Government borrowing rises, and how to manage conflict in the workplace
Today we consider the implications of high government borrowing on the upcoming budget, and we also provide support for business leaders with managing workplace conflict.
Government borrowing rises in September – what it could mean for businesses ahead of the Budget
Official figures show that UK government borrowing reached £20.2 billion in September – the highest for the month in five years. The figures, released by the Office for National Statistics (ONS), underline the financial pressures facing the Chancellor as preparations continue for next month’s Budget.
Borrowing, which measures the gap between government spending and income from taxes, was £1.6 billion higher than in September last year. The ONS said that although the government raised more through taxes and National Insurance, this was outweighed by higher spending, particularly on debt interest and inflation-linked costs.
Implications for the upcoming Budget
Higher borrowing means there is less room to manoeuvre in November’s budget. The rise in debt interest costs – nearly £10 billion in September alone – reduces the funds available for tax cuts or new spending commitments.
These figures are likely to make the Chancellor’s job more difficult when setting out her Budget plans. The Office for Budget Responsibility will update its forecasts alongside the Budget, setting out how much “headroom” the Chancellor has under her own fiscal rules. Many expect that the chancellor will need to raise taxes to meet those rules.
Analysts at Capital Economics estimate that around £27 billion may need to be raised, with households expected to carry much of that burden.
What might be in the Budget
Chancellor Rachel Reeves has been keen to emphasise that the government remains committed to manifesto promises not to raise the rates on income tax, VAT or National Insurance.
She has also made promises on taking “targeted action to deal with cost of living challenges” in the Budget. One idea suggests that the current 5% rate of VAT charged on energy could be reduced.
This suggests that any tax rises will at least be framed in such a way as to avoid the impression that people are receiving less in their pay packets.
Speculation around where tax rises could come from includes:
- Freezing tax thresholds. This is a stealthy way of bringing more people into higher rates of tax and increasing tax yield without being immediately felt by most.
- Cutting the employee rate of National Insurance, while adding the same amount to income tax. This would have a limited effect on those who are employed, but increase tax collected from pensioners, landlords and the self-employed.
- Reforming property taxes, such as replacing stamp duty with a property tax, making landlords pay more and removing principal private residence relief.
- Reducing the tax relief available on ISA and pension saving and the size of the tax-free lump sum that can be withdrawn.
Keep calm and carry on
Of course, the uncertainty that precedes a Budget leads to all kinds of speculation. We will only know what measures will definitely be used when the Budget announcement takes place.
We will keep you updated following Budget day on the measures likely to affect you. If you would like personalised advice on your tax situation, please call us at any time. We would be happy to help you!
See: https://www.bbc.co.uk/news/articles/c8035130918o
Addressing workplace conflict: insights from a recent Acas roundtable
The Advisory, Conciliation and Arbitration Service (Acas) recently hosted a roundtable with partners in Wales to explore the causes of workplace conflict and how organisations can respond more effectively. Several recurring themes emerged from the discussions.
Participants highlighted generational divides in attitudes towards work, rights and identity, and stressed the importance of strong people management skills for managers.
There was also a recognition that formal procedures often become the default approach, with managers feeling hesitant to handle issues informally.
Economic pressures and their effect on pay negotiations were also noted as a common trigger for conflict.
Supporting managers to manage conflict
The discussions made it clear that managers and leaders need both training and practical experience to handle conflict constructively. Training alone isn’t enough – managers also need time to practise the skills they have learned, especially when it comes to having productive conversations and negotiating effectively.
Key points highlighted during the roundtable included:
- Give managers time to learn and practise. Expecting instant expertise after training is unrealistic. They need opportunities to gain experience and then have the time to reflect on them and become more skilled.
- Empower managers. A strong, supportive relationship with HR helps managers feel confident to act appropriately and decisively.
- Lead by example. Senior leaders should be role models of the behaviours they expect from others.
- Address conflict early. Not all situations can be resolved informally, but recognising early warning signs and taking timely action can prevent escalation.
- Take a collaborative approach to resolving conflicts.
Tackle conflict early
Acas report that the earlier they get involved in resolving conflicts, the better.
While recognising that not all workplace conflict can be resolved at an early stage, Joanna Nunn, Interim Chief Conciliator at Acas said, “There are real long-term gains to be made shifting the mindset from adversarial positions and instead refocusing on dialogue and the possibility of positive outcomes for both parties. But this can only take place before positions become entrenched.”
Providing managers with clear guidance and training on handling conflict can help to resolve issues quickly, keeping teams focused and happy while reducing disruption.
See: https://www.acas.org.uk/building-partnerships-to-improve-workplace-relations