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14th March 2023

Spring Budget must help alleviate pressure on concerningly tight labour market

David Bharier, Head of Research at the British Chambers of Commerce (BCC) and Paul Butterworth, Chambers Wales South East, South West & Mid’s Interim CEO, have commented on what they expect and would like to see addressed in the Chancellor’s Spring Budget announcement.

Reacting to the latest ONS Labour Market figures and commenting on tomorrow’s budget announcement, David Bharier, Head of Research at the BCC, said: 

“Today’s ONS figures provide further evidence of historic tightness in the labour market. Despite a slight fall, there are still over 1.12 million vacancies across the UK. This confirms our own research that most firms are still trying to recruit staff.

“Finding appropriately skilled workers is one of the top issues for businesses, and many tell us that this prevents them from fulfilling orders or expanding. There are several levers which the Government can pull to ease the tightness in the market.

“Firstly, alleviating childcare costs could give greater flexibility to those looking to return to the labour market. The Government’s plan in tomorrow’s Budget to start paying childcare costs on Universal Credit up front is positive news, but further tax relief on childcare costs and reforms to increase childcare capacity are also needed.

“Secondly, there needs to be a fuller explanation of the causes of the significant number of people out of employment due to long-term illness in order for Government and businesses to invest in the right occupational health services. Occupational health services should also be made a non-taxable benefit in kind.

“Finally, as the BCC has repeatedly said over the last year, Government must reform the Shortage Occupation List to help firms fill urgent job vacancies from outside the UK when they cannot recruit locally.”

Paul Butterworth, Interim CEO of Chambers Wales South East, South West & Mid, said:

“The landscape for Welsh businesses is a difficult one currently. Whilst Welsh business prides itself on its resilience, the current economic climate is making it increasingly challenging to operate, innovate and develop grow plans.

“Data shows that there are 1.12 million job vacancies in the UK currently, constituting a major labour shortage which is further exacerbated in Wales, according to The BCC Quarterly Economic Survey 70% of businesses are struggling to recruit staff in Q1 of 2023.

“Expanding on the BCC’s thoughts on reforming the Shortage Occupation List, amendments in vital Welsh sectors will be critical in easing the labour shortage in the short-term. Furthermore, the UK should be encouraging those who have left the workforce to return alongside providing investment for the upskilling and reskilling of workers.

“Inflation remains a key issue, with higher interest making it harder for businesses to borrow. Welsh businesses are expecting to have to raise their prices in the next 3 months for the 5th consecutive quarter.

“Chamber Wales hopes the budget addresses energy cost support for businesses. Further investment in developing regional skills, renewable energy and alternative energy sources will be crucial to the long-term future of UK business. However, firms cannot afford to wait for new markets to emerge and urgent support is needed to save the future of thousands of Welsh businesses.

“The intention to raise corporation tax from 19-25% during the largest cost of doing businesses crisis in over a decade appears short-sighted. Businesses cannot afford to give up another 6% on top of everything else without relief.

“There are useful actions expected in the budget that will benefit businesses in Wales such as the Fuel Duty cut extension. However, any savings businesses make through will be swallowed by a rise in corporation tax.

“It is appreciated that the Chancellor must make difficult decisions in where to raise and where to spend money, but it must not be ignored that firms need support now more than ever.”

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