Budget 2021: What it means for UK businesses

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The 2021 Budget has finally been revealed. 

 

  • Furlough scheme extended to Autumn
  • Increased financial support to hire apprentices
  • Unsponsored, points-based visas
  • Infrastructure investment to create thousands of jobs

 

Following on from the government’s roadmap to ease lockdown restrictions, Chancellor Rishi Sunak outlined a number of initiatives to help the economy recover from the impact of COVID-19. This includes extending a range of COVID support measures, as well the introduction of programmes designed to help certain ailing sectors get back on their feet.

But what does it mean for UK employers? And how will the 2021 Budget affect you?

Here’s everything you need to know:

 

Extension of the furlough scheme

One of the main announcements made for UK workers was the decision to extend the Coronavirus Job Retention scheme until the autumn. 

Introduced at the beginning of the COVID-19 crisis, and aimed at keeping as many people in work as possible, the scheme was originally designed to end in October 2020. However, latest figures show 4.7 million people are still furloughed across the UK which has led to the Chancellor extending the scheme until the end of September 2021.

As a result, the government will continue to pay up to 80% of wages, capped at a total of £2,500 per month. Businesses will however be expected to contribute 10% towards the salaries of furloughed staff in July, then rising to 20% in August and September.


Increased cash incentives for businesses offering apprenticeships

Businesses continue to be encouraged to hire apprentices throughout 2021, with cash incentives for doing so being increased from 1st April until the end of September. Companies will now receive £3,000 – up from the previous £2,000 – for each apprentice they employ, regardless of the apprentice’s age.

Additionally, a new ‘flexi-job’ apprenticeship scheme will be introduced in January 2022, allowing apprentices to work for more than one company at a time. So even if you can only offer part-time apprenticeship positions, you’ll still be able to offer placements for apprentices and benefit from the scheme.

If you’re interested in using apprenticeships to grow your business, read our five top tips to make apprenticeships a success.

 

Points-based visas will allow businesses to fast track hiring top talent from abroad

New unsponsored, points-based visas will simplify businesses’ abilities to bring highly skilled workers from abroad in fields such as science, research and tech to the UK. This was announced in the Budget alongside a promise for new, improved visa processes for scale-ups and entrepreneurs.

 

40,000 more traineeships to come with £126m funding boost

More work placements are to be made available to help businesses to tap into fresh talent. The Chancellor stated that financial incentives for employers will continue at £1,000 per trainee hired, giving businesses another avenue to “grow back better” by offering high quality traineeship placements to under-25-year-olds – the age group hardest hit by unemployment – in the 2021/22 academic year. This adds to the handful of schemes available to help hire young workers right now.

 

National Living Wage increase

To support getting people into well-paid jobs, the Chancellor announced that the National Living Wage will rise to £8.91 from April 2021.

It will also be made available to those aged 23 and above, down from the previous age of 25.

 

Investment in infrastructure 

A pledge made by the Prime Minister in 2019 was to spend £100bn on new projects across the country. 

Beginning this spring with an initial investment of £12bn, the new UK Infrastructure Bank in Leeds is intended to aid financing for key infrastructural projects in both the public and private sectors across the country. Designed to support regional and local economic growth, this could potentially create thousands of jobs relating to engineering, construction, transport and logistics, particularly in the North of England and the Midlands.

 

What else was covered? 

Other announcements the Chancellor made which will benefit UK businesses included:

 

  • ‘Help to Grow’ scheme – This new digital-focused scheme will provide 30,000 heavily subsidised twelve-week management and leadership courses for businesses through “world class” providers, starting in June. Geared towards small and medium-sized businesses, the course is designed for companies needing financial support to boost workforce productivity by acquiring better management skills and transformation. ‘Help to Grow’ also includes free online technology advice plus a 50% contribution from the government towards productivity software (up to £5,000). 
  • Tax cuts – The current VAT cut for hospitality and leisure firms, as well as the business rate relief holiday, have also been extended until Summer. After this, business rates will still be capped for the rest of the year by two thirds. Previously due to end on 31st March, these measures will help a number of retail and hospitality businesses get back on their feet, and ease some of their financial burden as they begin welcoming customers back through their doors. 
  • High Street grants – A further £5bn is being pledged to help high street businesses that were forced to close during lockdown. The worst-hit (such as those in hospitality) will be able to claim up to £18,000 as part of the scheme, whilst non-essential retailers could receive grants of up to £6,000 each.   

 

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