The Chancellor should take action to reduce inactivity in the workforce in next month’s Autumn Statement, business groups have said.
In a submission to the Treasury ahead of next month’s Autumn Statement, the Federation for Small Businesses (FSB) argued Jeremy Hunt needed to take measures to reduce health-related labour market inactivity.
The FSB recommended expanding benefit-in-kind rules and said the government should offer incentives for employers to hire those who have been out of work for a long time.
Since the pandemic, growing numbers of people have left the workforce due to long-term sickness. Recent data from the Society of Occupational Medicine (SOM) suggests one in 16 working-aged people in the UK – or around 2.5m – are “economically inactive” due to long-term sickness.
Many economists have warned that a paucity of workers could hold back economic growth by stopping businesses from expanding.
The FSB also argued that training in new skills should be tax deductible for the self-employed, allowing the self-employed to train for new roles. Under current HMRC guidelines, expenses cannot be claimed for training that expands into new areas of business.
FSB National Chair Martin McTague said the government should “eliminate the perverse disincentive against acquiring new skills”.
The British Chambers of Commerce (BCC) recommended that Hunt take action to address the tight labour market, arguing the government should introduce tax breaks encouraging firms to offer occupational health benefits to keep people in work.
The BCC also argued that there needed to be fundamental reforms to planning system to speed up infrastructure projects.
“Businesses have told us they have billions of pounds in private investment waiting to be pumped into the UK economy, but our creaking planning system and overloaded grid are holding that back,” Shevaun Haviland, director general of the BCC, said.
“It’s vital we unlock this money and take steps to put British business in the best place possible to remain competitive in the global marketplace and weather any further shocks.”