The National Living Wage And More: What The Budget Means For Jobseekers

Living wage

“Britain deserves a pay rise and Britain is getting a pay rise.”


All Chancellors like to produce a ‘rabbit from the hat’ and George Osborne’s budget bunny came in the form of the National Living Wage.

In practical terms this will mean that, from next April the national minimum wage will go from £6.50 to £7.20 an hour. From then on it will rise to £9 an hour by 2020. This goes some way to appeasing a long-standing campaign to bring the minimum wage in line with the cost of living, albeit below the rate the Living Wage Foundation says is required. There is also no separate level for London.

Jobseekers should note that the new National Living Wage will not apply to under-25s. Public sector pay rises will be capped at one per cent a year for the next four years.

Personal allowance

The Chancellor’s wage announcement was not the only measure to impact on the pay packets of workers. George Osborne also revealed that the ‘personal allowance’ – the amount of pay exempt from income tax – will rise from £10,600 to £11,000 with an ambition to raise this further to £12,500 by 2020. The threshold at which employees must pay the 40p tax rate has risen to £43,000.

Benefits/tax credits

“We have to move Britain from a low-wage, high-tax, high-welfare society to a higher-wage, lower-tax, lower-welfare economy.”
 

The budget pay rise aimed to tip the balance away from welfare – and that means a number of changes for the benefits and tax credits that employees can claim as a result. Tax credits will begin to be cut for every pound earned beyond £3,850 – down from £6,420 – from next April. The cap on the total amount of benefits per household will also be lowered from £26,000 a year to £23,000 in London and £20,000 in the rest of the country.

A ‘two-child policy’ means that families will not receive tax credits or housing benefit for any children beyond their second child from April 2017.

Sunday trading

Local authorities will have the power to relax Sunday trading laws and allow stores to open for longer, changing the shape of the traditional working week in many sectors – particularly retail.

The law as it stands allows smaller shops to open all day, but restrict those over 280 sq m (3,000 sq ft) to six hours. The Chancellor believes there is a ‘growing appetite’ for Sunday shopping and will allow this to be extended.

Youth obligation

Young people will need to ‘earn or learn’. That means there will be no automatic entitlement to housing benefit for 18-21 year olds. Young people will need to undergo an ‘intensive regime of support from day one of their benefit claim’, and after six months must apply for an apprenticeship or traineeship, gain work-based skills, or go on a mandatory work placement. If not they will lose their benefits.

Student grants

University maintenance grants will be scrapped from September 2016. The grants – up to £3,387 a year – aimed to help lower income students to afford to go to university and will be replaced by loans. The amount that can be claimed will rise to £8,200, repayable once a graduate earns £21,000 a year.

Jobseekers should be aware that their pay packet could be boosted by the introduction of the new National Living Wage and rise in Personal Allowance. However, they are likely to see the benefits and tax credits they can claim reduced. Younger people will need to be aware that not all of the pay rise will filter to them and that the way degrees are funded is changing again. The relaxation of Sunday trading rules could also change the pattern of working in the retail sector, with extra jobs and hours required to meet the new demand.

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