“Emergency Budget” Implications On Employment23 June 2010
The “emergency budget” presented on 22nd June 2010 contained the following measures affecting employment:
1) The personal allowance, for income tax purposes, will be raised by £1,000 to £7,475 in April 2011;
2) The employer National Insurance threshold will rise by £21 per week above indexation from April 2011;
3) From 2011 the majority of benefits will be up-rated in line with the Consumer Price Index rather than the Retail Prices Index, (helping save over £6 billion a year by the end of the Parliament);
4) A two-year pay freeze in the public sector other than those who earn less than £21,000 who will receive a flat rise of £250 in both years;
5) A review of fairness in public pay the aim of which is to ensure that those at the top of organisations are paid no more than 20 times the salaries of those at the bottom; and
6) Despite the commitment in the coalition agreement that the Default Retirement Age would be phased out, there is only a commitment to a consultation on whether to phase it out.
Mr Osborne predicted the UK economy will grow by 1.2% this year and 2.3% next year, and rise further to 2.9% in 2013. But he warned by 2014 and 2015 growth would dip again to 2.7%. He added unemployment would peak at 8.1% this year.