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Budget 2011: Flexibility in the mix - or not?

Plan for growth misses some tricks, and a spat over 'broken promises'  on right to request

In today's budget Chancellor George Osborne revealed a mixture of financial measures, changes to regulation and new initiatives that he says will both cut the deficit and boost business growth.  In this article we take a look at the measures that will have an impact on the growth of flexible working practices.

And it's true to say that flexibility was not at the heart of the budget, though some of the measures will have an impact.  If anything, the language around flexibility was more in the traditional rather than innovative sense, about the advantages of having a 'flexible labour market'. But here are the key measures that make an impact.

Ditching planned extension to flexible working legislation

Already announced a few days earlier, the scrapping of an extension to the number of parents eligible to have the 'right to request' flexible working was confirmed as part of a wave of measures to reduce the regulatory burden on business.

This was seized upon by Ed Miliband, the opposition leader who said:

'But I have to say, his decision to cancel flexible working for families with children between 16 and 18 is extraordinary. Only this Prime Minister could take the credit for championing a policy with Mumsnet, and then a few months later take the credit with small business for dumping it.

You’ve got to ask, Mr Deputy Speaker – has he no shame?

The idea that families needing flexibility imperil our economic future is frankly absurd. And tells you all you need to know about this Government’s values and how they think our economy succeeds. Greater insecurity as the route to greater prosperity. Well we take a different view.

Flexible working is yet another broken promise from the broken promise Prime Minister'.

The axed plans in question were to extend the right to request flexible working to parents of 17 year olds for all businesses, which was due to start on 6 April 2011.

However, this was a measure that the Department calculated would cost £0.5 million, and seems perhaps unnecessary in view of the government's restated commitment to extend the right to request to all workers (not only parents).  So, despite the opportunity for rhetoric, it's in practice a only the delay of a very minor change. See our flexworld blog for further comment.

Support for start-ups and small business - but where's the home business?

There are a range of measures announced to support business development, though at this stage lacking in detail.  Support for innovation, cutting back red tape, small business mentoring, proposed enterprise zones, support for exports, high technology centres ....

But though it may be different in practice, the approach does have an air of 'back to the future' about it, and little apparent recognition of how the world of work has changed.

In particular, there is no recognition that the majority of business start-ups take place from home, which operates in a regulatory grey area.  And not a single mention of self-employment.  I fear the reality will be building more 'high tech' business parks - i.e. offices in unsustainable green field locations - and competitive funds for mid-size businesses that generate more bureaucracy than private sector jobs.

High speed broadband

Support for high speed broadband including into rural areas is announced (again!). When it comes it will be a boost for home-based and local businesses, and will fuel demand as it increases capacity for remote working, videoconferencing, virtual meetings, etc.

Unintended fiscal boost for part-time working

The progressive raising of tax thresholds towards £10k, along with the raising of thresholds at which employers pay Employers' National Insurance contributions, will bring about a boost to part-time working.

Increasingly it makes sense to come off benefits and go into work, and it is increasingly practical for parents of young children to take part-time work.

And it becomes even more advantageous for families with a single breadwinner to try to become a family with two part-time breadwinners.  In 2011-12 a household income of (say) £30k will go much further if both partners earn £15k rather than one partner be the sole earner.  They will take home more than £2k extra, and this will rise further in 2012 as the basic tax threshold is raised to over £8k.  Changing from a £50k sole earner to two £25k earners will bring home an extra £3k saved from the taxman.

Save that up for a couple of decades and there'll be enough to pay off those tuition fees for the kids ...



23 March 2011





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