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UK Chancellor George Osborne set out the government’s growth plans in its 2013 Budget speech on Wednesday, announcing changes to corporation tax, a crackdown on tax evaders and more help for small and medium-sized businesses.
While growth forecasts for 2013 were halved to 0.6% from 1.2% in December, Mr Osborne said that the economy is going to steadily grow in the coming years. Growth is predicted to be 1.8% in 2014, 2.3% in 2015, 2.7% in 2016 and 2.8% in 2017.
Ann Swain, chief Executive at the Association of Professional Staffing Companies, said: “The recruitment industry will be disappointed by the growth figures unveiled by the Chancellor today, but a fiscally neutral Budget with positive measures for business is good news. If the Chancellor is serious about finding a plan for growth, he needs to get behind the engine of growth in the UK – the flexible labour market. The recruitment sector drives the flexible labour market, so backing our members is the first step to put our economy back on the right track.”
After unemployment figures earlier this week showed a year-on-year decline in the jobless rate, the UK is now projected to create 600,000 more jobs this year than at the same time last year. The number of people claiming jobseeker’s allowances is expected to fall by 60,000.
Mr Osborne also announced several measures to boost businesses, including a cut in corporation tax by a further 1% to 20% in April 2015. Companies should also benefit from a new Employment Allowance which will take the first £2,000 off the employer National Insurance bill from April 2014. 450,000 small firms will pay no employer National Insurance.
The rise in personal allowance was brought forward to 2014, meaning no income tax will be paid on the first £10,000 of earnings.
The news was welcomed by recruiters. Tom Hadley from the Recruitment and Employment Confederation (REC) said: “The Chancellor had to deliver on jobs and growth and with measures that cut the cost of hiring, reward workers with more take-home pay and reduce the corporate tax burden on businesses George Osborne has made some steps in the right direction. These measures are very welcome and emphasise that work pays and Britain is open for business.”
Mr Osborne also said that an extra £15 billion will be invested in new road, rail and construction projects by 2020. “Investment in infrastructure to kick start construction and drive growth is good news as was the promise to deliver on Lord Heseltine’s ideas for helping SMEs through increased regional funding and an extension of the Funding for Lending scheme,” said Mr Hadley.
But, he said, “there was no sign that the government plans to do anything to help small businesses access public sector contracts.”
The government now plans to introduce a large package of measures to tackle tax avoidance and evasion, bringing in billions in unpaid taxes. It has also reviewed the use of offshore employment intermediaries. “The Government will strengthen obligations to ensure the correct income tax and National Insurance Contributions are paid by offshore employment intermediaries, with consultation on the details,” the Budget reads.
Mr Hadley said these were heartening news for recruiters as the government has responded to our calls to shine a light on bad practice. “For too long recruiters who abide by the rules have been disadvantaged by less scrupulous businesses who skirt round the law. We applaud the announcement of a crackdown on tax avoidance by offshore intermediaries and will work shoulder to shoulder with the government to level the playing field and support those in our industry who do the right thing,” he said.