How the new Cabinet may affect HR

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We asked experts about what Boris Johnson and his new Cabinet may have in store for apprenticeships, immigration, pensions and skills

On 23 July we finally knew for sure that Boris Johnson was to be the new UK prime minister. He wasted no time making his mark, installing a Cabinet the next day that strongly mirrored his views on Brexit – increasing the chance that we will leave the EU on 31 October, deal or no deal.

Just as Johnson quickly set out his stall, so did many high-profile business and employer groups.

Some jumped on comments that new chancellor Sajid Javid made about the apprenticeship levy in a piece for the Financial Times back in June. Javid said he would “broaden the apprenticeship levy into a wider skills levy, giving employers the flexibility they need to train their workforce, while ensuring they continue to back apprenticeships”.

This was welcomed by the CIPD, with head of public policy Ben Wilmott saying it would address “the failings of the levy as it operates currently”.

The REC went further, launching a petition to broaden the levy so that all workers (including temporary staff) could access the training available through levy funds.

Chris Russell, REC policy adviser, points to the current £104 million going unspent among those 670 REC members that pay the levy.

He tells HR magazine: “Almost one million temporary workers don’t have access to the apprenticeship courses that are the supposed benefit of paying the money in the first place, mainly because temporary workers tend to work for less than 12 months whereas apprenticeships last longer than that. Javid’s proposal to broaden the levy to a skills levy makes sense because it recognises the changing nature of work.”

Talk of reforming the levy is not new though. Former chancellor Philip Hammond announced a 2020 review in his 2018 Budget. But like so many well-intentioned policies it has been somewhat derailed by the Brexit behemoth. However, on this particular topic, Russell believes Brexit may eventually turn out to be a catalyst for positive change.

“Ultimately after Brexit happens, with skills shortages increased, it will be even more important that we’re investing in skills and training. Brexit may end up making our case even stronger,” he says.

Concerns over skills shortages were further heightened in mid-August when influential think tank The Centre for Social Justice (CSJ) urged incoming home secretary Priti Patel to increase the minimum salary threshold for immigrant workers from £30,000 to £36,700.

But talk of a higher threshold has met with hostility from business groups, including the Institute of Directors (IoD). IoD chief economist Tej Parikh told HR magazine: “The threshold is repeatedly raised by employers as a concern and raising the bar even higher would put another spanner in the works for firms looking to grow.”

Inevitably it’s those sectors particularly reliant on workers from overseas who are most nervous about any tightening of rules for immigrant workers. One such sector is seafood processing. Seafish, a non-departmental public body that aims to improve efficiency and raise standards across the seafood industry, is preparing the sector for what lies ahead.

HR director at Seafish Linsey Neill believes there will be “challenges for processing businesses trying to recruit post-Brexit” and that the “proposed salary threshold has the potential to pose problems”. But she also sees opportunities for employers “to adapt their recruitment strategies”.

She says: “We recently commissioned research to help the industry better understand young people’s attitudes towards the seafood sector and what barriers might prevent them taking up careers such as fish mongering, fish filleting and fishing.

“We have used the research to develop a campaign called The World Is Your Oyster to promote the hundreds of jobs available in the seafood industry, with a range of assets such as films and infographics available to businesses to use for their own recruitment campaigns.”

Neill believes we will also see a number of legislative changes around employment law post-Brexit. “It could be argued it is unlikely there will be appetite for a radical change, at least not immediately. But where things could get interesting is with the Supreme Court, which can deviate from retained EU case law,” she says. “For example, there might be interest in reversing weighty decisions such as the calculation of holiday pay.

“However, the rights of staff to be consulted and informed in the workplace will not change following a no-deal Brexit,” she adds. “Working within the boundaries of our current legislation and employment law, staying close to developments, informing and consulting staff on changes, and being responsive not reactive, is essential.”

Pensions is another area where the government was making changes before the distraction of Brexit, including on auto-enrolment, pensions freedoms and changes to pension taxation.

In late August state pensions were thrown back into the news cycle when The CSJ proposed an increase to the state pension age from 67 to 75 within the next 16 years. Given that the same body proposed the Universal Credit system in 2009, this is being taken very seriously.

If these changes are adopted it will mean workplace pensions become even more crucial to people’s later-life plans.

According to Tom McPhail, head of retirement policy at Hargreaves Lansdown, changes to workplace pensions have been continuing behind the scenes. And employers would do well to start thinking about what’s next before the reforms pick up pace again.

“Brexit and a desire to let existing changes bed in mean people haven’t been talking about pensions as much recently,” he explains. “But...unfinished business with pensions taxations, recruiting people to auto-enrolment – where participation and contribution rates aren’t where they need to be – and work around pensions freedoms are still being tinkered with.

“The DWP is looking to employers in terms of their delivery role for all these new elements. Employers should be thinking about how they can help their workers understand what this will mean through programmes to increase literacy and engagement.”

In terms of what the new government itself might look at, McPhail believes it will take time to get around to pensions. But he thinks we can look to ministers’ previous roles for clues of changes that may eventually be made.

“I cannot see the present government focusing too much attention on it immediately; they’ve got too much going on,” he continues. “We were supposed to have a pensions bill in 2019 but that hasn’t happened. My expectation is that in the next couple of years they will refocus, re-visiting proposals like delivering the pensions dashboards. Then they will come back to auto-enrolment, looking at ratcheting up contribution rates.

“My guess with Javid, looking at his days in the Treasury, is that he will re-visit pensions taxations, moving pensions to look more like ISAs with more flexibility but less tax relief.”

So although it may still be hard to see a time after Brexit, it is coming; and everyone should be prepared for a Cabinet keen to make up for lost time in the policy stakes.

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