Spring Statement 2022: Contractor staffing sector frustrated by 'jam tomorrow' chancellor

The contractor recruitment sector has emerged as frustrated at Rishi Sunak’s Spring Statement 2022, for being a ‘jam tomorrow’ type of mini-Budget.

On the Apprenticeship Levy for example, the government says exactly how more flexible apprenticeship training models can be supported is an area officials will be “looking at”

On immigration reform (so employers can get the skills they need), the government says it wants a visa system able to attract the “highly skilled,” so it will be “creating” such a system.

And similarly on R&D tax relief reform to include some cloud and data costs, and refocus support to the UK, the government is “considering” options to take effect -- from April 2023.

'Sunak's 'Here's What We'll Do Later' package'

Even away from staffing, employers and projects, on tax for example, the government says it will look to simplify the system and its 1,000 reliefs and allowances.

Albeit not before 2024.

This strong ‘jam tomorrow’ theme of Spring Statement 2022 is not lost on Reed Screening director Keith Rosser, even if he does think the government hopes it might be.

“To balance [out] the [bad] news [announced by the chancellor], the Spring Statement appears to be a ‘here's what we will do later’ package.

 “It appears to be a way for the government to distract from how little the mini-Budget will help people right now,” Mr Rosser told ContractorUK.

'Promised change before'

Neil Carberry of the Recruitment & Employment Confederation (REC) also strongly suggests that Mr Sunak’s many words on Wednesday didn’t correspond to much action now.

And not for the first time.

“[The chancellor’s] plan for incentivising business investment, including looking at the failed Apprenticeship Levy, sounds promising.

“But employers have been promised change before,” Mr Carberry said. “This time, he has to deliver.”

'Disappointing'

The Association of Professional Staffing Companies says it backs the chancellor’s vow to ‘examine’ the Apprenticeship Levy and reform visas.

Yet both came with no timetable.

VIQU, a staffing firm in the technology sector, also notes an absence of immediate measures.

“Sunak said he wants a ‘culture of enterprise,’ so it’s encouraging to hear of potential tax cuts on business investment and innovation.

“[But it was notable that] final decisions [on those won’t] be announced until Autumn Budget 2022,” says the firm’s managing director Matt Collingwood, who described Spring Statement as “disappointing”.

'Not what we expected'

As to one Spring Statement measure which was time-specified and imminent – the National Insurance threshold lift, APSCo regrets it “is not what we expected or have called for.”

Umbrella company Parasol reflected: “The chancellor’s surprise announcement of an increase in the NI threshold to £12,570 was welcome news and will help to offset the rise somewhat, although there was no increase in the thresholds for employer National Insurance.”

At the REC, and with his member agencies clearly in mind, CEO Mr Carberry echoed:

“Sixty per cent of National Insurance is paid by businesses. This tax rise [of 1.25% points] will place an extra heavy burden on them, especially in labour-intensive sectors”.

'Huge pressure'

“There is no relief for employers who will still be hit with the full increase in employers,” confirms Compass Contracting’s chief operating officer Alex Fraser.

He added: “[Employers will] also face huge pressure to increase wages in line with inflation which is expected [this year by Mr Sunak] to be as high as 7.4%.”

Not often in the same boat as full-time employees, contractors will “really feel the pinch” too, or at the least the majority will, according to Reed’s Mr Rosser.

“In the face of disposable incomes taking the biggest hit since the 1950s… this really doesn't feel like a Spring Statement that was at all tangibly helpful to contractors.”

'Tax rise for £34k-plus contractors'

Mr Rosser further told ContractorUK: “Yes, there is a change to the NI threshold which will help workers in a limited way, but it’s a tax rise nonetheless for contractors earning over £34,000.

“And yes, there is a small cut in fuel prices which for many contractors who travel for work, is helpful, but is still likely to be under £100 a year in real-term savings. Indeed, will any of the chancellor’s measures offset the dramatic, current rise in the cost of living? No.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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