Delaying the National Insurance (NI) rise, reform of the Apprenticeship Levy and giving workforce planning priority are among the asks the REC has sent to government.

In a 9 March letter to Chancellor Rishi Sunak, the REC has warned of “severe capacity constraints” to the UK economy as it recovers from the global pandemic, which the REC says are “contributing to higher inflation”. 

“The strength and resilience of the UK jobs market remains remarkable by any historic comparison as vacancies rise and unemployment falls,” said REC deputy CEO Kate Shoesmith in the letter to the chancellor. However, she went on to say, the trade body was “concerned by the high level of economic inactivity in the labour market, particularly among older workers… the number of job adverts in the UK has been steadily growing since the beginning of 2022… Employers’ confidence levels have also been boosted… However, the high level of job adverts also reflects the difficulty firms are having in hiring.”

Five key points outlined in the letter are:

• Delay the NI rise. The REC says the rise is “the wrong kind of tax… increasing labour taxes is simply not a fair or effective way of supporting our health service”.
• Reform and enhance the Apprenticeship Levy. “Use of a reformed levy to funding high quality, Ofqual-regulated training… would enable the levy to work more effectively, change lives and enhance the apprenticeship brand… rather than making it the answer to every skills issue.” The REC goes onto point out that the current structure of apprenticeships means that temporary agency workers generally miss out on them because apprenticeships must last for a minimum of 12 months; REC research shows that only 2% of temporary workers’ assignments last for 12 months or more. Also, 670 REC levy-paying members have had £104m of unspent Apprenticeship Levy funds between them. The REC calls for being able to use levy funding not being used for apprenticeships could support in-work progression, such as in courses in forklift truck driving, healthcare assistant training, manufacturing and production management, manual handling and leadership/management training, among others.
• Ensure workforce planning is front and centre. The REC recommends establishing a “cross-departmental forum, working in conjunction with business and industry to consider long-term workforce planning, identifying potential skills gaps and introducing the right policies to boost productivity and labour market engagement”.
• Ensure a fair and flexible immigration system. For instance, the REC recommends, “reviewing the Shortage Occupation List (SOL) on an annual basis would position us to better respond to changing needs”.

The REC also calls for investment in activation and work-finding services such as Kickstart and Restart, which the trade body says are “an excellent way of getting those furthest from the labour market engaged”. The letter tells Sunak that administrative challenges prevented Kickstart, for instance, from reaching more young people. “There was no shortage of employers offering placements, but we lacked a structured comms and outreach programme to young people,” the letter said.

The Spring Budget will be announced on 23 March.

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