“Emergency Budget” Implications On Employment

23 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.