02 May, 2013

Labour sets out their proposals for the economy

The spectre of local elections, a diminishing lead in the polls and a call to action from the former Labour PM Tony Blair, have seen Ed Miliband and team come under increasing pressure to set out what they would do should Labour win the general election in 2015.

Miliband has dubbed this his ‘alternative Queen’s speech’ with six bills on housing, finance, jobs, consumers, banking and immigration.

As always, the proposals include a mix of good and bad news for recruiters, and some measures where the jury’s still out.

• Under their finance bill, Labour propose a one year national insurance tax break for small businesses who want to take on new employees – a potential opportunity for recruiters across the board.

• They would seek to reverse the increase on VAT (temporarily at least) and for one year, VAT would be just 5{6060b2de664e4eaa3e7b7e86961ce2c4bbd7a29b6c1097abf8257a4e5b07383e} on home repairs and improvements.  Small businesses and families are expected to be the main benefactors, and those working in construction could expect business to be booming that year.

• A Compulsory Jobs Guarantee would be available to everyone unemployed for more than two years and a six month job for young people who have been out of work for over a year.

• Large employers winning a government procurement contract would have to offer apprenticeships – and again, it might be that recruiters could help deliver these opportunities.

• The major proposal in the banking bill was a British Investment Bank which would focus on supporting SMEs.

• Any breach in paying the National Minimum Wage (NMW) would be dealt with by local councils, fines would be doubled and the Gangmasters Licensing Authority would be extended to other sectors where abuse is taking place.

For some of the measures, they are clear on how a Labour government would pay for the proposals. The youth jobs guarantee, for example, would be paid for by a new bank bonus tax. In other areas, it is less clear how they would achieve the intended results.  Reduced VAT on construction schemes could be a great incentive to increase spending but as the REC has consistently highlighted, finding enough skilled people to work on such projects will remain an issue.

Miliband received a lot of press coverage at the weekend for suggesting that there should be zones where employers would be encouraged to pay the living wage, rather than the National Minimum Wage and Andy Burnham took the opportunity to suggest that all zero hour contracts should be phased out.

In our view, it is absolutely right that where employers can afford to do so, they pay the living wage. But how they would decide what a company could or couldn’t afford to pay and then enforce this scheme still remains to be explained.

We will be covering the Queen’s Speech next Wednesday and giving you an update on what it will mean for the recruitment industry. Look out for further updates in the news section and follow us on twitter at www.twitter.com/RECPress. Credit: rec.uk.com

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