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FCSA Chief Executive Phil Pluck responds to today’s Budget announcement
The Chancellor today revealed that debt would peak at 97% of GDP in 2023/24, which represents a daunting figure in terms of the future short-term financial standing of UK PLC.
This can only be affordable said the Chancellor if a measured debt recovery strategy in place and interest rates remain low and stable.
The Government has had a truly unique challenge to support the UK economy as it comes out of the pandemic whilst managing the debt challenge. Broadly, the FCSA both understand and support the balanced approach the budget announcement has presented.
Income Tax, National Insurance and VAT remain frozen at their current rates, as are personal tax thresholds. However, this does mean that, in reality, most pay packets will reduce in real terms.
Further support measures are to be put in place for those workers who are self-employed freelancers, but the FCSA remain concerned that these measures are still not comprehensive enough to truly support that element of the contingent working sector and many will still be exposed to little or no help. FCSA members provide essential support to these workers and understand that they are vital in supporting the UK as it emerges out of the current Crisis.
Corporation Tax will increase to 25% for those businesses posting profits in excess of £250,000. The FCSA welcomes its delay until 2023, giving FCSA companies the breathing space to both recover and contribute to the country’s growth. However, the increase to 25% represents a substantial increase and pressure on business and may well discourage further investment.
So, whilst the FCSA welcome the fiscal support to hard-hit sectors such as retail and hospitality, there are essential elements within the announcement that clearly do not recognise other sectors such as the outsourced worker sector.
Our sector is extremely resilient and is already showing growth. It will continue to take on an even greater support role as the economy grows. But this budget fails to recognise its unique challenges.
FCSA members exist to provide a vital support mechanism for the UK supply chains and as such employ and represent over 170,000 outsourced workers. The extension to the furlough scheme until September is welcome but it totally fails to understand the pressures it places on FCSA members as major employers.
The present furlough scheme is unaffordable to FCSA members. To further increase employer contributions by 10% in July and then 20% in August and September is simply not sustainable for FCSA members.
FCSA members have always wanted to support their contractor employees but their margins are low and the contracts they work on are short term. As a result, they cannot support those workers on terms that means they will suffer substantial losses on furloughed workers whilst still recovering from the body of the pandemic.
Our sector is a massive collector of taxes on behalf of the UK Government. But this sector also attracts those companies who are determined to exploit contractors and the UK Government by pocketing those taxes unlawfully. FCSA continues to lobby for regulation of the sector and the resources to pursue those companies who act unlawfully and so the FCSA and its members welcome the budget announcement of investment in HMRC to create a new task force of an additional 1000 investigators.
We now live in a country carrying the largest debt since both world wars and the FCSA welcome the wider investment in the economy, but this is set against a series of measures that mean that FCSA member companies will have to continue to show their own resilience in supporting other sectors without any direct government support whilst failing to be given the support to actively support contractors.