The UK chancellor will outline his ambition to get hundreds of thousands more people to work in next week’s budget, introducing reforms to get parents, the sick, the disabled and older workers back to work.
Jeremy Hunt said his priority was to create the conditions for growth and fight inflation, calling his budget statement next week “back to work”.
It is also expected to cut taxes on business capital expenditure, offsetting a rise in the next few weeks in corporation tax from 19% to 25% and the end of the tax “super deduction” for investment.
“The Tories have cut taxes when we can,” Hunt told the BBC’s Laura Kuennsberg. “Within the limits of what is responsible, we will always seek to reduce the tax burden.”
Idleness is set to be at the center of the March 15 budget, although critics wonder whether its patchwork of changes will significantly alter Britain’s dynamic. tight labor market.
The Office for Budget Responsibility, which assesses government policies based on their potential to boost growth, should be cautious. Former OBR officials say the budget watchdog’s approach is “show, don’t tell”.
Childcare costs for people on Universal Credit will begin to be paid up front, rather than in arrears, under budget plans, while the maximum amount people can claim for Childcare under the scheme will also be increased by several hundred pounds.
Hunt said additional help for families who don’t qualify for Universal Credit would be “expensive.” He added that ministers “would like to help everyone” – but added: “You can’t always do everything at once.
In the meantime, benefit claimants will be encouraged to return to work or increase their working hours through changes to the universal credit system and increased employment support schemes.
An element of coercion, backed by sanctions, will be used, with claimants being asked to attend more regular meetings with job coaches and participate in skills boot camps.
Work capacity testing will be abolished, allowing people with disabilities to try to work without fear of losing their benefits and reducing the number of tests needed to qualify for health-related benefits.
Hunt will also target measures at people with disabilities, those with chronic conditions and those over 50, many of whom left the labor market after the Covid-19 pandemic.
Older workers will be offered ‘returns’, offering flexible skills training that takes into account previous experience, with an additional 8,000 places in the ‘skills boot camp’ to the 56,000 currently on offer.
Hunt said: “Those who can work must work because independence is always better than dependency. We need to fill skills gaps and give people the skills, support and incentives they need to find work.
“With this plan, we can address labor shortages, bring down inflation and put Britain back on the path to growth.”
However, with 1.2 million vacancies in Britain, ministers privately accept that mobilizing inactive workers in the UK will not be enough to fill skills shortages and are looking to overseas workers to fill the gaps .
The Government’s Migration Advisory Committee leads a major overhaul labor market and is expected to add construction jobs to the list of shortage occupations next week, allowing employers to bring in foreign workers with lower wages and less visa bureaucracy.
The backdrop to the new measures is a sharp increase in the number of people aged 16 to 64 who are economically inactive due to long-term illness.
About 5.8 percent of the working-age population is inactive, the highest rate in 16 years, according to the Labor Force Survey. The Office for National Statistics has predicted that an aging population will further increase inactivity rates over the next three years.
Long-term illness or disability was the leading cause of the unexpected increase in inactivity between 2019 and 2022, the data shows.
The UK has a bigger problem than most comparable countries. All 37 advanced economies in the OECD saw rising inactivity rates in the first half of 2020, but the UK is among just 20% that still have higher rates than before the pandemic, according to the ONS .
The latest figures show employment is at 75% and unemployment is near a record high of 3.7%.