As the UK continues to rebuild livelihoods following the pandemic, Chancellor Sunak added insult to injury in the 2022 Spring Budget; announcing an astronomical increase to household bills and tax - including a 1.25% rise to national insurance (NI), and 54% increase in the energy price cap.
Whilst it is clear that the government’s main driver is to boost economic growth across the UK in the coming months; Sunak’s update did cover a small number of ways in which the government plan to support low-income households as the cost-of-living continues to rise.
Although the 1.25% NI increase remains in place, it was announced that there will be an aligning increase to the NI threshold for employees and the self-employed from July 2022. This change is designed to mitigate the effects of the 1.25% increase and will allow lower-income households to pay less NI than they are currently. In basic terms, for those earning under £35,000 annually, the change will reduce the amount of NI paid across the year but for those earning over this, NI payments will increase.
Furthermore, it was announced that from April 2022, the government will be issuing an additional £500m to the Household Support Fund. This comes as the UK credit card borrowing surges from £1.5bn to £59.5bn (Bank of England) and homelessness statistics predict 66,000 more people to be homeless by 2024 (Crisis). By boosting the Household Support Fund, the Chancellor hopes to reduce poverty and debt and aims to helps individuals manage the rising cost of essentials such as food, clothing, and utility bills.
As the cost-of-living continues to rise, it’s important for businesses to consider the impact of these increases on employees. It’s not just about pay rises. Businesses can provide a number of other services to teams that provide much-needed support over the challenging and uncertain months ahead.
3 things you can do to support your employees throughout the cost-of-living crisis
Provide financial education
Whether you choose to run workshops, direct employees to online budgeting courses, or provide a library of useful tools and templates; providing additional financial education allows employees to gain the essential skills and knowledge they require to make better financial decisions when coping with tighter budgets.
Financial wellbeing plays a key part in an individual’s mental health and is important to include in any employee strategy in order to maintain a happy, healthy and engaged workforce. With only “44% of organisations offering programs to help employees make more informed financial choices” (Employee benefits), businesses have the opportunity to stand out from competitors and improve employee engagement and retention.
Be transparent and flexible
Adopting a transparent and flexible leadership style is key in creating an environment where people feel confident to discuss private and sensitive matters. Employers should offer sufficient support for employees to ensure that they feel comfortable to discuss any concerns – including financial – in a safe and confidential space.
Whether you choose to operate an ‘open door policy’ or direct your employees to external support platforms such as the Money and Pensions Service; openly communicating with employees can help to distinguish the needs of an individual and how you can best support them going forward.
You may find that some employees benefit from being able to work from home in order to cut back on costs of travel, whereas others may prefer to work from the office to save money on utility bills at home. Either way, ensuring your business is built to accommodate the needs of your employees is a sure-fire way to maintain healthy work-life balances, reduce stress and increase productivity across the business.
Offer an Employee Benefits Scheme
Employee benefit schemes are proven to drive employee engagement, boost productivity, morale and wellbeing (Perkbox).
By expanding employee benefits packages to include perks such as interest free transport loans or salary sacrifice schemes - for instance the government’s cycle to work scheme - employees struggling with rising fuel prices and transport fees can seek some relief to their monthly costs.
Such schemes are not only beneficial in offering the flexibility of spreading costs across monthly payments, but also provide the opportunity for individuals to enhance both their physical and mental wellbeing.
Find out ways to support the mental health of your recruiters here.
Similarly, employee benefit and reward platforms such as Perkbox and Remus Rewards are designed to offer financial support to employees through discounts on retail stores, technology and personal insurances. With access to EAP’s, online fitness classes and other wellbeing services - by enrolling in a rewards platform, businesses can go the extra mile in offering financial relief for staff struggling with the rising cost-of-living.
To view more ways to support employees through the cost of living crisis, click here.
2022 will most certainly present the UK with challenges associated with the rising cost-of-living. Already energy, fuel and food prices have soared and with the additional expected 80% energy price cap increase in October 2022, there is a concern that the rising costs will make basic living standards unachievable for many.
Although there are important steps being made that will contribute towards recovering our economy, we can only hope that the government will consider taking further action to support lower-income households at risk.