Some more reaction and comment after yesterday’s Budget announcement;
David Williams, head of group risk, Towergate Health & Protection
“The government think they’ll solve the employee shortage by scrapping the pension lifetime allowance (LTA) to encourage people back into work. Spoiler: the current LTA only impacts the wealthiest so removing it will do very little to change the workforce shortage except in some very niche positions.
“Sick employees are surely much easier to get back into work than retired employees. The removal of the LTA will rightly be seen as a positive step in the world of pensions and life assurance taxation, but will have little impact on the 2.5 million people inactive due to illness. It’s pleasing to see the government recognising the benefit of employer-led occupational health services, but we believe more needs to be done to support employees to ensure their physical and mental health is maintained. The right employee benefits, including group income protection, private medical insurance and cash plans, all directly aim to reduce illness in the workforce.
Then you have the added value services within benefits such as group life assurance and critical illness, etc which are specifically designed to support people to stay in work and return to work after illness. Providing employee benefits for the masses has a better impact than tax breaks for a select few, and we’d encourage employers to look at these if they want to retain their workforce and be seen as an employer of choice.”
In its Spring Budget 2023, the UK government has presented measures aimed at providing further help to households to ease cost-of-living pressures, supporting economic growth in the medium term, and reducing the government debt ratio over the longer term. At the same time, the economic and fiscal outlook has improved compared with the forecasts presented in the Autumn Statement 2022. In DBRS Morningstar’s view, despite the improved outlook, risks to the economy and the fiscal position remain significant, amid still high inflation and monetary tightening, in view of the electoral cycle, and in light of recent financial stresses. In this commentary, we take a look at the revised forecasts, the main fiscal measures of the Spring Budget, and the risks to the fiscal outlook.
• The economic downturn in the UK is now expected to be milder in 2023, thanks to lower gas prices and interest rates.• The fiscal position has deteriorated less than expected, leading the government to adopt additional support measures. • The forecasts point to a lower-than-expected public debt ratio, but the trajectory of gas prices and interest rates poses some risks to the outlook, in addition to the electoral cycle.
“Although the economic and fiscal outlook has improved, we continue to see significant downside risks, including another energy shock, higher than expected interest rates, or prolonged volatility in financial markets,” said Adriana Alvarado, Senior Vice President in the Global Sovereign Ratings Group.”
Tom Sumpster, Head of Private Markets at Phoenix Group, commented:
“We are extremely supportive of the Government’s announcement on investment zones and the continued devolution of investment decision making to regions across the UK. By creating an increased pipeline of investable opportunities throughout the country, Phoenix has a real investment opportunity to help drive growth in key industries such as green technology and advanced manufacturing, which in turn will create jobs, incentivise apprenticeships and help level up communities across the UK.”