Autumn Budget 2021: A payroll perspectiveby
CIPP policy and research officer Mathew Akrigg analyses announcements affecting payroll professionals.
The economic consequences of the pandemic have played a significant role in the last two Budget announcements, but this Budget saw Sunak take a cautious step away from the emergency support measures that dominated previously, to initiatives designed to boost and support economic recovery in a post-covid era.
The Chancellor was keen to emphasise the role inflation could play in the cost of living over the coming years and talked about two global forces that were driving this. Firstly, the rapid return of economic activity has meant that in many areas, the demand for goods is outweighing supply, putting pressure on the supply chain and producing higher prices. Secondly, the surge in demand for global energy has also put a strain on prices. The Office for Budget Responsibility (OBR) anticipates that the consumer price index (CPI) – a measure of inflation, will reach an average of 4% over the coming year. That would result in inflation hitting its highest level for ten years.
Prior to the Budget, news outlets leaked the announcement that the National Living Wage (NLW) would increase to £9.50 an hour, a 6.6% uplift. Affecting an estimated 2 million workers across the UK, this rise could mean over £1,000 a year for full-time workers on minimum wage. While this is undoubtedly fantastic for employees, there will be some employers who will be concerned about increases in labour costs. In sectors disproportionally hit, such as retail and hospitality, it is feared that this will lead to higher consumer prices or even redundancies.
Additionally, the National Minimum Wage (NMW) for apprentices has been brought in line with that of under 18s.
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With a background in accounting and delivering outsourced payroll to the NHS, Mathew is now a member of the CIPP Policy and Research Team. He strives to educate and represent the payroll industry and raise its profile in the business world.