Spring budget 2023 and the ‘back to work’ reforms: headlines for employers
Chancellor Jeremy Hunt delivered his Spring Budget last week with a primary focus on getting Britain “back into work”. There are many points for employers to consider, to include attracting those off on long-term sick back into employment, to ‘returnships’, pensions and additional funding for childcare. The Budget delivered a raft of measures designed to break down barriers to work.
Childcare support for working parents
In a move that is designed to remove barriers that prevent parents working, the Chancellor has confirmed that working parents will be able to access 30 hours of free childcare per week, for 38 weeks of the year, from when their child is 9 months old to when they start school which will be rolled out in 3 stages between April 2024 and September 2025.
Further, parents on Universal Credit who are moving into work or increasing their working hours will receive childcare funding upfront instead of having to claim it back after the event, which is the case under the current system. In recognition of the increasing cost of childcare to working parents, the maximum childcare support available through the Universal Credit will also increase to £951 for one child (up from £646) and £1,630 for two children (up from £1,108).
Apprenticeships for over 50s
Moving on to another group that the government wants to encourage back to work, the government has adopted a new tactic for workers over 50 aimed at improving existing skills-building initiatives to make them more approachable for older workers and giving them the knowledge and assistance they need to find a direct route back into work.
Support for ill-health
With the Chancellor highlighting that more than 2.5 million workers are currently economically inactive due to disability or long-term ill health, the government has announced key measures aimed at enabling disabled people to return to work and supporting people through periods of ill health. These include:
- A Health and Disability White Paper containing plans to reform the welfare system to better meet the needs of disabled people. The overall aim is to support disabled people to try to work without fear of losing their existing financial support;
- WorkWell Partnerships will be piloted in England to deliver integrated work and health support in local areas;
- A new voluntary employment scheme for disabled people, known as the Universal Support programme, will match disabled and sick people who want to work with existing job vacancies. Up to £4,000 will be spent per person to help find suitable roles, with 50,000 places eventually available; and
- New funding will be provided to expand an existing programme providing tailored Work Coach support to disabled people so that they can find suitable work.
Key changes to the current pensions regime to support older workers to remain in the workforce include:
- The lifetime allowance for tax-free pension savings will be removed from April 2023 and subsequently abolished from April 2024. This change effectively removes the punitive tax rate which applies to savers who exceed the current lifetime threshold. This has been a particular issue within the NHS with some doctors, consultants and other high-earning professionals choosing not to work or to reduce their hours rather than incur the pension-related tax charges;
- The annual allowance (the total amount which can be saved into a pension each year before tax is incurred) will increase from £40,000 to £60,000 from April 2023; and
- The money purchase annual allowance will also increase from £4,000 to £10,000, allowing those who already access their pension benefits to continue saving an increased amount into their pension should they choose to return to work.
The government also intend to ensure that people receive the best possible financial, health and career guidance well in advance of retirement with the expansion of the mid-life MOT – a review for workers in their 40s and 50s, helping them take stock of finances, skills and health to prepare for retirement and build financial resilience.
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