitical and not-for-profit, its activities being funded through research and consultancy commissions, and from its corporate membership programme. The Institute aims to improve employment policy in the UK and internationally by carrying out authoritative research of practical relevance to policymakers and those responsible for implementing policy programmes and initiatives

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About Nigel Meager

Nigel is a labour economist by training, and a well-established international expert on labour market and employment policy issues. He has worked at IES since 1984, following posts at the Universities of Bath and Glasgow. He has been Director of the Institute since 2004. He has a long and varied research track record covering the functioning of national, regional and local labour markets, unemployment, skill shortages, labour market flexibility, changing patterns of work and equal opportunity policies and practices.

http://www.employment-studies.co.uk/staff/nigel-meager