Well it’s been fewer than 24 hours since Phillip Hammond delivered his final Budget before the UK’s impending departure from the EU, and despite many of the rabbits escaping ahead of time, it’s fair to say that the announcement delivered on its promise to be a crowd pleaser. The key takeaways for me centred on the concessions on income tax for some 32 million people, long-overdue investment in our beloved NHS, big investment in infrastructure and perhaps most importantly, recognition of the need to support mental wellbeing more broadly and to end its stigma for good.
And what for employee benefits? Well it was rather less eventful – once again many of the pre-Budget predictions failed to materialise (pensions tax relief dodging yet another bullet) perhaps with an eye on maintaining the status quo before Brexit kicks in early next year. It was a Budget for big ticket social policies and they really stole the limelight. That being said, buried deep in the detail there were some considerations for benefits professionals to take note, which at first glance may have been blinded by pothole repair policy. £5m put aside for investment into pensions dashboards including the state pension, consultation into the woeful retirement provision for the near 5 million self-employed in the UK, and a further review into disclosure of charges for pensions. There was good news for apprenticeship programmes for SME’s too with a meaningful reduction in training costs from 10% to 5% to help stimulate the growth of the new workforce.
A big win for mental wellbeing
This Budget proved to be a big win for wellbeing. It was a huge day for the NHS with a commitment to invest £20.5 billion over the next 5 years, plus targeted support for mental wellbeing through the introduction of mental health crisis centres, mental health ambulances and a 24-hour mental health hotline across the UK.
With 1 in 6 UK adults diagnosed with a common mental disorder, and mixed anxiety and depression estimated to cause one fifth of days lost from work in Britain, announcements to increase mental health funding are long overdue. Our own Global Employee Benefits Watch 2018/19 research found that 57% of employees demand more support towards improving their mental wellbeing, but only 23% feel that their employer fully supports them to do so. Let’s not underestimate the significance of the announcements yesterday. It’s clear to me that in order to stamp out the stigma of mental illness, and to ensure employees are fully supported to be as happy, healthy, and productive as they can be, employers have a fundamental role to play in mental wellbeing alongside these new government initiatives. Employers, who all stand to gain from having happier and more productive employees, have a responsibility to take a long hard look at mental health within their organisations too.
Financial wellbeing on the radar?
Whilst mental health was rightly high on the Chancellor’s agenda it was interesting to note that other key aspects of wellbeing were largely ignored, particularly financial wellness. Over 32 million people stand to be better off as a result of the new income tax band changes being brought forward to April 2019 (£12,500 for basic rate taxpayers and £50,000 for higher rate taxpayers), and lower paid workers stand to benefit with increases to the national living wage from April 2019 (to £8.21 per hour for the over 25’s). These increases in take-home pay will go some way to offset the potential flight from pensions next year as auto-enrolment rates increase again. However, with personal debt at its highest-ever level more could have been done to support employees and employers with financial education initiatives and reliefs. Freezing ISA limits and continuing to increase the Lifetime Allowance in line with CPI will do little for the average worker. Perversely, the increase in the basic rate tax threshold to £12,500 could see lower paid workers miss out on pensions tax relief entirely if they earn less than £12,500 and contribute via salary sacrifice or through a net pay scheme. More needs to be done to tackle these issues in the workplace. Whilst the news on mental wellbeing is welcomed, the government needs to focus on prevention not cure, as financial stress remains one of the key drivers for mental illness.
As we head towards uncertain times in a fractured political landscape, I think it’s fair to say this Budget was designed to be, and succeeded in being, a crowd pleaser. Let’s not forget that for the past couple of years the Chancellor has kept his powder dry on employee benefits after what seemed to be a continual dearth of changes in preceding Budgets (think salary sacrifice, IPT, and pensions tax relief). Yesterday saw nothing revolutionary come out of Number 11 but there are undoubtedly some subtle areas of consideration for benefits professionals. Whilst the outcome of Brexit negotiations with the EU are still unclear, I have a sneaky feeling we may not have seen the last of Fiscal Phil and the return to a Spring Budget. In the meantime we watch and wait with baited breath.