What are the implications of the Autumn Statement for employment?

Patrick Glencross

Senior Associate

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November 24, 2022

Categories Employment Law

We look at the headline points affecting employment and HR from the Chancellor’s Autumn Statement and the Office for Budget Responsibility (OBR) report published on 17th November 2022.

  • With the impact of inflation, the OBR predicts cuts to real wages of 1.8% in 2022 and 2.2% in 2023, before real wages start to increase again from 2024.
  • As the UK enters a year-long recession, the unemployment rate is projected to increase from 3.6% to 4.9% by 2024 before coming down to 4.1% by late 2027. This equates to a rise in the jobless total of 505,000.
  • The Government is lowering the threshold for the 45% additional income tax rate band from £150,00 to £125,140 with effect from April 2023. All other income tax and National Insurance allowances and thresholds will be frozen between April 2023 and April 2028, as will the threshold for employers’ secondary NI contributions.
  • There has been a marked decline in workforce participation since the Covid pandemic, particularly those aged over 50. Since the pandemic there are 630,000 more individuals of working age who are currently “inactive”, and the reasons for this decline are unclear. The Department for Work and Pensions is carrying out a review which will conclude in early 2023.
  • Also on the subject of workforce participation, the Government is introducing an “In-Work Progression” scheme, which will provide work coaches to support benefits claimants who are in employment to increase their hours and/or earnings. There will be a phased roll-out of this scheme from September 2023.
  • The National Living Wage will increase in April to £10.42 per hour, an increase of 9.7%, with similar increases to the other National Minimum Wage rates for younger workers.
  • The Government’s review of the State Pension Age will be published in early 2023. This review will in particular consider whether to bring forward the increase of the State Pension Age to 68 from 2045 to 2038, with a potential impact for everyone born between 1970 and 1977.

For further information contact Senior Associate, Patrick Glencross, on 01227 763939.