Budget 2012: This is not a budget for jobs, says business
Unemployment is expected to peak at 8.7pc, or 2.8m, this year, before falling to 6.3pc by 2016-17, the OBR said. Its forecast for jobs is largely unchanged since November.
By Louisa Peacock, Jobs editor
Last Updated: 5:03PM GMT 21/03/2012
Business leaders expected more out of the Budget 2012 to help them create jobs and curb youth unemployment. They were left disappointed.
The 2012 Budget lacked measures to stimulate growth and job creation, according to business leaders who expected more from the Government to help curb youth unemployment.
Chancellor George Osborne announced no new funding for apprenticeships, nor – as businesses had hoped – did he increase funding for next month’s new Youth Contract to help more young people.
At present, the £1bn scheme will help 160,000 unemployed youths find jobs by giving businesses £2,275 “wage incentives” per individual to take them on.
However, there are more than 1m under-25s out of work leading some groups, including the British Chambers of Commerce (BCC), to call for an extension of the Youth Contract.
But businesses were left “disappointed” that the Government did not throw in more measures to help them more hire young people.
Unemployment is expected to peak at 8.7pc, or 2.8m, this year, before falling to 6.3pc by 2016-17, the Office for Budget Responsibility (OBR) said. Its forecast for jobs is largely unchanged since November.
Businesses were hoping the Government would cut national insurance contributions for any business hiring someone aged 25 and under.
However, Mr Osborne did say the Government would test a new enterprise loans scheme for young people who wished to start their own business. The £10m loans system would work in the same way as the UK student loans scheme, widely used by young people going to university.
The Budget 2012 seemed to favour young people starting-up their own firms rather than rely solely on the private sector to create jobs.
But business leaders warned the Chancellor did not go far enough to help cut youth unemployment.
John Longworth, director-general of the British Chambers of Commerce, said: “We are disappointed that the Chancellor did not announce additional measures to incentivise businesses to employ more young people.
While the freeze in the youth rate of the National Minimum Wage is a welcome step [announced on Monday], an extension of the Youth Contract would have encouraged more companies to take on and train young people seeking to break into the world of work.”
The youth enterprise loan scheme was a welcome idea, he said, adding businesses up and down the country stood ready to support and mentor young people wanting to take their first leap into business.
John Philpott, chief economic adviser at the CIPD, said: “The Chancellor has redrawn the boundaries of taxation but, judging by the central forecast of the Office for Budget Responsibility (OBR), his budget has done nothing to change the big picture outlook for growth and jobs overall, while ironically shifting the balance of the economic recovery away from business investment and toward household consumption and public spending.
“Most worryingly of all the OBR has significantly downgraded its forecast for growth in business investment between now and 2016 while raising its forecast for growth in household consumption and government spending and investment.
“If the OBR is proved right the economy doesn’t appear to be rebalancing in the way we were supposed to expect, which casts an element of doubt on the Chancellor’s claim that the budget will enable Britain to ‘earn its way’ to recovery.
“Although this is a budget that rewards work, it doesn’t on the face of things look like a budget for growth and jobs.”
However, other experts were more optimistic the Budget 2012 would stimulate growth and investment.
Douglas McWilliams, chief executive of the Centre for Economics and Business Research, said it was one of the “best ever” budgets for growth.
Changes to planning law would help create 200,000 new jobs as new homes were built by 2015, he said.
Elsewhere, the OBR said the number of people claiming Jobseekers’ Allowance is expected to fall by almost 150,000 in 2014, saving £0.9bn, but this is largely due to the way the benefits are calculated rather than the effect of any policy measure.
It also predicted that 20,000 more public sector workers would lose their jobs by 2016-17, taking the total to 730,000 as a result of the austerity measures. At the same time, the private sector would create 1.7m jobs, leading to a net 1m rise in employment over the period, the indepedent forecaster said.
Employment experts remain sceptical the private sector can absorb all the public sector job losses, however.
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