You’ll have heard the headlines from the budget by now, but what does it mean for pay and reward?
Economic outlook
SLOWDOWN. Growth forecast for 2017 has been downgraded from 2% to 1.5% and GDP has been downgraded to 1.4%, 1.3% and 1.5% in subsequent years before rising to 1.6% in 2021-22. Productivity growth and business investment has also revised down.
It’s not all bad news though - despite Growth and Productivity downgrades, the Chancellor has managed to find some wriggle room to agree new investment. £3bn is set aside for preparing for Brexit, an immediate £350m cash boost for the NHS and £500m support for the tech industry.
Pay
NATIONAL LIVING WAGE INCREASE. The National Living Wage is to rise by 4.4% to £7.83 an hour from next April - up from £7.50 today for those aged over 25. Full rates are as follows:
Category New Wage25 years + £7.8321-14 year olds £7.3818-20 year olds £5.9016.17 year olds £4.20Apprentices £3.70
EXPECTED INCOME TAX CHANGES. The basic-rate income tax threshold will rise to £11,850 in April next year, up from £11,501 today, while the higher rate threshold will rise to £46,350, up from £45,001 today.
Cost of living
HELP FOR FIRST TIME BUYERS. The abolition of Stamp Duty for houses costing up to £300,000 is a clear incentive to first time buyers, In addition, houses costing between £300,000 and £500,000 will not attract Stamp Duty on the first £300,000 of the purchase price, with savings being as much as up to £5,000 in total for a house costing £500,000.
In addition, from Spring 2018, the TRAVEL AND THE 'MILLENIAL RAILCARD' for ages 26-30 will be introduced. This is great news for commuters, especially young adults finding travel costs eating into their wages.
FUEL DUTY FROZEN. In 2018, fuel duty will remain frozen for the eighth year in a row, saving drivers £160 a year on average.
Long-term progress
A BOOST FOR THE CONSTRUCTION INDUSTRY. Over the next five years the government will provide a £44bn capital investment to boost the housing market, which means by the mid-2020s there should be 300,000 homes being built every year. The ultimate aim is to make home ownership more affordable.
DRIVING PRODUCTIVITY AND NURTURING MORE TECHNICAL SKILLS INTO OUR WORKFORCE. The government will reward schools and colleges who support their students to study maths by giving them £600 for every extra pupil who decides to take Maths or Further Maths A levels or Core Maths – this is equates to a £406m investment in maths and technical education.
A HELPING HAND FOR SMALL BUSINESSES. It is recognised that small businesses are under "pressure" at the moment, therefore the uprating of business rates will be brought forward, which means that basing it on the CPI inflation index and not RPI by two years will save businesses £2.3bn.
If you’re interested in gaining more insight into 2018’s key trends, why not register for a free ticket for our Pay Trends 2018 Roadshows?
