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Budget 2023: four employment-related changes

According to the Chancellor, the main focus of his Spring budget 2023 was to get the UK 'back to work'. 

'We have around one million vacancies in the economy, but excluding students there are over seven million adults of working age who are not in work; that’s a potential pool of seven people for every vacancy.'

He announced a few new(ish) ideas to help boost the numbers of people able to work and bridge the skills gap. 

Tailored help for disabled people

The government will introduce a universal support programme in England and Wales, designed to match people with disabilities and long-term sickness with appropriate jobs and provide them with support and training. Up to £4,000 per person will be invested to support 50,000 people per year. The Chancellor also said that he will abolish the work capability assessment to help people get back to work without having to worry about losing their financial support.

Addressing the main causes of ill-health

The budget also outlined a wide range of measures to address the leading causes of ill-health related inactivity. These include:

  • tailored support in mental health and musculoskeletal health services
  • expanding access to digital resources and health checks to help people manage their conditions and obtain support to return to or remain in employment
  • supporting more businesses to provide occupational health services, by expanding the forthcoming occupational health pilot subsidy scheme for small and medium sized businesses announced by the Department for Health and Social Care and DWP in 2021
  • consulting on ways to boost UK occupational health coverage, for example, through regulations to require employers to provide occupational health services
  • consulting on options to increase investment in occupational health services by UK-wide employers through the tax system

Incentivising older and highly skilled workers to return to the workforce 

To attract economically inactive over-50s back to work, the government will introduce a new type of apprenticeship targeting this group – 'returnership'. These will promote accelerated apprenticeships, sector-based work academy programme placements and skills 'bootcamps' for the over-50s. This will enable this age group to re-train and develop second careers. 

It is not yet clear exactly how the new apprenticeships will work, but the government says they will focus on flexibility and previous experience to reduce training length.

The government also plans to expand its existing midlife MOTs programme to help older workers 'get the best possible financial, health and career guidance ahead of retirement'.  

It will also increase the pensions tax-free annual allowance from £40,000 to £60,000 to incentivise highly skilled workers to stay in work, while the lifetime allowance is going to be completely abolished. Both changes are effective from April 2023.

Improving access to childcare to help parents back to work

The UK has one of the most expensive childcare systems in the world. Currently, eligible working parents of children aged between three and four are eligible for 30 hours of 'free' childcare during term-time. That will be expanded. Thirty hours of free childcare will be available to eligible parents for their children from the age of nine months old until they start school, but this will be phased in over a number of years:  

  • From April 2024, eligible working parents will get 15 hours of free childcare for two-year-olds
  • From September 2024, eligible working parents will get 15 hours of free childcare for children aged 9 months to 3 years
  • From September 2025, eligible working parents will get 30 hours of free childcare for children aged 9 months to 3 years

Although the government refers to this as being 'free', many parents have to top up government payments in order to meet nursery fees. Plus, government subsidies only apply for 39 weeks of the year, to reflect educational term-times.

As a part of childcare reforms the government is going to change the childcare ratios from 1:4 to 1:5 to help with recruitment challenges. Implementation of the new ratios will be on voluntary basis. Schools and local authorities will also be funded to increase the availability of wraparound care meaning parents will be able to drop their school-age children off anytime between 8am and 6pm by September 2026.

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