Recruitment and HR professionals say the government’s Budget 2026 measures fall short of restoring employers’ confidence to hire, despite changes to young workers’ minimum wages and a £20.4 billion commitment to a National Wealth Fund.
The Recruitment and Employment Confederation’s interim chief executive, Maxine Bligh, said the package did not create the conditions businesses need to grow, invest and recruit. She warned that jobseekers could wait longer for a strong recovery in employment.
Hiring costs and business confidence
Bligh criticised the absence of a broad, phased restoration of the employer National Insurance threshold and said employment reforms were adding regulatory burdens. She also argued that temporary-work agencies should have been exempted from guaranteed-hours rules, which she said could help young people enter the labour market.
Employers are also seeking more flexibility in the Growth and Skills Levy and increased support for short, targeted training programmes, she said, describing those measures as stronger potential incentives for hiring and investment.
Fortune Hill founder and chief executive Joel Barnett welcomed the £20.4 billion National Wealth Fund commitment, saying investment could give companies more room to expand. He said boards facing higher employment and operating costs had become selective about senior recruitment, weighing internal promotion against the need to bring in skills they lack.
Barnett said the cost of employing someone in the UK had risen by almost 10% over the past year, while energy and fuel costs had also increased.
Minimum wage pressures
The Budget sets a 3.9% increase in the minimum wage for 18- to 20-year-olds. The HR Dept director Michaela Gartside said the rise would add to pressure on small businesses, many of which she said already operate with lean staffing and have little room to absorb higher wages without affecting workloads or service.
Burges Salmon partner James Green described the increase as measured but said it did not rule out larger rises for this age group later. Labour’s manifesto pledged to bring minimum wage rates across age bands into line. Green said the latest decision meant the gap would not narrow further from April next year, raising questions about the scale of any rise in April 2028 if that pledge is pursued.
The Low Pay Commission had previously proposed lowering eligibility for the national living wage to age 20 in 2027 and then to 18 in 2028 or 2029. Isio consultant Kelly Gajjar said employers should consider whether pay rises for lower-paid staff could compress the gap with more experienced colleagues, and review the affordability and value of their wider reward packages.
Immigration and employment reforms
Chancellor John Healey also announced plans to improve access to international talent through routes including the Global Talent Visa, while tightening access for low-paid or low-skilled workers. He said non-compete clauses would no longer prevent hiring in start-ups and scale-ups or stop workers in the wider economy from changing jobs.
Charles Russell Speechlys immigration partner Kelvin Tanner said the visa measures could give employers more flexibility, but questioned how they would interact with the government’s Earned Settlement proposals. He said the practical test would be whether reforms make the system more predictable for employers and internationally mobile workers.
Constantine Law partner Alan Lewis said the final visa rules could affect access to specialist skills, while changes to non-compete clauses could make it easier for workers to move or set up competing businesses. He said employers may need to reassess how they protect confidential information and customer relationships.
The immediate test for employers will be how the Budget’s wage and workforce changes affect recruitment plans, alongside the details of the proposed immigration and non-compete reforms.
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Budget 2026 draws mixed verdict from hiring experts
Recruitment and HR professionals say the government’s Budget 2026 measures fall short of restoring employers’ confidence to hire, despite changes to young workers’ minimum wages and a £20.4 billion commitment to a National Wealth Fund.
Maxine Bligh, interim chief executive of the Recruitment and Employment Confederation, said the Budget did not create the conditions businesses need to grow, invest and recruit. She warned that jobseekers could wait longer for a strong recovery in employment.
Hiring costs and business confidence
Bligh criticised the absence of a broad, phased restoration of the employer National Insurance threshold and said employment reforms were adding regulatory burdens. She also argued that temporary-work agencies should have been exempted from guaranteed-hours rules, which she said could help young people enter the labour market.
Employers are also seeking more flexibility in the Growth and Skills Levy and increased support for short, targeted training programmes, Bligh said, describing those measures as stronger potential incentives for hiring and investment.
Joel Barnett, founder and chief executive of executive search consultancy Fortune Hill, welcomed the £20.4 billion National Wealth Fund commitment, saying investment could give companies more room to expand. He said boards facing higher employment and operating costs had become selective about senior recruitment, weighing internal promotion against the need to bring in skills they lack.
Barnett said the cost of employing someone in the UK had risen by almost 10% over the past year, alongside increases in business expenses such as energy and fuel.
Minimum wage pressures
The Budget sets a 3.9% increase in the minimum wage for 18- to 20-year-olds. Michaela Gartside, director of advisory firm The HR Dept, said the rise would add to pressure on small businesses, many of which already operate with lean staffing and have little room to absorb higher wages without affecting workloads or service.
James Green, a partner at law firm Burges Salmon, described the increase as measured but said it did not rule out larger rises for this age group later. Labour’s manifesto pledged to bring minimum wage rates across age bands into line. Green said the latest decision meant the gap would not narrow further from April next year, raising questions about the scale of any rise in April 2028 if that pledge is pursued.
The Low Pay Commission had previously proposed lowering eligibility for the national living wage to age 20 in 2027 and then to 18 in 2028 or 2029. Kelly Gajjar, a senior strategic consultant at Isio, said employers should consider whether increases for lower-paid staff could compress the gap with more experienced colleagues. She also urged businesses to review the affordability and value of their wider reward packages.
Immigration and employment reforms
Chancellor John Healey also announced plans to improve access to international talent through routes including the Global Talent Visa, while tightening access for low-paid or low-skilled workers. He said non-compete clauses would no longer prevent hiring in start-ups and scale-ups or stop workers in the wider economy from changing jobs.
Kelvin Tanner, an immigration partner at Charles Russell Speechlys, said the visa measures could give employers more flexibility, but questioned how they would interact with the government’s Earned Settlement proposals. He said the test would be whether the reforms make the system more predictable for employers and internationally mobile workers.
Alan Lewis, a partner at Constantine Law, said the final visa rules could affect access to specialist skills, while changes to non-compete clauses could make it easier for workers to move or establish competing businesses. He said employers may need to reassess how they protect confidential information and customer relationships.
Employers will be watching how the wage and workforce changes affect recruitment plans, as well as the details of the proposed immigration and non-compete reforms.
Original Source: https://www.personneltoday.com/hr/budget-2026-fails-to-hit-the-bullseye-on-hiring-confidence/
