What was missing in the Autumn Budget? HR responds - HR Magazine

Did the Autumn Budget meet HR’s expectations? We asked commentators what they wanted from the announcement made by Chancellor of the Exchequer, Rachel Reeves, on Wednesday (30 October).

Gareth Burrows, founder of Breathe HR, commented that more support for SMEs would have been appreciated in the budget.

The employment allowance will increase in April 2025 from £5,000 to £10,500, which means that 65,000 small employers in the UK won’t have to pay national insurance contributions (NICs) next year, and more than a million will pay the same, or less, than they did previously.

Speaking to HR magazine, Burrows said: “While financial support for small businesses – like the increase to the employment allowance – will help, it won’t be enough to offset the combined costs of tax hikes and seeing through new employment rights. Some SMEs could be pushed to the brink.

“It’s up to the government to provide clear guidance and funding to help HR navigate these challenges. SMEs are the beating heart of the British business ecosystem. Proper support is essential to ensure they, and our economy, can thrive.”

Read more: Autumn Budget 2024: HR reacts

During the budget speech, Reeves announced increases in the national minimum and living wage, from April 2025, as well as raised NICs for employers.

The state pension is also due to increase in April 2025.

The increases in national minimum wage and NICs mean that “HR will need to reassess compensation packages to remain competitive”, according to Claire Williams, chief people officer at HR software provider Ciphr.

“Employers will be looking to offset those costs elsewhere, which could have a negative impact on reward packages or overall workforce size and costs. Employers may also take steps to accelerate transformation work, to realise any headcount efficiency gains,” she told HR magazine.

“Employers will need to conduct a detailed review of benefits and compensation to align with new tax thresholds, ensuring that packages remain attractive and compliant.”

Reeves noted that the government would introduce a Get Britain Working Plan, to unite national and local organisations in improving skills across the country. In July, the government introduced Skills England, a national skills body, to improve the UK’s employment rate.

During her budget announcement, the chancellor also allocated £300 million for further education and £6.7 billion for education investment next year.

However, the budget could have contained more funding for employers to focus on training to counteract the impact on recruitment, Williams suggested.

She said: “I expect many HR leaders were hoping for more support around workforce development and training, particularly additional funding for programmes targeted around future skill gaps (e.g. digital adoption).

“This would have been valuable to help protect employment, as, in light of rising employment costs, more employers may consider alternatives such as offshoring and digitalising roles.”

Charlotte Roberts, chief people officer at recruitment firm The IN Group, agreed that incentives to retain talent would have been welcomed by HR.

Speaking to HR magazine, she said: “Tighter budgets may lead HR to focus on high-impact initiatives that drive retention and engagement while managing resources carefully.

“More support in workforce retention incentives, such as funding or tax breaks, would help companies implement strategies that retain talent, especially in sectors facing critical skill shortages.”

The budget also committed £240 million for health and employment services to help people who are economically inactive back into work.

Further support for mental health would have been welcomed by HR, to help with retention, Williams added. She said: “Investment in mental health support initiatives was notably absent, despite rising employee wellbeing concerns across many sectors.”

Vicky Walker, group director of people for wellbeing provider Westfield Health, commented that Reeves could have reduced the insurance premium tax (IPT), a tax on insurance products and functions paid by consumers and businesses to HMRC. The current rate of IPT is 12%.

“The chancellor made no mention of IPT during her speech to the House of Commons, a detail that will have left many HR professionals feeling both relieved and frustrated at the same time,” she told HR magazine.

“Given the huge pressure facing our NHS right now and the financial burden many people are facing as costs of goods and services continue to rise, this was a missed opportunity to support employee health and wellbeing on a deeper level.”

Changes to IPT could help employers support employees with access to healthcare, and prevent the need for long-term sick leave or help the 2.8 million people in the UK already on sick leave back into work, Walker claimed.

She continued: “Removing or reducing IPT on health insurance would make private healthcare more accessible to a lot more people, and could encourage more businesses to offer it to their employees as a workplace benefit.”