• Emergency Budget: Impact on Employment

    The Chancellor has announced the details of the coalition Government’s ‘emergency’ Budget to deal with the  £149 billion budget deficit crisis.

    The following measures will be relevant to employment:

    • a review on when the retirement age will rise to 66
    • a consultation on whether to phase out the Default Retirement Age
    • from 2011 the majority of benefits – presumably including maternity pay, sick pay, etc will be up-rated in line with the Consumer Price Index rather than the Retail Prices Index, saving an estimated £6 billion a year by the end of the Parliament
    • a review of  fairness in public pay to ensure that those at the top of organisations are paid no more than 20 times the salaries of those at the bottom
    • a two-year pay freeze in the public sector. However, public servants who earn less than £21,000 will receive a flat pay rise of £250 in each of these years
    • the threshold at which employers start to pay National Insurance will rise by £21 per week above indexation from April 2011
    • the personal allowance, below which no income tax is payable, will be raised by £1,000 to £7,475 in April 2011.
    • The basic rate limit for income tax will be frozen in 2013-14. There will be no change to the 50p rate of income tax.

    The chancellor’s speech can be viewed here.

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