Opinion: Grant Speed

30 March 2016

Reflecting on the Budget

The fallout that has ensued following Ian Duncan-Smith’s resignation and the Personal Independence Payment debate have overshadowed much of the Chancellor’s Budget. But, as always, you need to take time to delve into the detail of such announcements and digest the raft of changes.

What is clear, is that Mr Osborne – after undershooting two out of three of his Autumn Statement and Spending Review promises – is betting on small businesses to boost the economy and help him achieve a budgetary surplus.

Much of the commercial world will welcome the further reduction in corporation tax to 17 per cent by 2020. For smaller companies, the attack on business rates will provide relief and its annual thresholds will exempt more than 600,000 from paying rates altogether from next year.

Interestingly, the support for the self-employed was clear. The cuts to Capital Gains Tax and Class 2 National Insurance contributions will certainly foster a better climate for entrepreneurialism.

In the case of larger corporates, there may have been a very different reaction to the speech. It is evident that large corporates will be shouldering some of the burden, such as the apprenticeship levy, to help pay for the numerous giveaways announced.

Now, as the Chancellor looks to get Britain's public finances back in the black by the end of the decade, he will do so amidst jitters in global financial markets, low productivity and scarce opportunity to raise significant tax revenues in a weakening economy fades.

Unfortunately, the public sector is likely to bear the brunt of the need to balance the books and spending cuts and ‘efficiency savings’ will continue to top the agenda for leadership teams in healthcare and education, as well as local government. Challenging times, indeed.

We are also keeping a close eye on the impact of the Chancellor’s IR35 reform to off-payroll engagement in the public sector. The policy will likely place further administrative pressures on public sector organisations even before the April 2017 implementation deadline. We’ll be working closely with our clients and candidates to prepare and ensure compliance.

Those with control over the purse strings will always need to take stock of the Budget and seek external advice and support to respond. But, the response required from the public sector will likely need to be transformational. The way that organisations operate and deliver their services is changing. For the financial year ahead, it will be those that can tap into the best commercial expertise that succeed in navigating the choppy waters that lie ahead.

Grant Speed is Managing Director at Odgers Interim


Comments

Grant Speed at 21/04/2016 09:58 said:

Many thanks for all your comments.

Grant

sharon green at 06/04/2016 18:00 said:

I agree with the comments especially Stephen's review. I think the Chancellor sees the rise in freelance, self employed and interim professionals as a concern when it comes to revenue raising for HRMC. I will be watching with interest what happens to the market. Will it lead to further market uncertainty? Probably in some sectors more than others. I've certainly seen more FTC roles of late. It's no surprise that the public sector, within governmental control to a certain extent, will see rates continue to be squeezed as they try to find day rate professionals equivalent to a fixed percentage rate above the salary levels of permanent staff. It's a soft target. I'm not unduly worried however I do think it will continue to place demands on Providers and Interims over the coming months and years as legislation and budgets are clarified /refined.

Ben Booth at 04/04/2016 08:46 said:

Certainly much to think about in the budget. More immediately I feel that the Brexit vote will put a damper on new initiatives. According to the Times today, FDs in larger organisations, who are always naturally cautious, are putting off new projects until after the vote.

Russell Levinson at 01/04/2016 18:40 said:

The Budget will reduce after-tax earnings for private sector interims too with the abolition of the dividend tax credit - meaning that company earnings will be taxed twice - and the higher tax rates on dividends. Also, the rules on extracting capital from the company through liquidation have been tightened and any benefit from using lower CGT rates and Entrepreneurs Relief will be reversed if the interim goes back into the same trade (whatever that means) within two years. There is more uncertainty ahead.

Stephen Lawrenson at 31/03/2016 12:01 said:

It will be interesting to see how this plays out over the next year. However, from my experience leading large transformations across the public and private sector I think the new moves around IR35 are a threat to Interim Providers and Interims. Many in the public sector will implement compliance controls in a ham-fisted or overly cautious manner, particularly until there is more detailed clarification from the Treasury and/or HMRC further to the 'consultation'. The result will surely be increased bureaucracy and costs for both Interims and Providers.

*
* CAPTCHA
*