Website of the UK government

Please note that this website has a UK government accesskeys system.

Public services all in one place

Main menu

Budget June 2010 - employment

  • Published: Wednesday, 23 June 2010

The Chancellor, George Osborne, today presented the first Budget of the coalition government. Changes include a two-year public sector pay freeze, changes to National Insurance Contribution payments, an increase to the Enterprise Finance Guarantee and reduction in small companies tax.

Unemployment rate

The unemployment rate is forecast to peak this year at 8.1 per cent. It is then predicted to fall for each of the next four years, reaching 6.1 per cent in 2015.

Public sector workers

The Chancellor announced a two year public sector pay freeze from 2011-2012. This will apply to public sector workers except those who earn less than £21,000, who will get a flat rate pay rise of £250 in both these years.

The government will carry out an investigation on public service pensions. An initial report will be published in September 2010 and a full report in time for next years Budget.

The Chancellor also announced that the operational allowance for armed services personnel would be doubled to £4,800.

National Insurance - employers

The threshold at which employers start to pay National Insurance will be raised, making it cheaper for companies to employ people. It will be raised by £21 per week above indexation in April 2011.

Retirement age

The Chancellor has announced that the government will consult on whether to phase out the ‘default retirement age’ (when employers can demand you retire) of 65.

Enterprise Finance Guarantee (EFG)

The Enterprise Finance Guarantee (EFG) supports lending to small businesses that find it difficult to access normal commercial loans.

The Chancellor announced that the EFG will be increased by £200 million to support £700 million of extra lending until 31 March 2011. This should benefit at least 2,000 small businesses.

New businesses

The Chancellor has announced a new tax scheme that aims to help create jobs. New businesses set up outside the East, London and the South East will be exempt from up to £5,000 of employer National Insurance Contribution (NIC) payments for the first ten employees they hire.

The government plans to have this scheme running by September 2010, but any qualifying new businesses set up from today will benefit. The government estimate that around 400,000 businesses will benefit from this scheme.

Small companies tax

The Chancellor announced a reduction in the small companies tax rate to 20 per cent from 21 per cent. This should benefit some 850,000 companies.

Was this information useful?

How useful did you find this information?

500 character limit
Your Privacy Opens new window

Why are we asking for this information?

  • we want to hear what you think about the quality and usefulness of our pages
  • your comments will help us improve our pages
  • your comments will also help with the future development of Directgov
  • telling us what you think will help make sure we give you the very best service

Additional links

Budget Day 2011

Budget 2011 on Directgov

Budget June 2010

Full coverage of the new government's first Budget

Online benefits advice

If you need advice on benefits, pensions and credits, see what you might get by using the online calculator

Access keys